African eCommerce giant, Jumia, posted a 22% gross profit in last quarter’s operations even though it still reported a loss of $49.8 million. This loss is a decrease of 41% year-over-year compared to last year’s operating loss figure of $84.7 million.
Jumia, one of the leading eCommerce companies in Africa, recently released its Q4 2022 report, indicating a positive change in its fortunes. Despite still reporting a loss of $49.8 million, the company’s gross profit in the last quarter’s operations increased by 22%, indicating a significant step towards profitability. This improvement comes as Jumia implements its turnaround plan under the leadership of the new acting CEO, Francis Dufay.
In November 2022, Sacha Poignonnec and Jeremy Hodara, Jumia’s co-CEOs, resigned, and Francis Dufay took over as the acting CEO. The report released yesterday shows that Jumia is delivering on its strategy to reduce losses and accelerate progress toward profitability. The new leadership team has taken swift action to streamline the organizational structure, resulting in a 20% headcount reduction, corresponding to over 900 position terminations.
The significant headcount reductions are expected to bring about a cost savings of over 30% in monthly staff costs starting from March 2023, compared to the October 2022 staff cost baseline. The implementation of these organizational changes resulted in $3.7 million in one-off restructuring costs booked in the fourth quarter of 2022. Additionally, Jumia has increased its focus on driving marketing efficiencies, leading to a significant reduction in the Sales & Advertising expenses, which decreased by 41% year-over-year in the fourth quarter of 2022.
Jumia’s new leadership team has also completed some business exits, such as scaling back on first-party grocery in Algeria, Ghana, Senegal, and Tunisia, discontinuing Jumia Prime, which had an immaterial contribution to GMV and Revenue, discontinuing food delivery operations in Egypt, Ghana, and Senegal. These actions are expected to help drive meaningful G&A savings in 2023.
The report shows that Jumia’s usage growth dynamics in the fourth quarter of 2022 were impacted by macro challenges in a number of countries with high inflation and supply disruption. However, the company’s management views these challenges as temporary in nature and is placing focus on executing even faster on cost efficiency projects.
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