Investors have taken a bite from the share price of Just Eat Takeaway after the group’s third-quarter performance fell short of expectations due to a larger-than-expected drop in orders in North America.
The shares of the Amsterdam-based food delivery company fell by 90p or 8.7 percent to 944p. It said it had received 211.1 million orders during the three months ending in September. This was less than analysts expected, who predicted 214.2 million.
The total gross transactional value (GTV), which is the value of all goods sold, including North America fell by 3 percent to €6,34 billion.
All markets saw a decline in orders, including northern Europe where two million fewer orders were recorded than expected. Meanwhile, orders in the UK & Ireland fell by 1 percent in the third quarter, to 60,1 million. Both markets, which account for 60 percent of the total group orders, saw GTV increase by 4 and 6 respectively.
The management is confident that the GTV, excluding North America will grow between 2 and 6 percent this year, and will produce adjusted underlying profit of €450 millions.
In North America, however, the company’s fortunes have deteriorated as it tries to find buyers for its grubhub businesses. The region saw a drop of 11 percent in orders to 66.8 millions, and a 12 percent decline in gross transaction value to €2.1 billion. In North America, orders are down by 9 per cent in the last year.
Giles Thorne is an analyst with Jefferies. He said that the trading update “paints the picture of difficult trading”, whereas Deutsche Bank stated that the third quarter was”typically the weakest quarter of the year because of seasonality.”
Jitse Groen said that the company had “made good progress in all of our strategic pillars which, we believe, will drive growth”.
He added that “cost and operational efficiency have allowed us to maintain our outlook while increasing investments.” The group, he continued, is “well on course to deliver our guidance” for the entire year.
Just Eat will be formed by the merger of Takeaway.com and Just Eat in February 2020. Just Eat launched in Kolding in Denmark in 2001. It entered the British market in 2006. In 2014, it was listed on the London Stock Exchange. Takeaway.com, founded by Groen in 2000, is a food delivery service.
The group’s headquarters is in Amsterdam, and it has operations in Germany, Canada and Australia as well as France, Spain, and Israel.
After a year, the company decided to sell Grubhub after its value had fallen below what it paid. Cat Rock Capital Management is one of Just Eat’s largest shareholders. It has stated that the sale will address the “deep and harmful” undervaluation of the company.
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