End of lockdown could hit growth, Deliveroo admits

DELIVEROO shares had another skid today after the company admitted the end of lockdown will hit growth – but it has no idea by how much.

In its first update since a widely panned, and somewhat embarrassing stock market float two weeks ago, CEO Will Shu said sales grew 114% in the three months to March to £1.65 billion.

There were 71 million orders placed as lockdown gripped the nation. But with pubs and restaurants re-opening, it seems likely that consumers will be keen to get out rather than stay in.

The note to the City added: “The Company continues to operate in an uncertain environment given that the timing and impact of these restrictions being lifted in the coming weeks and months remain unknown. Deliveroo expects the rate of growth to decelerate as lockdowns ease, but the extent of the deceleration remains uncertain.”

That didn’t help sentiment, and the stock which floated at 390p fell another 3p to 266p.

The company has been accused of over promising, seeking too high a valuation for a business that remains loss making. Goldman Sachs and JP Morgan, which led the float, have taken heavy criticism, though the bankers fees may mitigate any sense of embarrassment.

Shu, also under fire over a dual share structure which gives him voting rights far in excess of his stake, notes the business now reaches more than 60% of the UK population, adding another six million to its reach lately.

He said: “We operate in 12 markets which are all at different stages of restrictions, so we’ve been able to keep an eye on people’s behaviours. In Hong Kong, all lockdown restrictions have been lifted and people enjoy eating, but there is still really resilient growth.

“The truth is that we don’t know how things will turn out in the UK and how much these new consumer behaviours will stick, but we are really positive.”

The company said it is “taking a prudent approach to our full year guidance”, suggesting it might miss targets.

Deliveroo does seem to be the market leader in London at least, ahead of arch rival JustEat.

Concern about workers (lack of) rights has also blighted the business somewhat, though Deliveroo insists the riders demand flexibility.