Naspers, a global internet group and one of the largest technology investors in the world, has disclosed its financial outcomes for the fiscal year concluding on March 31, 2024. The company reported a trading loss of $14 million (R252 million) for its Takealot Group, which includes prominent South African e-commerce platforms.
Despite the reported loss, there was a silver lining as Mr D, the food delivery and logistics branch of the group, achieved profitability for the first time. This milestone comes amidst a challenging economic landscape marked by heightened competition and the impact of international retail importers like Temu and Shein, which have been gaining traction in the cost-sensitive South African market.
The Takealot Group, which encompasses Takealot.com, Mr D, and the fashion e-tailer Superbalist, experienced a slight 2% dip in revenue, bringing it to $792 million (R14.9 billion). However, the group managed to narrow its trading losses by $8 million (R150 million) compared to the previous year.
Naspers highlighted the intense competitive pressures faced throughout the year, with rivals ramping up their investments in e-commerce capabilities. The company also acknowledged the threat posed by global competitors who have successfully penetrated the South African market, offering budget-friendly products and potentially heightening the competitive environment.
Takealot.com itself saw a modest 3% growth in its gross merchandise value (GMV), and it successfully reduced its trading losses by $4 million (R75 million). The platform also celebrated a milestone, with its marketplace seller base surpassing 10,000 sellers as of March 2024.
In response to the challenges faced, Naspers stated that the Takealot Group’s primary objectives for the 2023/24 financial year were to enhance profitability and effectively manage competition. The group has taken measures to curb operating costs, which had risen due to the establishment of new warehouses and recruitment activities in the previous year. These measures included scaling back operations, driving efficiencies, instituting a hiring freeze, and installing diesel tanks at distribution centers to counteract soaring fuel prices.
Mr D’s performance was a standout, with its GMV increasing by 16% and reporting a trading profit of $3 million (R56 million). Naspers attributed Mr D’s success to its exceptional service, diverse restaurant offerings, and its evolution into a convenience-delivery model, which now includes a broader range of products such as pet food, gifts, and general merchandise.
Superbalist, on the other hand, faced revenue growth challenges due to the influx of international competitors offering affordable clothing options, which has put pressure on the local e-commerce fashion market.
Despite these hurdles, the Takealot Group has yet to achieve profitability since its inception 15 years ago. Former CEO Kim Reid had projected that the company would reach profitability by 2021 after reducing its losses significantly between 2019 and 2021. However, the company’s financial health has not improved as anticipated, with a loss of $22 million (R407 million) reported in 2023, an increase from the $7 million (R129 million) loss in 2022.
