MySale swings to loss as restructuring takes its toll
today Dec 5, 2019
Online retailer MySale has plunged to a A$58.2 million annual pre-tax loss after pivoting to an Asia-Pacific-focused model.
During the year, the company embarked on a significant transformation under its 'ANZ First' strategy, which saw it leave the UK market and close its US warehouse and office.
Group revenue before exceptional items fell from A$292.2 million in the previous year to A$209 million, while a pre-tax profit before exceptional items of A$2.9 million became a pre-tax loss before exceptional items of A$26.3 million.
On a reported basis, revenues plummeted 28% to A$208.6 million and the pre-tax loss widened to A$58.2 million.
“It has been a difficult year for MySale during which we faced a series of significant challenges which resulted in a disappointing financial performance for the group. We have now implemented the necessary changes to rebuild from a strengthened platform,” said CEO Carl Jackson.
Indeed, MySale is going in an entirely new direction. In addition to shifting the focus from being a global retailer to an Australia and New Zealand-first one, the business is being reinvented with a marketplace model. This will mean holding less inventory, a move that will help it achieve a more stable balance with improved capital efficiency and minimised logistical involvement.
To this end, the company has launched a marketplace platform, designed to be counter-seasonal to the Northern hemisphere. The platform “provides a compelling sales channel for our domestic and international brand partners”, particularly through its ANZ-first structure and clearance solutions, the company said.
New features to accelerate supplier on-boarding have been recently introduced, as well as a renewed effort to capture more consumer behaviour data and insights.
And the company, which is based in Sydney, is now operating on a debt-free basis, after raising A$23.3 million through a placing of shares.
But while CEO Jackson is confident that “the group is now primed to deliver value moving forwards”, it remains unclear whether its heavy reliance on the Australian and New Zealand markets is the right way forward.
Earlier this year, the group warned of “challenging trading conditions” in Australia, its largest market, due to new regulations, as well as cost base and product mix.
Moving away from an inventory-based model will certainly help, and the recent appointment of two new non-executive directors, Dow Famulak and Wally Muhieddine, is expected to bring valuable benefits, as they are experts in developing marketing strategies and distribution networks. Additionally, non-executive chairman Charles Butler will take the role permanently.
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