Just Eat considers sale of Grubhub as orders dip

20th Apr 2022 08:47

(Sharecast News) - Just Eat said on Wednesday that it was considering the partial or full sale of Grubhub as it reported a dip in first-quarter orders and cut its guidance for the full year.

Total orders edged down 1% to 264.1m, having been boosted last year by the pandemic. In North America, orders were down 5%, while Southern Europe and ANZ saw a 4% decline. Orders were flat in the UK and Ireland and 4% higher in Northern Europe.

Gross transaction value (GTV) came to €7.2bn in the first quarter of the year, up 4% compared with the same period of 2021, driven by a higher average transaction value.

Just Eat said it was "actively exploring" the introduction of a strategic partner into and/or the partial or full sale of US-based Grubhub, which it bought last year for £5.8bn.

"There can be no certainty that any such strategic actions will be agreed or what the timing of such agreements will be," it said, adding that further announcements will be made as and when appropriate.

The company also said on Wednesday that it was downgrading its growth expectations for 2022. It now expects GTV to grow by mid single-digit year-on-year, down from a previous forecast of mid-teens.

Meanwhile, adjusted EBITDA margin is seen between -0.5% and -0.7% of GTV, versus previous guidance of -0.6% to -0.8%.

Chief executive officer Jitse Groen said: "After two years of exceptional growth, we maintain the same high level of orders that were processed during the Covid-19 restrictions.

"Our priority for 2022 lies in enhancing profitability and strengthening our business. We expect profitability to gradually improve throughout the year, and to return to positive adjusted EBITDA in 2023."

At 1155 BST, the shares were up 7.5% at 2,333p.

Russ Mould, investment director at AJ Bell, said: "Shareholders in Just Eat reacted positively to a plan to potentially sell its US platform GrubHub. Just Eat shares have struggled for months as it has lost customers gained during the pandemic as consumer habits shift back to dining out rather than booking a takeaway.

"Key to success in this highly competitive market is scale, however selling GrubHub could give Just Eat Takeaway the resources necessary to dominate in Europe.

"The price tag for any divestment will be closely watched and could embarrass current management given GrubHub was purchased for more than $7bn just last June.

"However, sparing management's blushes should not be the priority and if this is the right decision for the future of the business then it seems logical for Just Eat to press ahead with a sale."