Investing in Europe #2
Just Eat Takeaway, Carrefour, Deutsche Post DHL, Associated British Food, Boohoo
Hello. Welcome to Investing in Europe, a weekly newsletter on what’s happening in European companies and markets, filtered for what matters.
I have been investing in Europe for over a decade and here I share some of my thoughts. You can find me on Twitter
This newsletter is for informational purposes only does not represent investment advice. Always do your own research before investing.
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What happened in European markets:
Just Eat Takeaway strikes back.
The online food delivery group reported a strong Q4 trading update, with orders up +57% and GMV +68%.
The stock crashed. Why? They are investing aggressively to keep their leadership position in key markets, especially in the UK, where logistic operators like Uber Eats and Deliveroo have taken market share over the past years. Investments include an acceleration of the roll-out of their own logistic network, higher marketing efforts, lower fees and more restaurants. While revenues growth accelerated, profitability will suffer: the company is guiding for an approx 10% adj EBITDA% in 2020. Expectations were for something around 14%.
Historically, Just Eat Takeaway has favoured the marketplace model, where restaurants list on the platform and deliver their own orders. No logistic network = higher margins. Deliveroo, Uber Eats started later and took another route, as they built their own fleet. Responding to this changing competitive landscape, Just Eat Takeaway has increased the share of delivery orders over time.
Delivery orders accounted for 30% of 4Q20 total orders, compared to 18% last year.
Quite a big ramp-up:
It will be interesting to see the impact on their market share, and how the competition will react. So far, at least from credit card data in the UK, it seems they regained a couple of % points, as they went from 53% at the end of October to 55% at the end of December 2020.
Carrefour, the French supermarket and one of the biggest grocery company in Europe, received a €16.2bn offer from the Canadian convenience store group Couche-Tard. Grocery is a tough business and the French market is particularly competitive. Carrefour has been losing market share for a while. What was the rationale of the deal? As the French government immediately stopped it, we will probably never know. Unless they find a compromise. Link
Primark’s owner Associated British Food and Boohoo, reported a trading update.
Spot the difference:
Primark sales were 30% lower than last year for the 16 weeks ended 2nd January. Primark has no online store
Boohoo sales increased by 40% for the four months ended December 2020. Boohoo has no physical stores
On a side note, it seems Boohoo’s sales were not impacted by their supply chain scandal.
Other online retailers reported good numbers as well, including The Hut Group.
Deutsche Post DHL - freight companies are having a good time. Thank you ecommerce and lower airfreight capacity. The German post and freight company had a record peak final quarter of the year, with operating profits up +56%. They also raised their midterm guidance to 2022. Link
Norwegian Air will no longer fly long-haul. The business struggled even before Covid-19. Too much debt. But it had become big enough to receive an offer from IAG. I guess they should have accepted it. Link
IPOs: a few companies are coming to the market in Europe, including the iconic Dr Martens (paywall) and, back to food delivery (in an interesting time considering Just Eat Takeaway strategy), Deliveroo.
Have a good week!