As part of its streamlining efforts, Jumia cut its headcount in Dubai by 60% and “planned an overall headcount that will result in more than 900 layoffs across 11 markets, representing a 20% reduction.” According to Jumia’s 2022 financial report, this happened in the fourth quarter of last year.
This news follows the Jumia Board’s note on the implementation of senior management changes when it appointed Francis Dufay as acting chief. CEO last November, “how it planned to choose managers and decision centres closer to consumers and sellers in Africa,” and Dufay’s first interview with Tc, where he mentioned that Jumia had started making those changes. According to the acting CEO at the time, a handful of contracts were cancelled in the company’s Dubai office, while the rest moved to various offices in Africa. He also told that Jumia is preparing to significantly reduce staff in 11 markets by the end of 2022.
It is too early to say how much the changes will affect the bottom line of the e-commerce giant, considering how it has been dragging for years. losses First, the company has posted quarterly losses since its 2019 IPO; it ended 2022 with an adjusted EBITDA loss of $207 million, up 5.3% from $196 million a year earlier. However, management has reason to be optimistic. From October 2022 to today, staff reductions and changes made after the first 100 days of the new management have allowed Jumia to save more than 30 percent on monthly staff costs. “The implementation of these organizational changes resulted in one-time restructuring costs of $3.7 million recorded in the fourth quarter of 2022,” the company added in a press release.
Adjusted EBITDA losses have also narrowed over the last two quarters after new management took over, and the company now expects to reduce losses by up to 50% and end the year with a loss of around $100 million to $120 million.
Jumia has also completed a number of business exits, which it said it would do in the third and fourth quarters of 2022. E-Taler has taken these steps to improve resource allocation and focus on core areas with an attractive ROI. Jumia Prime will be discontinued in all its markets. The company will also suspend logistics services in all markets except Nigeria, Morocco, and the Ivory Coast. Then reduce basic food items in Algeria, Ghana, Senegal, and Tunisia. And stop food delivery in Egypt, Ghana, and Senegal. The company reported that these activities accounted for less than 1% of group GMV for the nine months of 2022 and that the group’s adjusted EBITDA loss was 24%.
Jumia’s quarterly active customers fell 15%, from 3.8 million customers in Q32021 to 3.2 million customers in Q4 2022. According to Jumia, this was due to the fact that the economic environment in its countries of operation limited user spending. It also suggested that product categories were intentionally promoted through the use of “challenge unit economics.”
The company also observed a decrease in orders, total production value, and total payment value from the last quarter of 2021. Orders fell 12.5% from 11.3 million to 9.9 million; GMV: $1.4% decreased from 330.1 million to 283.1 million, and TPV decreased by 18% from 90.5 million to 73.9 million. Despite the decline in these figures, Jumia has grown steadily over the past two quarters, but its revenue has reversed, growing 7.1% from 62 million in 66.5 million in Q22. Gross margin increased by 21.9% compared to last year, while operating loss decreased by41%.
In 2021, Jumia received $512.8 million ($117.1 million in cash and bank receivables and $395.7 million in time deposits and other financial assets). By the end of 2022, its liquidity had decreased by more than 50% to $227.8 ($72.1 million in cash and bank balances and $155.7 million in time deposits and other financial assets). Shares of the African-focused but US-based e-commerce company were down 10% at around $3.78 at press time.
And for promising news, Dufay, after he replaced the founders of the company last November and spent three months as acting CEO of Jumia, was appointed as the CEO of Jumia. As such, “the management search that has been initiated is now complete,” the company said in its 2022 financial statements, citing a management update. “The appointment reflects the board’s strong confidence in Francis’ leadership and his ability to successfully lead the business to profitability.”