(Alliance News) - MySale Group PLC saw its share price tumble on Tuesday after supply chain issues took a toll on its first half, and it announced a "cautious" outlook for the rest of the financial year.
The Australian online retailer said gross profit had grown 3.3% in half year that ended December 31 to AUD24.9 million from AUD24.1 million the year before. However, supply chain volatility in the second quarter slashed underlying earnings before interest, tax, depreciation and amortisation by more than half to AUD1.0 million from AUD2.5 million the year before.
MySale's share price fell by 24% to 2.50 pence each in London on Tuesday morning. Earlier, the stock had been down by as much as 39% to 2.00p.
During the first half, the retailer had invested in additional own-buy inventory. However, this was met with "subdued demand" due to the Omicron outbreak in Australia. Combined with supply chain delays prior to Christmas, this led to a build-up of inventory. The inventory balance as of December 31 was AUD6.1 million, over double the AUD2.6 million a year before.
Revenue dropped by 6.4% to AUD59.7 million from AUD63.8 million a year before, which MySale attributed to the changing sales mix and the growth of the marketplace channel. MySale said the hit to trading has lasted into January and February so far.
Much of the company's AUD15.8 million cash reserves from December 31 2020 had been used by December's end in 2021, with just AUD3.8 million left. Accordingly, it is looking at strategic financing options for its working capital. This will include selling off its inventory balance, of which over 65% is fully paid. MySale remains debt-free, it noted.
In more positive news, gross merchandise value was boosted by 36% to AUD86.7 million from AUD63.8 million a year before, as MySale scaled its off-price marketplace platform. It expects the platform to become its largest sales channel, to be underpinned by its higher-margin own-stock channel. Margins also were up year-on-year to 42% from 38%.
In light of recent trading trends, MySale said it is taking a "cautious approach" to the full-year's outlook.
Chief Executive Officer Kalman Polak commented: "The new management team has continued to scale our marketplace platform, which is complemented by our own-stock channel. The group has worked hard to navigate recent headwinds in lower consumer demand driven by the impact of the Omicron variant and supply chain challenges. The group's increased inventory position is of a high quality. Notwithstanding these challenges, we remain confident and are well-positioned to capitalise on the long-term opportunity for the group."
By Elizabeth Winter; elizabethwinter@alliancenews.com
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