Jumia to discontinue food delivery in Egypt, Ghana, and Senegal
Jumia, an African e-commerce company is making frantic but strategic moves to sustain cut-costing measures and move from a loss-making position to profitability over the next year.
In its Q4 and full-year report released on Thursday, the NYSE-listed e-commerce firm declared a full-year loss of $207 million and an adjusted loss before earnings, interest, tax, depreciation, and amortisation, EBITDA of $49.2 million in the three months ended Dec.31 from $70 million in the same period of 2021.
Chief executive Francis Dufay said in light of the encouraging signs that Jumia’s cost-cutting initiatives were starting to bear fruit, it projects the losses to continue in 2023 but to moderate to $100 – $120 million as it continues to implement its cost-cutting measures.
Key highlights of Q4’22 financials
- Gross Revenue Q4’22 – $66M
- Total loss Q4’22 – 49.2M
- Total loss ’22 – $207M
- Projected Loss ’23 – $100 – $120M
- Order volume Q4’22 – 9.9M
- GMV (Gross Merchandise Volume) – $283.1M
- Jumia Pay TPV (Total Processed Volume) – $73.9M
- Liquidity Position Q4’22 – $227.8M
- Cash Position – Q4’22 – $72.1M
It told investors during an earnings call on Thursday that part of the cost-cutting measures includes headcount reductions, scaling back offerings such as groceries, and reducing delivery services not related to its e-commerce business in order to turn profitable.
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The group cut more than 900 jobs in the fourth quarter and significantly reduced its presence in Dubai, relocating most of its remaining staff to its African offices.
“We expect these headcount reductions to allow us to save over 30% in monthly staff costs starting from March 2023,” Jumia said.
It also significantly reduced its sales and advertising expenditure, by 41% year on year and scaled back its grocery offering in Algeria, Ghana, Senegal, and Tunisia to reduce business complexities.
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Dufay told investors on a call that Jumia had also discontinued its food delivery operations in Egypt, Ghana, and Senegal, saying they were “sub-scale”.
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While group revenue rose by 7.1% to $66.5 million in the quarter, its marketplace active consumers fell by 15% to 3.2 million as rising inflation squeezed consumer spending while affecting sellers’ ability to secure supply.
Dufay also told Reuters that the group would also look to grow the business by expanding into smaller towns in existing geographies where there is under-penetration of online shopping.