STOCK WATCH: Booktopia Directors Resign, Koala Assess Market Entry

After a solid two weeks, pureplay retailer performance on the ASX is beginning lose its momentum. In the last seven days, the ASX Listed E-Commerce Index is down 8.6%, while the ASX200 has shed 2.9%.

This is not unexpected (if anything, the recent share price boost was perhaps a surprise), but another blow to retailers all the same. Booktopia is the best performer on the E-Commerce Index, up 2% in the last week. Yesterday the company announced the resignation of its independent non-executive directors.  Back in August, Tony Nash (Founder and ex-CEO)  (via Tony Nash Enterprises Pty Ltd as trustee for the A L Nash Family Trust, which holds 5% of the shares in company) advised of his intention to call and Extraordinary General Meeting for the purposes of changing directors. Since that time the independent directors of Booktopia discussed various options with Nash regarding the board composition. “The two priorities for these discussion have been having a quality independent board and ensuring a good transition and stability for the Company. As nothing has been able to be resolved, the four independent directors have therefore decided to resign,” the announcement says. Su-Min Wong has resigned, Fiona Pak-Poy, Judy Slayter and Chris Beare will resign at the AGM on 28 November. Beare will step down as Chair as soon as a new Chair is elected. “In the interim,” the notice says, “the remaining directors will work with Tony, management and the Board to assist in a smooth transition.”

The resignations don’t seem to have impacted the share price negatively at this stage. Perhaps investors see it as a step in the right direction of reaching some kind of resolution / getting their sh*t together. Very newly divorced parents / everyone trying to get along for the sake of the children (investors?) vibes.

Source: ASX Listed E-Commerce Index based on ASX reporting for the period

Adore Beauty is the worst performer on the Index this week, down 14.7% to $1.54. No recent announcements that would account for a change in investor sentiment, so it seems to be collateral of general shift away from retail / tech in the context of inflation, cost of living, post-covid landscape, all of the things.

Cettire, Kogan, Redbubble and Temple & Webster are all down slightly as well (-12.3%, -8.9%, – 10.2% and -7.7% respectively). Like Adore, there’s no specific news that would account for this downward shift, other than the general economic environment. Given consumer confidence actually seems quite strong given current pressures, we may see investors embrace e-com closer to Christmas and peak season spend.

There’s also news that furniture startup Koala is considering listing, with reports it met with fund managers last week as part of stockbroker Order Minnett’s IPO class of 2023 introductory meetings. If (and it is a big ‘if’ at this point) the company does float, will it impact Temple & Webster’s performance on the ASX? And, on the flip side, as a comparison company, will Temple & Webster’s performance over the last few years impact Koala’s valuation? The furniture sector is still in the early stages of online penetration, compared to both overseas markets, as well as other online categories in Australia. Whether this is because there’s a boom yet to come, or because consumer hesitancy to purchase furniture online is a hurdle to growth is uncertain. COVID-19 certainly generated a push out of consumer ‘need’, and the tailwinds are still there, though more a puff than a gale.

Figures are current as at close of ASX on 20 September 2022. This is analysis only and not intended as investment advice.

The e-commerce landscape is changing. With a Power Retail Switched On membership, you get access to current e-commerce revenue and forecasting, traffic levels, average conversion rate, payment preferences and more!