Redbubble’s shares have dived following an announcement that the company will be reducing its workforce by 14 percent amidst other cost cutting measures shared in a trading update posted today, January 18.
Redbubble revealed in a trading update posted January 18 that it would be making up to one in five of its workforce redundant as part of a company-wide cost cutting program that seeks to return the company to cashflow positivity by the end of the 2023.
“Looking ahead, we expect consumer demand to remain challenging in the near term. As a result, we have decided to reduce the cost base within the Redbubble marketplace to accelerate the Group’s return to cash flow positive,” wrote Michael Ilczynski, CEO of Redbubble Limited in the update. “These are hard decisions and I am sorry for the impact this will have on our people. The steps we are taking, however, will put our business on stronger footing and position us to capitalise on the tremendous potential of the Group as the consumer landscape improves.”
The company reported an $18 million operating loss for the 1HFY23, and while this comes as no surprise to investors, shares in the company dived as a result of the announcement. RBL saw a 11.4 percent drop on Wednesday January 18 following the announcement, going from 0.56 cents at open to a low of 0.50 cents by the end of the day. This is in stark contrast to this time last year where shares peaked for 2022 at $2.20 on January 19 when the company reported an operating profit of $10.5 million.
Redbubble made this announcement ahead of the release of its financial results for the half year ended 31 December 2022 (1HFY23) and revises its FY23 guidance. According to the announcement, the Group is focused on improving its EBITDA margin and is aiming to be sustainably cash flow positive by the end of calendar year 2023. Redbubble outlined that as well as reducing its workforces, it would be implementing further cost-reduction initiatives necessary to meet that goal. It will be additionally suspending investment in the Redbubble brand awareness, and reducing general costs to align with business priorities and scale. These initiatives are expected to reduce the Redbubble’s cost base by approximately $20 million to $25 million.
A proportion of this reduction will be realised during the second half of this financial year, with the full benefit anticipated to be realised from the beginning of FY24.
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