Business29.11.2023

Takealot slashes trading loss

The Takealot group of online stores significantly reduced its trading losses from a year ago despite muted revenue growth, according to the latest interim financial results of parent company Naspers.

The Takealot group consists of the main Takealot.com business, online clothing retailer Superbalist, and on-demand delivery service Mr D.

The Naspers interim results for the period ended September 2023 (H1 FY24) revealed that Takealot Group’s gross merchandise value (GMV) and revenue grew by 15% and 9%, respectively, compared to the same period in 2022.

However, these increases were based on rand values, which Naspers does not specify in its reports.

GMV only increased by about 1.57% in dollars — from $700 million to $711 million. The disparity is due to the weakening of the rand against the dollar between the two reporting periods.

On 30 September 2022, the rand was trading at R18.07 to the dollar, compared to R18.92 by 30 September 2023.

According to Takealot, the currency fluctuation on its own resulted in the GMV being $91 million lower in the latest period.

Naspers attributed the relatively muted revenue growth to rising interest rates and inflation depressing consumer demand, while load-shedding also created strain.

Despite these challenges, Takealot group reduced its trading losses by 85% when measured in US dollars, declining from $13 million in H1 FY2023 to $2 million in H1 FY2024.

In rand, the trading loss went from around R235 million last year to R38 million this year when using the currency exchange rates on the last trading days for each period.

Naspers said that Takealot continued to grow its marketplace seller base, which reached approximately 10,600 sellers in September 2023.

Mr D grew revenue by 11% and GMV by 15% in local currency. Naspers said Mr D’s partnership with Pick n Pay, for which it handles some on-demand deliveries, continued to scale.

The slide below from Naspers’ results presentation summarises the Takealot group’s performance between April 2023 and September 2023 and how this compared with the same period last year.

It remains to be seen if Takealot can continue cutting trading losses in the second half of its financial year to make a profit for the first time.

The group previously reported a full-year loss of $22 million (R392 million at the time) for the 2023 financial year.

The main Takealot.com business was launched in June 2011. It was merged with Kalahari.com, owned by Naspers, in 2015.

As part of the deal, Naspers got a 46% stake in the merged company. As of early 2018, it had increased its share in Takealot.com to 96%.

Naspers also acquired Mr Delivery and Superbalist.com, the other parts of the Takealot group, in 2014.

Despite repeated statements over the past few years that Takealot was headed towards a breakeven point, it has continued to be a loss-maker.

A major potential hurdle on Takealot’s path to profitability is the launch of Amazon.com’s South African marketplace, scheduled for 2024.

The world’s biggest retailer is known for its competitive pricing and fast delivery turnarounds, which could help it bite into some of Takealot’s market share.

Amazon.com made its first one-off profit in 2001 and became profitable in 2003. Those milestones happened seven and nine years after its launch, respectively.

“While the Takealot Group is not yet profitable at a trading profit level, strong momentum towards profitability has been made through Takealot.com’s business operations which are generating more revenue than they cost to run,” said Takealot Group CEO Mamongae Mahlare.

“This is a clear indication that the business health is solid, with profitability at an operating level. The other two businesses — Mr D and Superbalist.com — are on track to do the same at the appropriate point in their development cycle.”


Now read: Someone spent R376,000 in one Takealot order on Black Friday

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