Booktopia announces cost cutting initiatives

Booktopia has announced its plans to deliver up to $15 million earnings improvements with a series of cost cutting initiatives. According to the ASX media release, the Business initiatives approved by the Board include 30 to 40 redundancies that are claimed to reduce costs by $4-5 million.

The initiatives were developed to ‘improve shareholder returns and in response to changing consumer sentiment, greater competition online and inflation.’ Included alongside the organisational restructure is an initiative to optimise margins with some product cost increases, and a a change in how the company recovers third-party delivery costs, resulting in a $4-5 million annualised earnings improvement. The Company has also optimised its advertising program to focus more on high-conversion channels. This is expected to deliver $1-2 million per year in cost savings. As previously announced, the Company has exited its investment in Welbeck ANZ, resulting in a cash payment of $1.5 million. Accordingly, there are no further costs or obligations associated with the investment. Booktopia is also reducing its property/lease obligations requirements, resulting in $2-3m of annualised cost savings. This rationalisation includes departure from the current Lidcombe building and transition to the Company’s Next Gen Customer Fulfilment Centre (CFC) at South Strathfield,

“Booktopia is focused on building a profitable, sustainable business in the interests of all stakeholders and is committed to delivering the Next Gen CFC in 2023 which will position the Company for the challenging online retail conditions in the near term,” said Booktopia Chairman Peter George. “Letting some of our talented staff go as part of these cost cutting initiatives is a disappointing but necessary step in these economic times.”

This announcement follows a slew of companies revealing their extreme cost cutting measures to reach targets include laying off staff. This past week has seen Redbubble make the announcement that up to 20 percent of its current workforce is set to be made redundant over the next few months in order for the company to remain profitable.
Most recently, Google sent an automated email to 12,000 staff alerting them they had been made redundant across the United States on Friday. Around 6 percent of the Google workforce saw their accounts locked and office keys deactivated in what has been described as a deeply impersonal mass layoff with some receiving no warning. Google’s Australian team is yet to hear anything regarding the job security of its 2000 local employees, yet CEO Sundar Pichai hinted at a global follow up stating that while the American layoffs were effective immediately, “In other countries, this process will take longer due to local laws and practices,” in the email he sent to US employees on Friday.

This morning’s announcement has seen Booktopia’s shares jump up from $0.210 – $0.275 today, up nearly 27 percent over the past five days.

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