Mysale Group plc (LON:MYSL), a leading international online retailer, has provided a trading update for the six-month period to 31 December 2021.
Gross Merchandise Value, increased 36% to A$86.7m (A$63.8 H1 FY21), reflecting progress in scaling the Group’s off-price marketplace platform, which is expected to become the Group’s largest sales channel, underpinned by the higher margin own-stock channel. As a result of the changing sales mix and growth of the marketplace channel total revenues declined by 6% to $59.7m (A$63.8m H1 FY21).
Gross profit was A$24.9m (A$24.1m H1 FY21), with gross margins improving to 41.8%, an increase of 370 basis points (38.1% H1 FY21). However, supply chain volatility in Q2 impacted on broader profitability, with Underlying EBITDA* of A$1.0m ($2.5m H1 FY21).
Inventory balances
During H1 FY22, in line with Mysale Group’s strategy, management took the decision to invest in additional own-buy inventory. 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. As such, the inventory balance at 31 December 2021 was A$6.1m (A$2.6m H1 FY21), and the Group’s cash balance was A$3.8m (A$15.8m H1 FY21). The Group remains debt free.
The recent trend in trading continued throughout January and February to date. While the Board continues to monitor the Company’s position, it is considering a number of strategic financing options available to manage its working capital, including reducing the A$6.1m inventory balance of which over 65% is fully paid.
Outlook
In light of recent trends in trading, the Board is taking a cautious approach to its full year outlook and will provide further detail in due course.
Change of Broker
The Group announces that Singer Capital Markets has become Sole Broker and remains as Nominated Adviser to the Group.
Kalman Polak, Mysale Group CEO, commented:
“The new management team has continued to scale our marketplace platform, which is complemented by our own-stock channel. 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.”
*Underlying EBITDA is calculated as reported EBITDA before impairment losses/reversals related to goodwill and receivables, share-based payments, reorganisation costs, one-off cost and unrealised foreign exchange loss/gain.
