NIGERIA – Africa focused e-commerce group Jumia has recorded a 10% drop in revenues in the second quarter despite the company recording increased business activity during the COVID-19 pandemic.
The dismal performance by the e-commerce group has dashed investor hopes that lockdowns aimed at stemming the spread of the new coronavirus would lead to a flood of online orders.
Despite of its less than satisfying results, the loss-making company which highlighted an 8% rise in orders, expressed confidence through its co-CEO that the ongoing cost cuts pointed to a path to profitability.
Jeremy Hodara, the company’s co-CEO, told Reuters that the 26% drop in Jumia’s adjusted loss before interest, tax, depreciation and amortisation, a rise in gross profits per order, and higher orders of fast-moving consumer goods, showed the company was on the right track, despite coronavirus disruptions.
“We committed that we are going to show significant progress on our path to profitability. And that’s what we did,” Hodara said.
Jumia was the first Africa-focused tech start-up to list on the New York Stock Exchange and reached a market capitalisation of over $1.5 billion just after it went public in April 2019.
Revenue for the quarter fell to 34.9 million euros ($41.1 million) despite of surges in demand in markets that went into total lockdown.
Despite of the gains achieved in regions that experienced total lockdowns, Sacha Poignonnec, one of Jumia’s founders co-CEO, said that Softer restrictions elsewhere led to “less drastic changes in consumer behaviour”.
She further revealed that the company’s performance was also drastically affected by logistical problems and closed borders which led to lost revenues.
Early this month, Bloomberg reported that MTN Group Ltd had plans to sell part or all of its $243 million interest in Jumia Technologies AG.
Bloomberg noted that the move was inline with MTN’s strategy of selling non-core assets to pay down debt and enter new markets.
Called Africa’s Amazon, Jumia operates in 14 African countries including Nigeria, Ivory Coast, and Kenya where the U.S. giant still lacks distribution infrastructure.
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