MySale Group plc (LON: MYSL), the leading international online retailer, has today provided a trading update for the six months to 31 December 2018.
As announced on 10 December 2018 the group experienced challenging trading in the first half and anticipates an underlying EBITDA loss in the first half. This is due primarily to the market disruption caused by changes to Australian GST regulation, together with product mix and inventory issues. Revenue has also been impacted by the planned reduction in the group’s offline activities during FY19.
As previously outlined, actions have been taken to accelerate the group’s cost saving programme, via increased technology platform efficiencies and rationalised operations. An improved product mix and increased local sourcing have also been put in place to improve gross profit margins.
Annualised cost savings in excess of A$10 million are anticipated which, in combination with improved margins, will result in a significantly improved performance in the second half. The group anticipates delivering a small underlying EBITDA profit for the full year.
Trading summary for the six months to 31 December 2018:
· Group revenue decreased 17% to A$126 million (H1 FY18: A$152 million)
· Online revenue decreased 13% to A$120 million (H1 FY18: A$138 million)
· Gross profit decreased 35% to A$29.5 million (H1 FY18: A$45.6 million)
· Gross margin reduced to 23.4% (H1 FY18 30.2%)
· Underlying EBITDA loss of approximately A$5.0 million (H1 FY18: A$5.5 million profit)
· Active customer numbers reduced 7% to 0.9 million
· Customer AOV and order frequency, remained stable.
The group’s cash balances grew ahead of expectations in the period due to working capital management being better than anticipated. The group ended the first half of the year with net cash of A$2.7 million (H1 FY18: A$8.3 million). This was an improvement of A$8.9 million from the A$6.2 million net debt as at 30 June 2018.
The Board is confident the group’s action plans will deliver improved performance in the second half of the financial year and that the full year outcome will be in line with market expectations. A further trading update shall be provided with the release of the FY19 Interim Results in mid-March 2019.
Carl Jackson MySale Group plc Chief Executive Officer commented;
”Whilst performance during the first half of the year has been disappointing, we have taken immediate action to address the issues.
“Our previous plans to streamline and automate the business have been accelerated and these actions are already delivering results. The changes to product strategy are materially underway and will be completed in the second half.
”Whilst we have experienced a short-term dip in revenue and profitability, we anticipate the actions initiated will deliver a positive underlying EBITDA in the second half and for the full year.
“The group has a strong balance sheet and the anticipated improvements in working capital are being achieved and cash balances increased. We believe the reconfigured business will be stronger, more efficient and continue to provide a compelling consumer offer and deliver unique solutions to our brand partners.”