Booktopia has revealed that soft demand and a transition to a new facility has had adverse effects on sales revenue.
Booktopia has released a trading update that reveals the online bookstore has had significantly reduced sales YoY.
“Following the conclusion of the second quarter which traditionally delivers the largest proportion of the Company’s annual profit, results were down year-on-year to the end of the first half and to forecast across both revenue and gross margin,” wrote Booktopia. “The Company has now completed a re-forecast of its financial performance taking into account the results of the key festive sales period.”
Last year the company forecasted an underlying EDITDA of $13.5 million, this has now been downgraded to an anifipated range of $1 million – $3 million.
Last year’s underlying EBITDA result was $4.6 million.
According to Booktopia, on top of soft demand, the company incurred some temporary challenges with the transition into the CFC. Its next gen customer fulfilment centre opened mid-late 2023 andwas expected to deliver a range of operational efficiencies and improved margins compared to the company’s old facility at Lidcombe including a flexible robotics platform.
“The transition and its associated challenges had an adverse effect on sales revenue during the first half, where: there was a decrease in the volume of inventory Booktopia was able to hold, with many products out of stock for extended periods; and the customer promise was also compromised, with longer delivery times for customers. Costs were also impacted, most notably with integration of the new technology into its systems and processes. These included delays with its new robotic technology undertaking a key function of delivering received items to be put away on shelves and with the ability to cross dock. These issues have been, or are in the process of being, resolved. A significant portion of these costs have been adjusted in determining the underlying EBITDA,” stated Booktopia.
It wasn’t all bad news for Booktopia, the company saw revenue growth year-on-year during the Black Friday retail period and customer basket sizes increase. Despite cost-of-living pressures, it is also reporting a stabilisation in its active customer base and growth in its Booktopia Publisher Services division, providing positive foundations for the business moving forward
As a result of this reduction in earnings, the Board has “initiated a strategic review of the business to explore all options to accelerate a return to acceptable earnings.”