Booktopia revenue down 18%, earnings down 23.7% in ‘challenging’ year

Monday, 28 August 2023 Books+Publishing

Online retailer Booktopia has reported its revenue was down 18% in the 12 months to 30 June (FY23), while the company’s earnings fell 23.7% over the same period.

In its audited results for the 12 months to 30 June, Booktopia reported revenue of $197.6 million—down from $240.78 million last year—and an EBITDA (earnings before interest, taxes, depreciation and amortisation) loss of $3.02 million, compared to last year’s loss of $2.4 million.

Underlying EBITDA—which Booktopia directors consider to be ‘one of the key financial measures of the group’ but notes is not a financial measure prescribed by the Australian Accounting Standards Board—presents the company’s EBITDA adjusted for specific items, including costs related to its fine from the ACCC, the sale of its 25% stake in Welbeck Publishing Group Australia and New Zealand and restructuring costs, among other non-recurring items. The company reports an underlying EBITDA loss of $4.6 million for FY23 after posting underlying EBITDA of $6.2 million last year, a fall of 173%.

Booktopia shipped 6.83 million units (down 19.6%) in FY23, with its average order value growing 4.9% to $79.29 and average customer spend down 0.6% to $134.13. The company said that despite revenue being down year-on-year, the results remain ‘significantly up’ on its pre-Covid performance; its FY23 revenue was 19.2% higher than the $165.7 million revenue reported in FY20, while its FY23 average customer spend was 20.3% higher than the $111.43 reported in FY20.

Booktopia said its results ‘reflect a challenging year with impacts from the company’s transition to its new Customer Fulfilment Centre (CFC) in addition to the difficult economic climate, impacting revenue and earnings’.

Looking ahead, the company said its new CFC—which is now operational—will ‘ultimately reduce operational costs, improve efficiencies and support future growth’. ‘This forms an important pillar of the company’s business strategy to optimise performance as it prepares for a busy Christmas trading period,’ Booktopia said. ‘As advised earlier this year, the business has adopted a series of other initiatives to improve earnings by at least $12 million from FY24. This includes strategic inventory and pricing initiatives, optimisation of freight recovery costs and rationalisation of lease obligations.’

In its Independent Auditor’s Report, Deloitte Touche Tohmatsu highlighted ‘material uncertainty relating to [Booktopia’s] assessment of continuing as a going concern’. It cited material uncertainty as a going concern may arise if Booktopia is unable to achieve its operating cash flow forecasts, and/or the group breaches its debt covenants, resulting in Australian non-bank lender Moneytech calling its trade finance facility; and/or Moneytech withdraws its trade finance facility.

Booktopia CEO David Nenke, who was appointed to the position in April, said: ‘Over the next financial year, we will focus our attention on excelling in key areas that contribute to a best-in-class book buying experience which enables Booktopia to stand out in the market.’ ‘Following measures taken earlier this year, we are already seeing a positive impact and with the benefit of these initiatives in place over a longer period, we have every confidence we can have a much stronger and profitable trading period,’ Nenke said.

Of the company’s recent successful capital raise of $10.9 million, which was proposed in July and approved by shareholders earlier this month, Nenke said it would help to ‘increase available inventory for the important Christmas period as well as contribute to the successful transition to our new CFC’.

‘This is a key milestone for the business and will set us up to achieve operational efficiencies, which will ultimately help to transform the shopping experience we offer to our customers,’ Nenke said. ‘We are looking forward to launching a series of additional strategic initiatives in the coming months, which will expand the unique selection we offer to readers across ANZ, improve personalisation and user experience. The intent is to deliver higher levels of customer engagement, satisfaction and increase levels of website traffic, connecting the Booktopia brand to a broader audience than it has done before.’

In a trading update accompanying the announcement of its capital raise last month, Booktopia forecast an underlying EBITDA loss of around $5m for FY23, and an underlying EBITDA profit of $13.5 million for FY24.

Category: Local news