By Isabel Demetz and Tristan Veyet
(Reuters) -German meal-kit company HelloFresh raised the lower end of its guidance on adjusted core profit but cut its full-year revenue-growth outlook, as it expects bigger returns due to more focused marketing, despite a weaker fourth quarter.
It expects revenue growth on a constant-currency basis between 1% and 1.7%, down from a previous range of 2% to 8%.
HelloFresh raised the bottom of its core-profit forecast to 360 million euros ($389.66 million) after previously guiding for between 350 million euros and 400 million for the year.
Shares in the Berlin-based company were trading up 16.3% at 1313 GMT.
HelloFresh, which has come under pressure from investors and analysts about the effectiveness of its promotions and advertising, said it was focusing on improved marketing spending.
HelloFresh said in April that it would emphasize retaining customers.
The company will aim to win fewer customers, but those that spend more on products such as deliveries and bigger basket sizes, spokesperson Sophie Kohoutek told Reuters.
More efficient spending allowed HelloFresh to raise the lower end of its outlook for adjusted earnings before interest, tax, depreciation and amortisation, it said.
The company forecast lower marketing spending in the fourth quarter compared with last year, and a corresponding dip in revenue, that also led to a downward revenue revision for its fiscal year forecast.
“The second half of the fourth quarter is typically a time where it is conducive to acquire customers,” Kohoutek said, referring to holidays.
The cost of acquiring customers also typically rises during this period. “You are competing with all the companies that are advertising potential presents,” she said.
HelloFresh reported preliminary third-quarter results with revenue up 1.9% on a constant-currency basis to 1.83 billion euros, in line with a company-provided analysts’ consensus estimate.
AEBITDA rose to 72 million euros from 69 million euros a year earlier.
HelloFresh’s full third-quarter results are due on Oct. 29.
($1 = 0.9239 euros)
(Reporting by Isabel Demetz and Tristan VeyetEditing by David Goodman, Tomasz Janowski and Rod Nickel)
