Takealot Reports R252-Million Loss: Navigating Competition and Economic Challenges

Naspers’ annual results reveal a R252 million loss for Takealot Group for the financial year ending March 31, 2024. Despite facing a challenging economic environment and intensified competition, Takealot.com reduced its trading losses. Meanwhile, Mr D reported its first profit, highlighting strategic efforts to enhance profitability and efficiency.

Naspers has released its annual results for the financial year ending March 31, 2024, reporting a R252 million loss ($14 million) for the Takealot Group. This report comes amidst a challenging economic landscape and increased competition from global retail giants like Temu and Shein. Despite these hurdles, the Takealot Group has shown resilience and strategic focus on reducing losses and improving operational efficiency.

Key Highlights:

Financial Performance:

• Group Revenue: The Takealot Group, which includes Takealot.com, Mr D, and Superbalist, reported a 2% decline in revenue year-on-year, totaling $792 million (R14.9 billion).
• Trading Losses: The group’s trading losses decreased by $8 million (R150 million), highlighting efforts to streamline operations and cut costs.
• Takealot.com: This segment’s gross merchandise value (GMV) saw a modest increase of 3%, and trading losses were reduced by $4 million (R75 million).
• Marketplace Expansion: The marketplace seller base surpassed 10,000 sellers in March 2024, indicating a broadening of the platform’s reach.

Challenges and Competition: Naspers acknowledged the intensified competition in the South African e-commerce market, driven by heavy investments from competitors in enhancing their e-commerce capabilities. The influx of affordable products from Chinese retailers Temu and Shein has posed significant challenges, especially for Superbalist, which has struggled with revenue growth.

Operational Strategies:

• Cost Management: The group managed to mitigate rising operating costs due to new warehouses and hires by scaling down activities, enhancing efficiencies, and imposing a hiring freeze.
• Fuel Cost Mitigation: Diesel tanks were installed at distribution centers to counteract the effects of high fuel prices.

Mr D’s Success:

• GMV Growth: Mr D’s GMV grew by an impressive 16%, achieving its first trading profit of $3 million (R56 million).
• Strategic Expansion: Mr D expanded its product categories beyond food delivery to include pet food, accessories, gifts, flowers, and general merchandise. This shift towards a convenience-delivery model, alongside a partnership with Pick n Pay, has strengthened its market position.

Future Outlook: Naspers emphasized that improving profitability and managing competition were top priorities for the Takealot Group in the 2023/24 financial year. While the group has yet to turn a profit since its inception 15 years ago, there is cautious optimism driven by reduced trading losses and the profitability of Mr D.

Historical Context: Former Takealot CEO Kim Reid had projected the company to turn its first profit by 2021, following a period of reduced losses from 2019 to 2021. However, the company has faced setbacks, recording a loss of $22 million (R407 million) in 2023, a significant increase from $7 million (R129 million) in 2022.

Conclusion: The Takealot Group’s journey through a turbulent financial year highlights both the challenges and the resilience inherent in the e-commerce landscape. As the group continues to adapt and refine its strategies, its focus on efficiency, expanded offerings, and strategic partnerships positions it for potential future growth and profitability.