LONDON (Alliance News) - Shares in MySale Group PLC jumped 10% early Friday after the online retailer said that although its first-half gross profit and margins were lower than last year, it expects to at least breakeven at the operating profit level in the second half of the year alongside margin growth.
MySale reported a gross profit of AUD28.4 million for the six months to end-December 2014, lower than the AUD32.0 million gross profit it made in the first half of last year, as it generated lower postage revenue and the cost of sales increased. Its net loss for the period was AUD13.6 million, smaller than the AUD18.3 million loss last year, as it benefited from an income tax gain.
The online retailer said revenue grew 8% to AUD112.4 million in the first half to the end of December, up from AUD102.9 million, buoyed by strong trading over the Christmas period and a 14% increase in active members to 862,000. Revenue increased 30% in Southeast Asia, but only 3% in Australia and New Zealand. The company said that postage discounts in Australia and New Zealand resulted in a reduction in the average customer spend.
During the period, the online retailer successfully launched new websites in the UK and Hong Kong, while it closed down its US and South Korea websites as part of its re-focus plans to cut costs and focus just on key markets - the UK, Australia, New Zealand and South-East Asia.
"During the first half we focused on the growth of the business and member acquisition. As we now have a membership base of more than 15 million we were able to take action to reduce marketing and promotional costs and capitalise on our international product mix and larger membership," said Chief Executive Carl Jackson in a statement.
"The actions taken in December have already had a positive impact on the gross profit margin as well as reducing expenses. As a result, management expect the company to generate at least breakeven EBITDA [earnings before interest, taxes, depreciation and amortisation] in the second half of the year," the company said.
MySale shares rose 10% in early trading Friday, but have since retraced early gains, currently up only 1.9% at 53.50 pence.
The company said its flash sale, low inventory, member acquisition business model remain robust and it is well capitalised, with cash of AUD59.4 million at the end of the first half.
"During the second half, management will continue to deliver against its strategy, focusing on improved marketing and promotional investment efficiency, further optimising the cost base and converting new members acquired into active customers," the company said.
MySale partnered with its new investor Sports Direct International PLC in July to launch a Sports Direct offering in Australia and New Zealand, targeting the region's lucrative sportswear market. MySale said Friday that inventory is now in its distribution centres ready for launch in the second half of 2015.
"We will continue to pursue opportunities to provide new channels of distribution in new markets," the company said.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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