Deliveroo PLC (LSE:ROO)'s founder and chief executive Will Shu confirmed at an investor event today that Deliveroo will expand its offering to non-food retail.
The delivery company held what its vice president of finance, strategy and investor relations, David Hancock, said was its first Capital Markets Day (CMD) event at its headquarters in London today.
At the investor event, management personnel expanded on how Deliveroo plans to achieve growth in the "mid-teens" in the medium term, and an adjusted earnings margin (EBITDA) of more than 4% by 2026.
The company’s big news of the day was that it is expanding its technology platform to widen its offering to consumers by delivering more than just groceries and fast food.
Founder Shu said: “We’ve reinvented convenience (for shoppers).”
“People want more than just food,” he said, adding: “Today we announced our expansion to non-food retail.”
He said Deliveroo’s new service offering will expand food deliveries and groceries to include deliveries from local shops such as florists, pharmacies and DIY stores.
Deliveroo has added new categories to its platform, including electronics and beauty, as well as adding another new vertical, an occasions tab where users can choose gifts for certain events.
Shu said the company was able to do this because of the automated and scalable nature of the technology platform, and that its “relentless” drive has meant it continues to adapt and improve.
He said: “We are consumer-obsessed, above all Deliveroo is a consumer-first business.”
“Innovation is nothing without the ability of getting things done,” Shu added. “We are operators... This is a highly complex business driven by technology.
“We’ve transformed the way people work... and now we’re going to transform the way people shop.”
Analysts were divided about Deliveroo’s revelations at the CMD event today, pointing out that Lloyds Pharmacy, Holland & Barrett, Boots and WHSmith are already existing partners of the company.
Analysts at investment banking and capital markets firm Jefferies said “current trading appears to be tracking to expectations”, rating Deliveroo’s shares as a ‘buy’ on a price target of 145.30p.
Deliveroo made two statements on its guidance today, repeating its full-year forecasts and reducing its medium-term targets for growth.
It updated its medium-term target for gross transaction value (GTV) growth to the mid-teens, which analysts said replaced a higher earlier guidance of 20-25%.
Its earnings before interest, taxes, depreciation and amortisation (EBITDA) margin guidance of 4% or more of GTV by 2026 remained unchanged and compares favourably with market consensus, according to analysts.
“The guidance for medium-term GTV growth has finally been updated to reflect this higher cost of capital environment; despite the lower headline numbers, it still represents material upwards pressure to current consensus growth expectations,” Jefferies’ analysts said.
Analysts at independent investment group Shore Capital said Deliveroo's latest guidance was a “step-up” versus near-term growth expectations but represents a step-down in the medium term.
Within the context of “competition heating up from key grocery and aggregator peers”, Deliveroo’s latest guidance “still leaves leg work” for the company, analysts said.
ShoreCap has Deliveroo as a ‘sell’ on a price of 145p per share.
Shares climbed 1.79% to 147.90p in afternoon trade.