By Paul Sandle
LONDON (Reuters) – Britain’s Deliveroo said it would quit the Netherlands after failing to gain a strong position in the home market of rival Just Eat Takeaway, as it reported a larger loss in “challenging market conditions” in the first half.
Chief Executive Will Shu said he was disappointed to leave after six years, but the Netherlands was a very small market – accounting for 1% of Gross Transaction Value (GTV) – and it would require a lot of investment to try to become a top-tier player, with no guarantee of success.
Shares in Deliveroo, which have fallen 73% in the last 12 months, were trading up 3% in early deals, as analysts said a core loss of 67.9 million pounds ($82.1 million) was 11% ahead of consensus.
“Importantly, we are seeing further signs of rationalisation, with Deliveroo intending to end operations in the Netherlands,” analysts at Citi said.
Deliveroo, which also competes with Uber Eats, cut its full-year growth outlook last month after a sharp slowdown in the second quarter, which it said reflected increased consumer headwinds.
Growth in GTV slowed from 12% in the first quarter to 2% in the second, but Shu said demand had picked up and would continue to improve as tough comparatives with pandemic lockdowns eased.
“The GTV growth rate that we’ve seen more recently is certainly above the growth rates that we’ve seen in the second quarter that we published,” he said in an interview.
He said the company was “firmly on track” to break even on the core earnings level in the second half of 2023 or the first half of 2024, despite losses increasing against the same period a year earlier.
“We feel very good about the progress so far despite a weak consumer environment because we have the flexibility on our financial levers, and we have a lot of cash on the balance sheet,” he said.
($1 = 0.8269 pounds)
(Reporting by Paul Sandle; Editing by Kate Holton and Barbara Lewis)
