Australian online bookseller Booktopia in Distress
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Loading... - Bryce Landry
- 08 Aug 2024
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Australian online bookseller Booktopia has plunged into a precarious situation, now under the management of voluntary administrators, casting uncertainty over the fate of customer orders. An urgent evaluation of Booktopia's assets is underway, with potential options on the table, including a sale or restructuring. The task of spearheading this critical assessment has been entrusted to three administrators from McGrathNicol Restructuring, who will oversee the fate of Booktopia Group Limited and its three subsidiaries.
Trading of the company’s shares on the ASX has been suspended since June 13 as the company sought additional funding. In 2020, Booktopia made its initial public offering (IPO), issuing shares at $2.30 and debuting on the ASX at $2.86. However, the stock has since plummeted, losing over 98% of its value and last trading at a mere $0.045.
The company's financial struggles have deepened, with a $16.7 million loss recorded for the six months ending December 31, a significant deterioration from the $3.9 million loss in the same period the previous year. Booktopia has attributed its declining fortunes to economic challenges and the persistently weak performance of the Australian book market, which has severely impacted its primary business model of selling books through its websites, Booktopia.com.au and angusrobertson.com.au. Both platforms, however, remained operational as of Wednesday.
Founded in 2004 by current executive director Tony Nash, his brother Simon Nash, and Steve Traurig, Booktopia has faced significant hurdles in recent times. The company's transition to a new $12 million robotic warehouse in Sydney's South Strathfield, which was expected to yield substantial cost savings, has instead been beset by difficulties and failed to deliver the anticipated efficiencies.
Robbie Egan, CEO of BookPeople, the Australian bookseller's association, expressed deep concern over Booktopia's collapse, labeling it as "deeply problematic" for the broader industry. "This is a significant void that needs addressing, and I sympathize with the authors, publishers, and others who will be affected by this," he stated.
In June, the company announced the elimination of 50 jobs as part of a cost-cutting strategy, accompanied by $1 million in funding from AFSG Capital. This announcement also coincided with the immediate resignation of chief executive David Nenke. Mr. Egan emphasized that Booktopia's plight was not indicative of an industry-wide issue but rather a problem specific to the company's structure and scale, describing it as a "value-destruction exercise." He also raised concerns about the potential shift of some of Booktopia’s online market share to Amazon, a prospect he found particularly troubling.
