Deliveroo has cut its annual sales forecast as the cost of living crisis continues. The food delivery group has revealed a drop in demand for takeaways as customers cut back on spending.
According to the firm, growth in total sales by gross transaction value (GTV) plunged from 12% in the first quarter to 2% in the three months to the end of June. "This is a slowdown in GTV value which management believes reflects the impact of increased consumer headwinds," the company said in a trading update on Monday.
In the UK, sales growth dropped from 12% to 4% quarter-on-quarter. "As the cost-of-living crisis bites with inflation close to double digits, consumer discretionary spending on services like Deliveroo are in the firing line as households look for ways to cut back on spending," Victoria Scholar, the head of investment at Interactive Investor, told the Guardian.
"There have already been reports that Britons have been cutting back on streaming services such as Netflix and Disney+ while food delivery businesses such as Deliveroo are likely to face a similar decline in demand." Deliveroo said it now expects full-year gross transaction value (GTV) growth to be in the range of 4% to 12%, compared with its previous guidance of 15% to 25%.
But the business kept its outlook for underlying earnings margins unchanged. "The company is maintaining its adjusted [profit] margin guidance and Deliveroo’s balance sheet remains strong," it said.
"Management is confident in the company's ability to adapt financially to a rapidly changing macroeconomic environment, through gross margin improvements, more efficient marketing expenditure and tight cost control."
