Deliveroo, a British food delivery company, warned that sales growth would be at the low end of its previous forecast as households cut back on takeaways due to rising prices.
Despite the worsening outlook, Deliveroo, which competes with Just Eat Takeaway and Uber Eats, increased its adjusted earnings (EBITDA) margin guidance on Friday, aided by lower marketing spend.
The company is aiming for adjusted earnings (EBITDA) breakeven in late 2023 to early 2024, and it is confident it can adapt to the worsening economic outlook, which includes higher food and energy bills for consumers.
Deliveroo shares, which have fallen 60 per cent this year, rose 4 per cent to 84 pence in early trading.
Deliveroo stated that gross transaction value (GTV) growth was now expected to be in the range of 4-8 per cent in constant currency, which was already downgraded from 15 per cent-25 per cent in July.
“While the drop in GTV guidance is a negative, given the shifting focus of the industry towards profitability, the improvement in margin should be taken well,” Goodbody analysts said.
Deliveroo reported 11 per cent GTV growth in its largest UK and Ireland market, boosted by the addition of McDonalds to its offering, while its performance in its international markets in Europe, the Middle East, and Asia Pacific dragged.
The impact of the economic headwinds, combined with the seasonal effect of summer, when people’s routines change, caused GTV to contract by 5 per cent in the three months to the end of September, it said.
GTV per order was up 6 per cent in the most recent period compared to the same period last year, indicating the impact of price inflation, while orders were down 1%, indicating a difficult consumer environment.
Deliveroo announced recently that it would leave the Netherlands on November 30 after failing to gain a sufficient local market share.
(Adapted from Latestly.com)