Breaking: Deliveroo's game-changing profit leads to major grocery expansion plans!

Roula Khalaf, the distinguished Editor of the FT, unveils her top picks in this exclusive weekly newsletter. This week’s spotlight falls on Deliveroo, the takeaway giant that recently made headlines by announcing its first-ever annual profit. As the company delves deeper into grocery and retail orders, a cautionary note on weakening customer sentiment caused a slight dip in its shares.

Let’s break down Deliveroo’s latest developments:

Deliveroo surprised the market with a net profit of £2.9mn for the full year, a significant turnaround from a loss of £31.8mn in the previous year. This positive shift can be attributed to increased customer spending on the platform, coupled with its expansion into groceries and partnerships with retail giants like Screwfix and The Perfume Shop.
CEO Will Shu acknowledged on Thursday that the consumer landscape wasn’t as robust as they hoped, prompting a delay in their earnings target. Initially aiming for a 4% adjusted EBITDA margin by 2026, Deliveroo now sets its sights on achieving this goal in the “medium term.”
Embracing the societal shift towards frequent deliveries rather than traditional weekly shopping trips, Deliveroo plans to intensify its presence in the grocery and retail sectors. Shu highlighted the importance of adapting to this evolving consumer behavior to drive future growth.
The introduction of a grocery service in 2018 has been a pivotal move for Deliveroo, with grocery orders accounting for 16% of the company’s gross transaction value in the latter half of last year, up from 13% in 2023.

While some investors were taken aback by Deliveroo’s altered guidance, there are still bright spots like the robust growth in its grocery segment. Shu dispelled rumors about his potential departure, reaffirming his unwavering commitment to the company’s long-term vision.

As Deliveroo navigates the competitive landscape, it remains steadfast in its global footprint. Despite its recent exit from Hong Kong, the company has no intentions of withdrawing from other markets.

In a dynamic industry marked by acquisitions and expansions, Deliveroo faces its challenges head-on, poised for continued growth and success. As the company charts its course amidst shifting consumer trends, one thing remains clear – Deliveroo is here to stay.