Shares in MySale (MYSL:AIM) were marked down the best part of 40% to just 2p after the bombed-out, Australia-focused online retailer reported a plunge in first half earnings and warned it is now taking a ‘cautious’ approach to its annual outlook.
Investors were further spooked as the embattled AIM minnow warned it is considering ‘a number of strategic financing options available to manage its working capital’ amid tough trading conditions.
SUPPLY CHAIN PAIN
MySale’s revenues softened 6% to A$59.7 million in the half to December 2021, while supply chain volatility in the important second quarter crimped profitability, with underlying earnings before interest, tax, depreciation and amortisation more than halving from A$2.5 million to A$1 million.
‘During H1 FY22, in line with the company’s strategy, management took the decision to invest in additional own-buy inventory,’ explained MySale, which operates retail websites in Australia, New Zealand, and South-East Asia.
‘However, the subdued demand, driven by the speed of the spread of the Omicron variant in Australia, and delays in stock deliveries prior to Christmas meant that inventory built up to a higher level than expected’, conceded the troubled company.
CONSIDERING ITS OPTIONS
MySale warned that the recent subdued trading trend has continued throughout January and February to date and said the board is ‘considering a number of strategic financing options available to manage its working capital, including reducing the A$6.1 million inventory balance of which over 65% is fully paid.’
In light of recent mellow trading, MySale is taking ‘a cautious approach to its full year outlook and will provide further detail in due course’, a comment that further unnerved investors.
Nevertheless, CEO Kalman Polak insisted MySale’s new management team has ‘continued to scale our marketplace platform, which is complemented by our own-stock channel’.
He added that 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 of high quality. Notwithstanding these challenges, we remain confident and are well positioned to capitalise on the long-term opportunity for the group.’
