Jumia, the Africa-focused e-commerce giant, has announced significant headcount reductions and business exits as part of its streamlining efforts.
The company has reduced headcount among managerial roles by 60% in Dubai and overall headcount reductions that resulted in more than 900 position terminations across its 11 markets, affecting 20% of its staff, News About Nigeria reports.
The changes are part of a wider shake-up of Jumia’s senior management, which began when Francis Dufay was appointed as acting CEO in November 2022. The new administration has allowed Jumia to save over 30% in monthly staff costs.
In the last two quarters since new management took over, Jumia’s adjusted EBITDA loss has decreased. The company now expects to reduce losses by as much as 50% and end this year with about $100-120 million in losses.
Jumia has also finalized some business exits it announced it would make in Q3 and Q4 2022. The e-tailer will discontinue Jumia Prime across all its markets and suspend its logistics-as-a-service in all markets except Nigeria, Morocco and Ivory Coast. It will scale back first-party groceries in Algeria, Ghana, Senegal and Tunisia, and discontinue food delivery operations in Egypt, Ghana and Senegal.
Despite the significant headcount reductions and business exits, Jumia’s revenue has remained on course, witnessing a 7.1% year-on-year increase from $62 million in Q4 2021 to $66.5 million in Q4 2022. Gross profit also increased 21.9% year-on-year as operating loss saw a 41% drop.
However, quarterly active customers on Jumia dipped 15% from 3.8 million in Q4 2021 to 3.2 million customers in Q4 2022. Jumia said this happened because the economic environment in the countries it operates in limited how much users could spend. It also pointed to a deliberate reduction in how it promoted product categories with “challenging unit economics.”
In 2021, Jumia finished with $512.8 million, but by the end of 2022, its liquidity had reduced by more than 50% to $227.8 million. Shares of the Africa-focused and U.S.-headquartered e-commerce company fell about 10% to about $3.78 at the time of publication.
Despite the drop in metrics that Jumia had steadily grown over the past couple of quarters, Dufay, after replacing the company’s co-founders last November and spending three months as acting CEO of Jumia, has been appointed Jumia CEO.
The appointment reflects the strong confidence of the board in the leadership of Francis and his ability to successfully scale the business to profitability.