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HelloFresh Nears Zalando-Style Turning Point After First Profit

Stefan Nicola

(Bloomberg) -- Zalando SE lost money for the first five years of its existence, then in 2014 it turned a corner and began posting a profit every year. Evidence suggests meal kit startup HelloFresh SE is following a similar path.

The Berlin-based food company is optimistic it can generate a group-wide operating profit this year and sustain and expand profitability in the years to come, Chief Executive Officer Dominik Richter said in an interview on Tuesday. HelloFresh shares rose the most since January in early Frankfurt trading.

HelloFresh can “generate much higher profit levels than other e-commerce companies,” because the company controls the entire value chain -- from branded retail to wholesale to logistics, Richter said.

The company, which assembles ingredients into boxed meal kits and seeks to convince customers of the benefits of cooking at home, earlier Tuesday reported its first quarterly operating profit, in the April-June period, after sales growth across its markets.

The results are “significantly better than what we expected,” Deutsche Bank analysts Nizla Naizer and Silvia Cuneo wrote in a note to clients. They mark “a key turning point for the group in our view.”

HelloFresh rose as much as 17.7%, the steepest intraday gain since Jan. 18.

The Berlin-based startup is especially strong in the U.S., its biggest market, where it’s surpassed Blue Apron Holdings Inc., expanded its choice of meals, and this week started a special “date night” kit in a marketing partnership with businesswoman and actress Jessica Alba.

To contact the reporter on this story: Stefan Nicola in Berlin at snicola2@bloomberg.net

To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, Nate Lanxon

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