Big leap for Takealot – but still no profit

South African online retailer Takealot has managed to narrow its trading losses by a massive 85% – but the group is still not yet profitable.

This is also reflected in the group’s owner, listed tech and investment group Naspers’ wider results, where it reported a jump in profit for the six months ended 30 September 2023 (1H24), but operating losses have extended, and its e-commerce segment is not yet in the black.

Naspers recorded a 9% increase in revenue to $3 billion for the period – however, operating costs ate away at all of this, leaving the group with an operating loss of $426 million (extended from an operating loss of $111 million in the prior year).

The group’s results reflect figures on a “consolidated basis” from continuing operations, which reflects all majority-owned and managed businesses in its portfolio.

Operating losses rose US$315 million to US$426 million over the period, primarily due to an impairment loss recognised on Edtech investments, it said.

Thanks to its share of equity-accounted results and gains made on partial disposals of equity-accounted investments – related to its partial disposal of Tencent – the group managed to claw back to an overall profit for the period.

The group continues to struggle with its e-commerce segment, which is still posting a trading loss. Naspers said it hopes this segment will turn to profit by the second half of the financial year.

E-commerce consolidated revenue from continuing operations increased by 10% or US$272 million from US$2.7 billion in the prior period to US$2.9 billion.

“This was primarily due to revenue growth in Classifieds, Food Delivery, and Payments and Fintech,” it said.

On an economic-interest basis, e-commerce revenue grew 15% to US$5.3 billion and trading losses improved from US$820 million to US$249 million.

Takealot

Looking at a more South African context, Takealot continued to post a loss, though it has been reduced significantly from the prior period.

Takelot’s losses amounted to $2 million for the period (~R at current rates), reduced by 85% from $13 million (~R at current rates) before.

Takealot’s gross merchandise volume (GMV) was up to $711 million from $700 million before.

This was up 15% in local currency, Naspers said, but in dollar terms, down by 2%, with the online retailer taking a $91 million hit from the impact of foreign exchange rate changes in the conversion.

“Rising interest rates and inflation depressed consumer demand while load shedding created strain,” Naspers said.

“Despite this, Takealot group has managed to reduce its trading losses by a significant 85% when measured in US dollar, excluding any impacts from M&A.”

Takealot.com continues to grow its marketplace seller base, which reached approximately 10,600 sellers in September 2023

Part of the Takealot “retail” business, Mr D grew revenue by 11% and GMV by 15% in local currency, excluding M&A. Mr D’s partnership with Pick n Pay, a leading local grocery retailer, continues to scale, Naspers said.

Mamongae Mahlare, Takealot Group CEO said that, 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.

“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,” she said.

Read: Takealot stranglehold spells bad news for South Africa