A year’s worth of gains was erased on Thursday when the meal delivery operator Deliveroo (ROO.L) opened a new tab and set back its profit growth target following a weaker than anticipated rebound in consumer confidence.
This was the case even though the British business, which faces competition from Uber Eats and Just Eat, reported positive cash flow and statutory profit for its first year.
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In 2023, it lost 31.8 million pounds, but last year it made 2.9 million pounds ($3.8 million). At 129.6 million pounds, core earnings were at the upper end of the range of projections.
Chief Executive Will Shu, however, stated that he had anticipated a “bit faster” recovery of the consumer environment when he established the goal in 2023 to increase the core profitability margin to 4% “by 2026,” with additional upside possibilities.
Deliveroo now anticipates that margin growth will pick up speed “from 2026” and reach 4% in the medium run. Early transactions saw a 9% decline in the group’s shares, wiping away gains from the prior 12 months.
The new margin timeframe, according to Jefferies analysts, was “a blemish,” but their consensus prediction “was already far behind the old timeline.”
According to Shu, who started Deliveroo twelve years ago, order growth in its largest region, Britain and Ireland, has accelerated every quarter, and growth in gross transaction value, a crucial performance metric, has sped up in the second half of 2024.
“Q1 trading has been good,” he told them. “We don’t see any differences from the latter part of last year into Q1.”
He claimed that Deliveroo could keep expanding “by focusing on the levers in our control,” which would include emphasizing value and its tier-based membership plans.
