Picture: Facebook/Takealot
South Africa’s biggest online store Takealot is still experiencing slow growth towards profitability, even after selling its online apparel and footwear retailer, Superbalist.
Parent company Naspers released its consolidated interim financial statements for the six months ended 30 September 2024 on Monday.
The results showed improved performance across the company, except for Takealot.
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Naspers said Takealot group continues to face “a slow-growing macroeconomic environment”. The likes of Temu and Amazon have impacted Takealot’s growth.
It recorded 11% revenue growth, and gross merchandise value (GMV) growth of 11%, excluding Superbalist. “Takealot group continues to gain market share in general merchandise.”
The group houses Takealot.com, and Mr D.
Takealot.com grew GMV by 10% and revenue by 11%.
The results added that Takealot.com adapted to change in shopping patterns following the end of load shedding. The e-commerce business also opened a distribution centre in Durban to increase same-day and next-day deliveries.
However, the group’s adjusted earnings before interest and taxes fell to a loss of $12 million.
“Mr D grew revenue by 12%, or $4 million, reaching $58 million in local currency, excluding M&A, driven primarily by the groceries business, which compensated for the slower growth in food delivery.”
Food delivery recorded GMV growth of 2%, with groceries delivering GMV growth of 109%, resulting in overall GMV growth of 13%.
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Takealot.com and Mr D recorded profit earlier in the year for the first time.
MyBroadband previously reported that Group CEO Frederik Zietsman attributed the profits to the nature of the J-curve in e-commerce.
The principle behind the J-curve is that as a company recovers from its fixed-cost expenditures, it can start to grow rapidly.
“You need to incur fixed costs ahead of your revenue curve if you are in e-commerce. You expand your fixed cost base for the next 12–18 months, and then you grow into that base,” said Zietsman.
“If you look at Takealot.com, we expanded our fixed cost base post-Covid, then we grew into that base last year, and we made a profit.”
The group sold Superbalist to a South African consortium of retail and private equity investors, led by Blank Canvas Capital on 1 September 2024.
The group said the acquisition will support Superbalist’s ongoing growth, while the group gives its undivided efforts to expanding Takealot and Mr D.
Takealot sold Superbalist due to concerns about competition from low-cost Chinese retailers, Temu and Shein.
Superbalist was acquired by the group in 2014 from three local entrepreneurs, Luke Jedeikin, Claude Hanan and Daniel Solomon, who founded the online fashion retailer in 2010.
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