Item 2.05 Costs Associated with Exit or Disposal Activities.
On February 18, 2020, Blue Apron Holdings, Inc. (the "Company") announced the
planned closure of its fulfillment center in Arlington, Texas (the "Arlington
Facility") and the consolidation of production volume from the Arlington
Facility to the Company's fulfillment centers in Linden, New Jersey and
Richmond, California (the "Arlington Facility Closure") in order to more
efficiently continue to service the Company's national footprint while also
enabling the Company to redirect financial resources into other parts of the
business, including growth initiatives. The Company also notified employees at
the Arlington Facility of the Arlington Facility Closure on February 18, 2020.
Approximately 240 employees located at the Arlington Facility will be impacted
by the Arlington Facility Closure.
The Arlington Facility Closure is expected to be substantially completed in the
second quarter of 2020. As a result, the Company expects to incur approximately
$1.5 million in restructuring charges in connection with the Arlington Facility
Closure, including approximately $0.8 million of employee-related costs,
primarily severance payments, and approximately $0.7 million of other exit
costs, all of which are expected to result in cash expenditures. In addition,
the Company expects to incur non-cash asset-related charges in the range of $5.0
million to $8.0 million. The majority of the charges will be incurred in the
first half of 2020. However, the actual timing and costs of the Arlington
Facility Closure may differ from the Company's current expectations and
estimates, and such differences may be material.
The Company expects the Arlington Facility Closure to generate annual savings of
approximately $8.0 million beginning in the second quarter of 2020 in product,
technology, general and administrative expenses.
Forward-Looking Statements
This Form 8-K includes statements concerning the Company and its future
expectations, plans and prospects that constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. For
this purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. In some cases,
you can identify forward-looking statements by terms such as "may," "should,"
"expects," "plans," "anticipates," "could," "intends," "target," "projects,"
"contemplates," "believes," "estimates," "predicts," "potential," or "continue,"
or the negative of these terms or other similar expressions. Forward-looking
statements in this Form 8-K include, but are not limited to, the amount of
expenditures that may be made or charges that may be incurred by the Company in
connection with the Arlington Facility Closure, the timing of the Arlington
Facility Closure and the anticipated savings from the Arlington Facility
Closure. The Company's expectations and beliefs regarding these matters may not
materialize, and actual results are subject to risks and uncertainties that
could cause actual results to differ materially from those projected. Factors
that could contribute to such differences include possible changes in the size
and components of the expected costs and charges associated with the Arlington
Facility Closure; risks associated with the Company's ability to achieve the
benefits of the Arlington Facility Closure; risks resulting from the Arlington
Facility Closure, including, but not limited to, further employee attrition and
adverse effects on the Company's operations, such as interruptions in
production; risks related to the Company's consolidation of production volume to
its Linden, NJ and Richmond, CA fulfillment centers; the Company's anticipated
growth strategies and their dependence on the Company's ability to obtain
additional financing; its ability to sufficiently manage costs, maintain
sufficient capital and obtain additional financing to remain in compliance with
the financial covenants under its revolving credit facility; its ability,
including the timing and extent, to obtain additional financing and sufficiently
manage costs to fund investments in its operations in amounts necessary to
support the execution of its strategic growth plan; its expectations regarding
competition and its ability to effectively compete; its ability to expand or
innovate on its direct-to-consumer product offerings and strategic partnerships;
its ability to cost-effectively attract new customers, retain existing customers
and increase the number of customers it serves; its amount of indebtedness and
ability to fulfill its debt-related obligations; seasonal trends in customer
behavior; its expectations regarding, and the stability of, its supply chain;
the size and growth of the markets for its product offerings and its ability to
serve those markets; federal and state legal and regulatory developments; other
anticipated trends and challenges in its business; and the risks more fully
described in the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2019 filed with the U.S. Securities and Exchange Commission (the
"SEC") and in other filings that the Company may make with the SEC in the
future. The forward-looking statements in this Form 8-K are based on information
available to the Company as of the date hereof. The Company assumes no
obligation to update any forward-looking statements contained in this Form 8-K
as a result of new information, future events or otherwise.
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