Despite the massive growth of E-Com over the last two years, E-Com companies have taken a battering on the ASX.
MyDeal shares were $0.75 at the beginning of January and closed out on Tuesday at $0.60, a loss of 20% since the start of the year. The company released its Q2 FY22 Activities Report last week. A key focus of Q2 FY22 was the execution of MyDeal’s In-Stock strategy which saw Gross Sales growth of 204% year-on-year following the launch of Third Party Brands in Q1 FY22. In-Stock, which also includes private label, now accounts for 12% of gross sales.
“Gross Sales of $83.1 million for the quarter showed strong growth of 18.5% reflecting continued strength in both customer acquisition and retention, with Active Customer numbers reaching a record high of 963,882 and more than 60% of transactions coming from returning customers,” said MyDeal CEO Sean Senvirtne.
Negative cash of $6 million for the quarter primarily reflected the deployment of IPO funds (including investment in inventory and personnel). MyDeal remains ‘well capitalised’ with $40.1 million cash at bank as at 31 December 2021. Despite Senvirtne flagging ‘strong growth ahead’, it appears the market is less than confident, with its dip in share price following the announcement.
Adore Beauty started off the month at $4.09. As we head to the end of January, it’s listed at $2.90, shedding almost 30% so far in 2022. It has yet to release its Q2 HY22 results, meaning the dip in share price is more to do with general unease rather than the company failing to meet investor expectations. Results will be announced mid-February. Will this lift its share price or will Adore continue a downward spiral?
Adore and MyDeal are far from anomalies on the E-Com Index, with Booktopia losing 56.9% over 90 days, closing at $1.10 on Tuesday. Similarly, Redbubble’s share price of $1.80 is a 54.9% dip over three months. Kogan opened at $7.01 this morning, shedding 37.4% since October. Even (former) industry favourite Temple & Webster lost 39.7% over the last three months, opening at $8.08 this morning. At $0.14, there’s little room for BikeExchange to go much lower, although it’s far from the worst performer on the E-Com Index, dropping 22.2% over 90 days. Cettire, which closed at $2.95 on Tuesday, shed 13.2% over seven days (a long way from the double-digit growth we saw last year).
Source: ASX Listed E-Com Index based on ASX reporting for the period
Every online retailer on the ASX Listed E-Com Index has recorded a dip in share price, which shows exactly how investors are feeling about the industry as a whole. The ASX Index lost 5.4% over 90 days in comparison to the E-Com Index at -38.8%.
The E-Com industry has been able to sustain the supercharged growth of the pandemic, yet this appears not to be enough. Despite recent supply chain and fulfilment challenges faced by retailers, consumers have shown that the shift to online is a permanent one. Can e-com bounce back, or is this a sign that it was previously overvalued? Or… is the long-term shift to online and the serious growth we’ve seen since 2020 a sign that e-com is severely undervalued and investors are being short-sighted?
Figures are current as at close of ASX on 25 January 2022. This is analysis only and not intended as investment advice.
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