Promotional photo of a Just Eat delivery driver cruising the streets. / Bloomberg Promotional photo of a Just Eat delivery driver cruising the streets. / Bloomberg
Tech

Just Eat’s CEO Out Amid Stronger Competition From Rivals

Just Eat Plc’s CEO is leaving after a surge in competition from rival apps and pressure from an activist shareholder to speed up decision-making and consider the sale of assets.

Peter Plumb is stepping down with immediate effect, with Peter Duffy, chief customer officer, appointed as interim CEO. In December, shareholder Cat Rock Capital Management LP recommended Just Eat’s board consider selling its minority stake in Brazilian startup iFood, arguing it could generate up to 650 million pounds ($837 million) that could potentially return to investors.

Shares in Just Eat fell as much as 5.8 percent in early trading Monday before turning positive, up 0.8 percent as of 9:06 a.m. in London.

“I think the market’s been a little frustrated with the quality of communication that the company has had with the market and with investors around some of the strategy,” said London-based Jeremy Thomas, head of global equities at Sarasin & Partners LLP, and a shareholder in Just Eat, “particularly around the costs of delivery.”

Plumb was appointed to the top role in mid-2017 with a target of getting the company in the FTSE 100, achieved in December that year. However over 2018 the shares fell 26.2 percent, after facing increasing competition from new rivals including Deliveroo and Uber Eats, causing the company to fall out of the FTSE 100 last month.

The food delivery operation of Uber Technologies Inc. is looking to expand how users can pay for meals and generate more business via its website rather than its app — a key part of Just Eat’s business.

“The business is in good health,” said Plumb, “Now is the right time for me to step aside and make way for a new leader.”

Just Eat also posted a positive trading update Monday, with full-year 2018 orders of 221 million and revenue of 780 million pounds. The company previously saw revenue between 740 million and 770 million pounds. Guidance for 2019 is revenue of 1 billion to 1.1 billion pounds, and underlying earnings before tax in the range of 185 million to 205 million pounds.

“The departure will raise questions about why it has taken place,” said Ian Whittaker, analyst at Liberum, in a research note. “One possible explanation is that there may have been a dispute over the direction of the Latin American strategy.”

Just Eat said that it expects its Latin American operations, dominated by its stake in iFood, to report an EBITDA loss in the range of 80 million to 100 million pounds. Just Eat added that it expects to grow marketplace EBITDA margins year on year and for its Canadian business, SkipTheDishes, to report its first full year profit in 2019.

Cat Rock, a small hedge fund with around $850 million under management, has a stake of about $50 million, according to data compiled by Bloomberg. The investor has urged the company to commit to a three-year plan aligned to management’s renumeration, and to consider alternatives for what it sees as non-core assets, such as iFood.

Just Eat will provide further detail on its plans at its full-year 2018 results on March 6.

©2019 Bloomberg L.P.

This article was written by Giles Turner and Lisa Pham from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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