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Deliveroo has this morning revealed widening losses, slowing growth and the loss of Next boss Simon Wolfson from its board.
The tech platform managed to grow revenues, orders and gross transaction value in the first half of 2022 in what it called “challenging market conditions”.
Revenues increased 12% to £1bn, with GTV up 7% to £3.6bn, as its commissions and consumer fees rose and it made more money from advertising.
However, growth in GTV slowed considerably as the half progressed, tumbling from 12% in the first quarter to just 2% in Q2 as consumers tightened their belts as the cost of living spiralled.
In the UK and Ireland, revenues in the half rose 13% to £544.4m, outpacing GTV growth of 8%, while orders increased 12% to 80.1 million.
Deliveroo said it also made market share gains despite the consumer headwinds.
Pre-tax losses at the group widened to £147m in the half, compared with £95m a year ago. Although, Deliveroo highlighted an improvement compared with the second half of 2021 when losses totalled £203m.
The group said it had also made “good progress” on its path to profitability as its adjusted EBITDA loss also improved from £106m in the last six months of 2021 to £68m in the first half of 2022.
Higher fees paid by consumers, an increased contribution from advertising revenue and a reduction in its marketing spend fuelled the improvement.
Founder and CEO Will Shu said Deliveroo was “committed to delivering profitable growth”.
“We are focused on driving the business to the milestone of adjusted EBITDA profitability and then on to positive free cashflow generation,” he added.
“In March we set out our path to profitability and the levers to deliver this. So far in 2022, we have made good progress delivering on our profitability plan, despite increased consumer headwinds and slowing growth during the period. We are confident that in H2 2022 and beyond we will see further gains from actions already taken, as well as benefits from new initiatives.”
In a separate announcement, Deliveroo revealed Simon Wolfson had decided to step down from the board.
Wolfson joined the business in January 2021 ahead of its flotation on the London Stock Exchange later in the year.
“After much consideration, and with regret, I believe that the time required to continue in my role at Deliveroo is no longer compatible with my executive and other commitments,” Wolfson said.
“I have enjoyed my time working with Will, the executive team and my board colleagues over the past 18 months and wish the company all the best for the future.”
Chairman Claudia Arney added: “Simon has played a key role in supporting the company in its first year as a public company. His experience, advice and guidance have helped to navigate an unprecedented trading environment and to build solid foundations to capitalise on the opportunities ahead of us.
“On behalf of the board I would like to extend our sincere thanks for his important contribution.”
Shares in Deliveroo climbed 1.7% this morning to 92.8p.
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Morning update
Dutch supermarket group Ahold Delhaize has increased net sales in the second quarter by 6.4% to €21.4bn.
Sales in both the US and Europe accelerated in the period versus Q1, growing 7.7% in the former and 4.2% in the latter.
The group said it experienced increased share in the majority of its markets thanks to strong customer loyalty to its locally tailored customer value propositions.
Online sales in the quarter also increased 4.8%, while online sales in grocery increased 11.5%.
Ahold said its brands had helped customers manage high levels of inflation through its €850m cost savings program, absorbing cost increases and introducing more entry-priced products.
The group also revealed it had pulled its planned IPO for its online retail site Bol.com and would look at the flotation again when equity market conditions were “more conducive”.
CEO Frans Muller said: “For consumers and businesses alike, these are difficult times.
“The war in Ukraine is causing an unprecedented energy crisis, commodity prices are high, and inflation has reached record levels. Consumers’ household budgets are under pressure and household purchasing power is declining.
“Our brands are laser focused on supporting customers and helping them to manage their spending efficiently. Our brands do this by ensuring access to affordable, healthy food options, expanding their high-quality own-brand assortments, introducing more entry-priced product solutions, and ensuring our highly tailored omnichannel loyalty programs offer competitive and attractive solutions across all customer touchpoints.
“Our cost reduction programs also help Ahold Delhaize’s great local brands absorb cost increases relating to energy, transport and labor, enabling us to keep prices as low as possible.”
The FTSE 100 opened down 0.2% to 7,475.09pts.
Early risers included Ahold Delhaize, up 6.4% to €27.89, Carrefour, up 1.6% to €16.91, Science in Sport, up 3.5% to 30p, and Pets at Home, up 1.6% to 346.4p.
Fallers so far included Bakkavor, down 2.6% to 94p, Finsbury Food Group, down 1.8% to 69.3p, and AG Barr, down 1.6% to 540p.
Yesterday in the City
The FTSE 100 nudged 0.1% higher to 7,488.15pts yesterday after UK retail sales unexpectedly jumped in July as hot weather and inflation boosted the figures.
Coca-Cola HBC saw shares dip 0.2% to 1,952p following its announcement of the acquisition of Greek mixer brand Three Cents, while shares in Supreme leapt 4.4% to 106p after it revealed deals for vaping manufacturer Cuts Ice and e-liquids business Flavour Core.
Risers yesterday included Bakkavor, up 3.8% to 96.5p, Hotel Chocolat, up 2.5% to 144.5p, Imperial Brands, up 1.7% to 1,864.5p, and Pets at Home, up 1% to 341p.
Just Eat Takeaway slumped 7.5% to 1,414.2p, while other tech stocks were also hit, including Deliveroo, down 3.6% to 91.2p, HelloFresh, down 7% to €27.18, and Delivery Hero, down 6.1% to €46.87.
Associated British Foods, C&C Group and B&M were also all among the fallers, down 1.1% to 1,641.5p, 2.2% to 192.9p and 0.2% to 418.7p respectively.
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