A Deliveroo driver nears Victoria station on March 31, 2021 in London, England.
Dan Kitwood | beautiful pictures
Losses at British meal delivery company Deliveroo skyrocketed in the first half of 2022 while revenue growth slowed significantly, as the disappearance of pandemic restrictions and an increase in the cost of living affected demand for online food.
Deliveroo reported a pre-tax loss of £147.3 million ($178 million) for the first six months of the year, up 54 percent year-on-year. The losses were mainly due to increased spending on marketing and general expenses.
The company’s revenue increased 12% to £1 billion. This is much slower than the revenue growth the company reported in the first half of 2021 when sales grew 82% year-over-year.
Deliveroo’s total transaction value – a measure of overall sales on the platform – rose 7% to £3.6 billion, a growth that pales in comparison to last year when GTV doubled in the first half of the year. The company blamed the disappointing performance on “challenging market conditions.”
Deliveroo said it was consulting on a plan to leave the Netherlands, which would be the company’s biggest European exit.
The company, facing the prospect of much stricter gig economy laws in the European Union, previously pulled out of Spain last year and Germany in 2019.
The Netherlands accounted for just 1% of Deliveroo’s GTV in the first half of 2022, Deliveroo said.
Deliveroo reiterates its full-year sales growth guidance. Last month, the company revised its GTV growth target for 2022 to a range of 4% to 12%, down from its previous forecast of 15% to 25%.
Shares of Deliveroo rose 3% on Wednesday following its results.
Share buyback program
“So far in 2022, we’ve made good progress in delivering on our profitability plan, despite mounting consumer difficulties and slowing growth during this period.” , Deliveroo CEO Will Shu said in a statement.
“We are confident that in H2 2022 and beyond, we will see even more benefits from the actions already taken, as well as the benefits of new initiatives.”
“We remain confident in our financial ability to adapt to any changes in the macroeconomic environment,” added Shu.
The food delivery market is facing the dual challenge of rising inflation and more extroverted consumers.
People are spending more time dining at restaurants instead of ordering online while soaring costs of energy and essentials have made shoppers more cautious about how they part their cash. me.
Separately on Wednesday, Deliveroo said it would begin its first share buyback program, buying up to £75 million worth of shares from investors. The purpose of the program is “to minimize dilution from equity-based compensation plans,” Deliveroo said.
The company announced that Simon Wolfson, CEO of UK clothing retailer Nextdecided to resign from its board of directors.
“After much consideration, and with regret, I believe that the time required to continue in my role at Deliveroo is no longer appropriate for my executive and other commitments,” said Wolfson.
Deliveroo, which recently added McDonald’s to its platform as part of a global partnership, is hoping its focus on other areas of on-demand delivery will help it weather the storm. recession may occur. The company has registered non-food retailers such as WH Smith and LloydsPharmacy.
Food delivery has long been a tough market, with low margins and a lot of competition making it difficult for any single player to achieve significant success. While the Covid-19 lockdown has been a boon for some companies in the space, the market has seen increasing consolidation recently as valuations fall due to falling demand for such services. .
Last week, the Anglo-Dutch company Just Eat Takeaway.com wrote down the value of its U.S. subsidiary Grubhub by $3 billion, almost half of the $7.3 billion it paid the company last year. The company is Discover the sale of Grubhubamong other options, amid pressure from investors to improve its business.
It comes later Amazon announce a agreement to buy shares in Grubhub and add food delivery perks to Prime membership. Amazon has similar arrangement with Deliveroo in the UK, Italy, France and the United Arab Emirates.
