MySale loss slightly wider, shares fall even as it romps ahead on sales
today Oct 9, 2018
Cocosa owner MySale released its preliminary results on Tuesday and on most measures, it’s doing well. With revenue up 9% to A$292.2 million, its gross profit rose 13% to A$85.7 million and the gross margin was up 100bps in the 12 months to June 30. Underlying Ebitda rose 36% to A$11.8 million and underlying pre-tax profit surged 50% to A$4.9 million.
But on a headline basis, the company reported a pre-tax loss of A$1.7 million. That was 9% worse than the A$1.6 million of a year earlier.
So what exactly is going right/wrong at the company? Well, it had made a tiny profits two years ago and tipped into loss-making territory this time last year. The wider loss was linked to a charge related to the purchase and reorganisation of personalised product retailer Identity Direct and A$20 million for abandoned acquisitions.
“Whilst it is disappointing to incur costs on projects which do not conclude, the group has identified key strategic and commercial benefits that can be derived from increasing the scale of the business and continues to evaluate acquisition opportunities,” MySale said.
The fact is though that the company's senior management was extremely upbeat on Tuesday as it released the results and talked a lot about positioning itself for future profitable growth.
So let's look at what happened in the past year... The company’s active customer base increased 9% to 1 million and it continued its focus on activating customers with higher lifetime value. Its strategic plan to increase its own-buy inventory also paid off, reaching 23% of online revenue.
Meanwhile its average order value increased 5% to A$91, order frequency per customer increased 4% to 3.5 times a year, and items per basket increased 4% to 3.4 items.
The company benefited from its increased spending on technology and saw higher uptake of its proprietary Ourpay buy-now-pay-later offer. Its Select subscription delivery service also launched and it focused on mobile with m-commerce now representing 60% of orders.
CEO Carl Jackson said: “Through targeted investment, customer engagement has improved with increases in average order values, basket size and order frequency. At the same time, we continue to deliver the integrated inventory solutions and new sales channels that our international brand partners require, which are becoming all the more relevant given the structural shift to online across the retail sector generally.
“We aim to build on these foundations in the current year. Our online platform has been strengthened and will deliver even greater efficiency and lower unit costs moving forward.
“While it is early in the current year, and our peak trading period lies ahead, trading to date has been in line with expectations and the board expects that underlying EBITDA for the year will be in line with market forecasts.”
The Group operates 24 websites in eight countries, including OzSale and BuyInvite in Australia; NzSale in New Zealand; SingSale in Singapore; MySale in Malaysia, Thailand, the Philippines, the UK and Hong Kong, and Cocosa in the UK, Australia and New Zealand.
And it looks like the UK operation is performing particularly strongly. It said that while revenue rose 9% in Australia/New Zealand and actually fell 1% in Southeast Asia, it surged 26% in the rest of the world, which basically means Britain.
The company said it had prioritised margin improvement over revenue growth in Southeast Asia, hence the revenue dip, and this seemed to pay off as the gross margin increased by 280 bps to 26.7% following a revised pricing policy.
In the UK, it “had another good year, as gross profit, the group's priority, increased by 65% to A$3.8 million, revenue increased by 26% to A$16.5 million and gross margins improved. This growth was underpinned by increased numbers of active customers which is a key objective for the group in newer territories.”
The company also said it has a material presence in the UK “as it is an important centre for the group's product sourcing team for both UK and European brands. Brands from these territories, along with USA, have grown their weighting within group revenues over the past few years and now account for over half of our worldwide revenue.”
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