Jumia defends sales figures following controversial Citron report

Citron Research’s report alleges that the company is fraudulent, claiming that its equity is “worthless”

Jumia is trying to encourage more prepayment to discourage returns or cancellations, the head of its Nigerian business says, following a report by Citron Research, which questioned some of Jumia’s sales figures, last week.

First quarterly earnings call after the initial public offering has provided a chance for Jumia executives to push back against the claims.

Jumia became the first African tech stock to list on Wall Street on April 12 with initial soaring shares which fell sharply on Friday after the publication of the report by Citron Research, run by short-seller, Andrew Left. 

Sacha Poignonnec, Jumia CEO, says the company is transparent and declined direct response to the report’s claims, saying “We don’t necessarily want to feed those types of organisations or people”.

Citron Research’s report alleges that the company is fraudulent, claiming that its equity is “worthless”. The report was particularly centred on “material discrepancies” in Jumia’s S1 filing with the United States Securities and Exchange Commission (SEC) in March and a confidential investor presentation Jumia had made six months earlier.

News of the report further triggered a decline in stock price last week in comparison to an impressive run after the IPO’s initial launch.

“We stand by what we disclosed… the way GMV (gross merchandise value) is calculated in the industry is gross of cancellations and returns,” Juliet Anammah, chief executive of Jumia Nigeria, says

According to Anammah, many customers in Nigeria, Jumia’s biggest market, still only pay by cash when they receive their orders, but Jumia is trying to move customers to its Jumia Pay solution to pay in advance when they check out online. 

It plans to make its marketing spending more efficient, charge merchants for storing their goods in its warehouses, boost sales of advertising on is site and charge sellers to create content, such as images of their products, she said. 

“We are going to monetize value-added services such as Jumia Express and add on more advertising”, she said. 

Investors seem to be satisfied with Jumia’s response as the shares have rebounded over the last day. The stock closed up 8% at the end of business on Monday (May 13) and was set to continue an upward trajectory on Tuesday.

As the company looks to regain investor appetite however, Jumia will hope other numbers in its earnings results inspires some confidence. The company touted strong year on year growth in gross merchandise volume (GMV) growth 58% to £240 million ($270 million)

* GMV is a non-standard accounting metric Jumia uses to show the “total value of orders including shipping fees, value added tax and before discount deductions, irrespective of cancellations or returns.

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