Online book retailer Booktopia Group (ASX: BKG), faced with falling sales and rising costs, is slashing at least 50 jobs to reset the business with the company also announcing the immediate resignation of CEO David Nenke after just https://www.businessnewsaustralia.com/12 months into the role.
The planned redundancies follow a strategic review of the business announced in February after the company reported a 34 per cent deterioration in its underlying EBITDA loss to $https://www.businessnewsaustralia.com/1.8 million in the December half year, led by a 2https://www.businessnewsaustralia.com/1.https://www.businessnewsaustralia.com/1 per cent fall in revenue to $86.3 million.
After initially forecasting underlying EBITDA of $https://www.businessnewsaustralia.com/13.5 million for FY24, the company in February forecast this to slump to between $https://www.businessnewsaustralia.com/1 million and $3 million.
Booktopia today has now withdrawn this target saying it is in no position to offer a guidance for the full year.
At least 50 roles are being considered for redundancy across various departments at Booktopia’s corporate headquarters at Rhodes in Sydney’s inner west.
“This organisational restructure would result in $6.https://www.businessnewsaustralia.com/1 million annualised cost savings, which would be realised in FY25 and assist with the company successfully completing a restructure,” says Booktopia in a statement to the ASX.
Topping the employee culling list is Nenke who this morning tendered his resignation, ceasing to be Booktopia’s CEO with immediate effect. Nenke had only been in the role since May last year.
The company says Nenke will serve out his six-month notice period and provide assistance to the company when requested while a search for his replacement will be taken “in due course”.
In the meantime, Booktopia chairman Peter George will assume the role of executive chairman, taking on operational responsibilities over the next six months.
Existing director, and former CEO, Tony Nash will assume the role of executive director and take on the position of sales director for the next six months.
Booktopia’s directors also will not be spared the pain after they agreed to assist cashflow by having their fees paid to them through the issue of “nil priced options” which are exercisable for conversion into Booktopia shares. This started on https://www.businessnewsaustralia.com/1 June and is expected to remain in place for the next six months.
“The sustained volatility of the economic climate, in addition to changing consumer spending behaviours, have continued to contribute to business results that have been below our expectations,” says George.
“The board remains committed to building a profitable and sustainable business in the short and long-term and, as such, we have regrettably had to make the very difficult decision to make a large reduction in headcount and will commence the necessary consultation with our staff.
“This will assist in resetting the company’s cost base to become more commercially viable and improve its prospects as it moves forward.”
George acknowledges that the redundancies will lead to the loss of “many talented staff”. He also expressed “a sincere thank you to those affected for all of the hard work and commitment they have put into the company”.
George notes a “particularly challenging” transitional period for the company had occurred under Nenke’s leadership which he says was delivered with “dedication and tenacity” through this period.
Booktopia says it has several key strategic focuses being implemented to improve conversion rates and support increased revenue.
“This includes focusing on core elements of the website experience, which will make it easier for customers to make purchases, with emphasis on development of a guest checkout feature as well as further optimisations to improve website speed on mobile and desktop, improving the book buying experience,” says the company.
Booktopia also has secured $https://www.businessnewsaustralia.com/1 million through a revolving debt facility with AFSG Capital to help with redundancy payments.
The funding will come at a cost of at least $600,000 to the company which will be payable via the issue of shares.
This comprises an arrangement fee of $400,000 plus GST through the issue of 7.33 million shares to Tony Nash Enterprises Pty Ltd as trustee for the AL Nash Family Trust. The share issue, which is subject to shareholder approval, is in consideration of collateral which Nash has provided to AFSG to support the facility.
An establishment fee of $200,000 plus GST will also be paid through the issue of 3.66 million shares to LA&MDP Pty Ltd as trustee for the Paton Family Trust, as it is a related entity of AFSG nominated to receive this fee. This share issue is not subject to shareholder approval.
The restructure plan led to investors slashing more than https://www.businessnewsaustralia.com/13 per cent off Booktopia’s share price today, taking them to a low of 4.9c.