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Deliveroo has reported its first annual profit as the takeaway group pushed further into grocery and retail orders, but a warning of weak consumer sentiment sent shares down on Thursday.
Deliveroo posted a net profit of £2.9mn in full-year results, compared with a £31.8mn loss the previous year, as customers spent more on the platform and it expanded beyond takeaways into groceries and partnerships with retailers such as Screwfix and The Perfume Shop. It also announced a £100mn share buyback.
However, chief executive Will Shu said on Thursday that consumer demand was weaker “than we would have liked”, as the group pushed back an earnings target. Deliveroo was pursuing an adjusted earnings before interest, tax, depreciation and amortisation margin of 4 per cent by 2026.
On Thursday, it said it would aim instead to achieve its goal in the “medium term”, sending shares down as much as 8 per cent in morning trading in London.
Shu said Deliveroo was aiming to expand by pushing further into grocery and retail. There had been a “societal shift” away from the weekly shop towards “a few deliveries during the week”, he said. “We’ve spearheaded that, and that will have will be a big part of our growth plans going forward.”
The group first started offering a grocery service in 2018, and orders accounted for 16 per cent of the company’s gross transaction value in the second half of last year — the total cost of people’s baskets plus delivery fees — up from 13 per cent in 2023.
Sean Kealy, analyst at Panmure Liberum said the results “surprised the market to the downside”, following the company’s change in guidance, although “bright spots” such as grocery growth remained.
Shu said there had not been any discussions with the board about his potential departure, following media reports that he could exit the company later this year, saying: “I’m 100 per cent committed to what we’re doing here”.
In February, Deliveroo said there were “no plans for Will to step down”, adding he “remains relentlessly focused on the long-term future of Deliveroo and delivering for consumers, merchants and riders”.
Shu said Deliveroo was also not planning to leave other markets, after the company announced earlier this month it was exiting Hong Kong, including by selling some assets to rival Delivery Hero.
Its update comes after rival Just Eat was acquired by investment firm Prosus last month in a deal worth €4.1bn, in a transaction expected to lead to further expansion by the takeaway group.
“We’ve taken on big competitors before,” Shu said. “This is in our peripheral vision.”
