Australian online retailer MySale Group PLC (LON:MYSL) slumped to a loss in the first half of its financial year amid “challenging trading” conditions.
The AIM company, which owns websites in Australia, New Zealand, South-East Asia and the UK, endured a rough six months, during which it had tried to put up prices of some goods, but ended up slashing them below the original price in order to prop up demand.
It also blamed product mix and inventory issues as it swung to a A$5.0mln underlying loss in the six months ended 31 December, down from a profit of A$5.5mln a year earlier.
Revenue took a beating, too, down 17% to A$126mln – a 17% fall from the A$152mln it racked up in 2017.
The biggest issue for MySale and other online retailers was the disruption caused by sales tax changes in Australia, which forced firms to charge a 10% levy on overseas purchases worth less than A$1,000.
Of more concern is the fact that some foreign sites selling global brands into Oz have allegedly not been charging GST, essentially undercutting the local competition.
MySale, which warned on profits back in December, has been working to cut A$10mln a year from its cost base which, in combination with a pick-up in margins, should result in a “significantly improved performance” in the second half.
Small profit this year
As such, the £30mln company expects to deliver a “small underlying EBITDA profit” overall this year.
“Whilst performance during the first half of the year has been disappointing, we have taken immediate action to address the issues,” said chief executive Carl Jackson.
“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.
He added: “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.”
Shares fell 11.5% to 20.1p in early deals on Friday. The stock has lost more than 80% of its value over the past year.