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Deliveroo has warned annual sales growth will come in at the lower end of previous guidance after order numbers fell in the third quarter.

The takeaway delivery firm said it produced a “solid” third quarter despite a “difficult” consumer environment.

Gross transaction value was up 8% (5% in constant currency) to £1.7bn despite orders declining by 1% year-on-year as the value per order rose 9% driven by price inflation and optimisation of consumer fees.

Sequentially Q3 GTV contracted by 5% in constant currency compared to the second quarter, and orders were down 7%, reflecting summer seasonality in European markets and current consumer headwinds.

UK growth outperformed international, with GTV in UK and Ireland up 11% and in International down 2% year-on-year (up 5% in reported currency).

Deliveroo said international growth was relatively stronger in Europe and Middle East, offset by declines in Asia Pacific (where renewed COVID-related restrictions in the third quarter of 2021 gave a tough comparison base)

The group has updated its full year guidance based on GTV developments during the quarter and the current economic outlook.

2022 GTV growth is now expected to be 4-8% in constant currency, the lower half of the previously-announced range of 4-12%.

Meanwhile, gross margin improvements, more efficient marketing expenditure and tight cost control means its expects to deliver an adjusted EBITDA margin (as a % of GTV) in the range of -1.2% to -1.5% in 2022, up from its previous guidance of -1.5% to -1.8%.

Deliveroo still aims to reach adjusted EBITDA breakeven at some point during the second half of 2023 or early 2024, which is “the next key milestone on the path to achieving its longer-term profit ambitions”.

Will Shu, founder and CEO of Deliveroo, said: “During the quarter, we delivered continued GTV growth year-on-year, strengthened our value proposition and made further progress on our path to profitability. Since June, the year-on-year GTV growth trend has been broadly stable, despite the ongoing economic uncertainty.

“Throughout 2022 we have been adapting financially to the operating environment and driving forward on our path to profitability, and we now expect the H2 2022 adjusted EBITDA margin to be better than our previous guidance. We continue to be excited about the opportunity ahead and our ability to capitalise on it.”

Deliveroo shares are up 3.3% this morning to 84.6p.

Morning update

GfK’s Consumer Confidence Index edged back up two points in October, but remains close to historic lows.

The index measuring changes in personal finances over the last 12 months was the same at -28, while the forecast for personal finances over the next 12 months bounced back six points to -34.

The measure for the general economic situation of the country during the last 12 months is up three points at -69 and expectations for the general economic situation over the coming 12 months have improved by seven points to -61, although this is till 35 points lower than October 2021.

Joe Staton, GFK’s client strategy director, commented: “UK consumer confidence continued to bump along close to last month’s historic low, with an Overall Index Score of -47 in October. However, all core measures remain severely depressed. The three-point fall in the major purchase measure continues a steep downward trend that began in July 2021 and is especially worrying for the final quarter of the year, which many businesses rely on to strengthen their balance sheets.

“But the biggest danger by far is inflation, now rising at its fastest rate for 40 years. Households are not just running scared of burgeoning energy and food prices, and the prospect of further base rate rises increasing mortgage costs. They are now facing the likelihood of tax rises and even austerity measures. For ordinary consumers, this web of uncertainty and turmoil amounts to a ‘new abnormal’. The negative environment will deflate future spending plans, and cautious consumers could easily slow the UK economy still further. Consumers, like governments, are just as capable of U-turns, and today’s economic headwinds indicate a long hard winter.”

Cake Box, the specialist retailer of fresh cream cakes, has announced the appointment of Michael Botha as Chief Financial Officer.

Botha has worked in senior finance and commercial roles for a number of franchise businesses over the last 20 years. He is currently CFO for one of the largest franchise groups in the Domino’s Pizza Franchise system in the UK and Ireland, a role he has held since 2016.

He is working his notice with his current employer and will join Cake Box no later than 10 April 2023.

Prior to his current role, Michael spent over 12 years at Domino’s Pizza Group as commercial director and group financial.

David Forth who was appointed as interim CFO in March 2022 will leave the group when his contract expires in November 2022. Martin Blair, chairman of the audit committee will be overseeing the finance function until Botha joins the group.

Chairman Neil Sachdev commented: “We are delighted to have Michael joining the Cake Box Family to support our continued growth and future ambitions. He brings extensive experience in senior finance roles across a number of high profile franchise businesses, and has a strong track record of overseeing the implementation of internal systems and controls. Michael will further strengthen our Executive team through his experience in franchisee run corporates and good internal governance.

Botha added: “Cake Box has a strong financial position and brand with a highly attractive offering to customers, franchisees and shareholders. It has great growth prospects and I’m looking forward to joining the community of entrepreneurial franchisees and helping to make Cake Box a household name.”

Elsewhere, Greencore has announced that non-executive director, Paul Drechsler has decided not to seek re-election at the Annual General Meeting in January in order to spend more time on other business interests. Consequently, he will retire from the board with effect from the conclusion of the 2023 AGM.

On the markets this morning, the FTSE 100 has dropped 0.5% to 6,906.8pts.

Risers include Nichols, up 1.9% to 1,151.5p, Haleon, up 0.8% to 273.8p and Kerry Group, up 0.6% to €89.08.

Fallers include Naked Wines, down 7.8% to 112.5p, THG, down 3.7% to 52.6p and Pets at Home, down 2.8% to 273.8p.

Yesterday in the City

The FTSE 100 closed up 0.3% to 6,943.9pts yesterday, reversing Wednesday’s slight decline.

Naked Wines bounced back 29.2% to 122p after it announced the results of its strategic review and its focus on profitability rather than funding growth.

Other risers included Hotel Chocolat, up 4.7% to 133.5p, Ocado, up 3.3% to 493.9p, Nichols, up 2.7% to 1,130p, SSP Group, up 2.2% to 199.4p, Premier Foods, up 2% to 98.8p and Greencore, up 2% to 67.8p.

Fallers included THG, down 6.5% to 54.7p, McBride, down 3.4% to 23p, PZ Cussons, down 2.7% to 186.8p, Coca-Cola HBC, down 1.7% to 1,926.5p, Science in Sport, down 1.6% to 15.25p and Diageo, down 1.4% to 3,609p.

 

 

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