Blue Apron Has New CEO, Same Broken Model

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Blue Apron Holdings Inc. (NYSE: APRN) has a new chief executive officer, but an entirely ruined business model. For that reason, a change at the helm will not make much difference.

Founder Matt Salzberg leaves the CEO post immediately and becomes executive chairman, a job that probably has little power. Chief Financial Officer Brad Dickerson takes the top spot. It is unclear why the board believes that someone with a background that is primarily financial can do a good job. Dickerson was chief operating officer and CFO of Under Armour, another deeply troubled company. The move is more likely meat thrown at the unhappy investors who blame Salzberg for the failure of the Blue Apron’s model and the dive in its stock price.

Dickerson is excited about his new job, and he should be because it is a promotion:

I am incredibly excited to assume this new role and for the future of the company. We have an exceptionally talented team at Blue Apron that is focused on taking decisive actions to transform the business, continuing to innovate our product in new and diverse ways, and unlocking future growth opportunities. We remain confident in our previously stated financial guidance for the second half of 2017, and I believe we are taking the right steps to move the business forward.

The only thing Dickerson can say for sure is that investors have revolted as Blue Apron shares have dropped from a 52-week high of $11 to $3 more recently. In the third quarter, the revenue of what is supposed to be a growth company barely moved higher to $211 million. The company lost $87 million, based on reported net income

The anxiety about Blue Apron all year is that so many other companies can get into its business. It has what business school professors call a narrow moat. Dickerson cannot do anything to change that. The most immediate cause for Blue Apron’s share price drop is the logistics of a move from one fulfillment center to another. The longer term reason is that it cannot effectively fend off competition.