Another massive loss for Takealot

 ·24 Jun 2024

South African online retailer Takealot registered another massive trading loss of R253 million for the year ending March 2024—though this has been narrowed from the R400 million loss recorded last year.

In a positive turn, however, delivery platform Mr D has reached profitability for the first time.

According to Takealot-owner Naspers’s latest results for the financial year ended 31 March 2024, normalised consumer behaviour post-pandemic and a challenging economic environment, characterised by interest rates and high inflation, featured throughout the year.

The group said that there was heavy fragmentation as competitors continued to invest heavily in e-commerce capability.

“Temu and Shein have made inroads in the South African market, and the recent arrival of Amazon will intensify competition further,” said Naspers.

Amidst the challenging backdrop, the Takealot group delivered a 3% growth in Gross Merchandise Value (GMW) and an 8% growth in revenue in rand terms.

Takealot.com grew GMV by 13% and narrowed its trading losses by US$4 million (R72 million) in rand terms, excluding M&A, from the previous financial year.

Overall, trading losses were US$14 million (R253 million), down from the US$22 million (~R400 million) recorded in the year prior.

Mr D, on the other hand, increased GMW by 16% in rand terms despite the tough economic environment for its traditional middle-class market.

The business became profitable for the first time, with a trading profit of US$3 million (R54 million )for the financial year.

On an economic-interest basis, the Etail segment grew revenue by 9% to US$3.0 billion (R54 billion), and trading losses improved from US$85 million (R153 million) to US$49 million (R85 million).

AutoTrader also recorded an 11% rise in user traffic, with the platform seeing growth of 97% since 2019, highlighting a surge in online vehicle shopping.

Property24 continued its reign as the market leader and acquired a stake in Grace Nineteen, a Black-owned property technology that will provide innovative tenant solutions.

Media24 is reassessing several of its major print titles and is shifting focus towards digital platforms. The group is reportedly planning to cut 400 jobs at its print publications, including City Press, Rapport and Beeld.

“Our businesses in South Africa continue to innovate and explore new opportunities, despite the challenging economic conditions affecting consumers,” said Phuthi Mahanyele-Dabengwa, South Africa CEO, Naspers.

“We are proud of the performance of these businesses, most notably Takealot.com, which has surpassed 10,000 active sellers in its marketplace. We believe that the platform economy is a catalyst for economic growth, innovation, and job creation in South Africa.”

Overall

“We have made substantial progress this year in delivering against our strategy. Our E-commerce portfolio is profitable for the first time ever, and our ongoing buyback has created significant shareholder value,” said Naspers Interim CEO Ervin Tu.

“We also reorganised the Group, bringing us closer to our businesses so that we can enhance their performance further.”

“AI continues to be the highest priority, and our in-house AI expertise, combined with our implementation of AI in practice across our entire portfolio, are distinct competitive advantages. AI is instrumental to our efforts in building and investing behind the next wave of technology leaders.”

Consolidated revenue grew by 8% to $6.4 billion (R115 billion) due to solid performance at OLX and iFood.

Ecommerce’s consolidated trading profit jumped by a massive US$460m (R8.3 billion) to US$24m (R43 million) in FY24 as growth, scale and cost reductions boosted the results.

The group’s consolidated trading losses were reduced by US$486 million (R8.7 billion) from US$640 million (R11.5 billion) in FY23, underlining our accelerating profitability path.

Core headline earnings, the group’s measure of after-tax operating performance, were US$2.1 billion (R38 billion) – an increase of 88%.

Headline earnings per ordinary share increased from 119 US cents (R21.53) to 759 US cents (R137.34).

Amidst the increase, the board of Prosus, Napser’s Dutch-listed company, recommended that its shareholders receive a gross distribution of 10 euro cents (R1.94) per ordinary share N.

“Subject to the requisite approval by Prosus shareholders being obtained, a dividend will be paid by Naspers in relation to the Naspers N ordinary shares and A ordinary shares from the amount that Naspers receives from Prosus, in accordance with the rights attaching to the shares as set out in the Naspers memorandum of incorporation.”

The group’s overall results can be found below:


Read: Dark clouds for middle-class and rich South Africans

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