Monday 19 August 2019

Just Eat orders melt under February sun as UK growth falters

The online delivery firm also blamed strong comparative figures.

Just Eat has reported first quarter figures (PA)
Just Eat has reported first quarter figures (PA)

By Ravender Sembhy, Press Association City Editor

Just Eat has reported a slowdown at its UK business, with the online delivery firm blaming warm weather and the timing of Easter.

The group saw UK orders grow 7.4% to 31.9 million in the three months to March 31, compared with growth of 24% in the same period last year.

It blamed strong comparative figures, “unseasonably warm weather in February”, and Easter falling entirely in the second quarter.

The firm said it expects an improvement in UK order growth during the remainder of the year.

Across the group as a whole, orders were up 21% to 61.4 million, helped by new initiatives and strong international growth.

Outside the UK, orders grew by 40% to 29.5 million, fuelled by good growth in Canada, Italy, Switzerland and Ireland.

Interim chief executive Peter Duffy said: “Just Eat is on the right path to be the leading hybrid marketplace for online food delivery and we are confident in the delivery of our strategy.

“Many of our international markets have performed very well in the period although, as expected, we saw softer UK order growth in the quarter. We are making good progress and continue to execute at pace.”

Just Eat reiterated its full-year guidance of revenue in the range of £1 billion to £1.1 billion and earnings of £185 million to £205 million.

The food firm has come under intense pressure recently from shareholder Cat Rock, which has ripped into the company over recent board appointments and has ordered it to seek a merger with an industry peer.

The group, which owns 2% of Just Eat, has said this would be a better outcome than relying on the board to choose a new chief executive following the departure of Peter Plumb.

Alex Captain, Cat Rock managing partner, said on Friday: “These results clearly underscore the need for urgent change at Just Eat. The company only grew orders 7% in the UK despite benefiting from delivery investments and its acquisition of HungryHouse.

“These results are unacceptable given that the average customer still only orders less than once per month in the UK and population penetration is still only about 20%. Global peers are growing much faster in markets with similar levels of frequency and penetration.

“Just Eat needs a world-class CEO with online food delivery experience, and the board should be actively evaluating a merger with one of the many potential strategic partners available to the Company.”

Just Eat has instead chosen to focus on its own strategy, investing £51 million last year to help deliver a “hybrid strategy”. This included £21 million in the UK to help restaurants fulfil deliveries.

It is also attempting to keep up with Deliveroo and Uber, which have been muscling in on its territory.

Speculation that Uber is in early talks to buy Deliveroo has also recently hit Just Eat’s shares.

Shares sank over 4% to 714p in afternoon trade.

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