Booktopia has announced that its CEO is leaving, dozens of jobs will be lost and it has withdrawn its profit forecasts.
The company has arranged $1 million in emergency financing as it struggles to stay afloat.
The online bookseller said that CEO David Nenke had tendered his resignation with immediate effect on Monday morning. Chief Financial Officer Fiona Levens resigned on May 15.
Booktopia also said Monday it was withdrawing its guidance issued in February that it would earn $1 million to $3 million in 2023/2024.
In addition, at least 50 positions would be considered for redundancy at the Rhodes headquarters in a bid to save $6.1 million by 2024/2025.
Australian online bookstore Booktopia has announced at least 50 job cuts as it tries to stay afloat. This move could help the company save $6.1 million
Booktopia made a $16.7 million loss in the six months to December 31 and said university students making cost-cutting decisions contributed to the company’s loss
To help pay costs associated with these layoffs, the company has entered into a $1 million revolving debt facility with AFSG Capital at an interest rate of 18 percent.
The company issued $400,000 worth of stock to secure the debt facility and has agreed to pay $200,000 when it first borrows from it. GST is paid on top of these costs, bringing the cost to $660,000.
Booktopia is seeking consent from its existing secured lender, Moneytech, regarding the debt facility and certain financial reporting covenants.
The company said economic headwinds and the continued weak performance of the Australian book market had hit its core business of selling physical books through two websites, Booktopia.com.au and angusrobertson.com.au.
Tertiary students have also made cost-conscious decisions around their study and learning materials, impacting performance in that category, Booktopia said.
Booktopia shares once reached $2.99 and are now trading at 5.3c
Booktopia made a loss of $16.7 million for the six months to December 31, compared with a loss of $3.9 million a year ago.
Underlying earnings before interest, tax, depreciation and amortization fell 34 percent to a loss of $1.8 million and 20.6 percent fewer books and other items were sold – 3.1 million for the half-year.
As a cost-saving measure, Booktopia’s directors have agreed that their fees will be paid in the form of shares over the next six months, during which time chairman Peter George will take on the role of executive chairman.
“The continued volatility of the economic environment, in addition to changing consumer spending behavior, has continued to contribute to operating results that fell below our expectations,” Mr. George said.
Booktopia also said it is working to improve its website, including making it easier for customers to make purchases.
Around noon on Monday, Booktopia shares fell 7.0 percent to 5.3 cents, giving it a market capitalization of just $13 million. BKG shares traded as high as $2.99 in August 2021.
