Online book retailer Booktopia axes up to 40 jobs as it cuts costs
The jobs carnage across the tech sector is growing as online retailer Booktopia axes up to 40 jobs in a bid to cut costs. Shares rally.
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Booktopia has axed as many as 40 jobs in a bid to rein in costs and boost flagging earnings.
The job losses represent about 10-15 per cent of the online book retailer’s total workforce.
Booktopia said on Monday that it had implemented several initiatives to deliver $12m-$15m in earnings improvements that primarily would be booked in the 2024 fiscal year, with the cuts including charging more for postage, and slashing advertising and lease costs.
However, some of the largest savings will come from a restructure that will result in 30-40 redundancies, resulting in $4m-$5m in annualised cost savings.
“Letting some of our talented staff go as part of these cost-cutting initiatives is a disappointing but necessary step in these economic times,” Booktopia chairman Peter George said.
Booktopia shares soared 31 per cent, or 7c, on the news to close at 28c on Monday. However, they have slumped 75 per cent in the past 12 months as revenue stalled.
The job cuts come days after arts and crafts marketplace Redbubble announced it would make 50 staff – or 14 per cent of its workforce – redundant, as it limits spending in response to competition and flatlining revenue.
Many online retailers hired a large number of staff in the early months of the Covid-19 pandemic as demand skyrocketed. But with spending returning to normal as cases eased, those groups are now having to reverse those hires.
Booktopia experienced huge growth during the pandemic, with its sales rising more than 50 per cent during some quarters. Since then, sales and earnings have flatlined. It has also contended with boardroom turmoil involving the exit of its founder and former chief executive Tony Nash, who has fought the board to wrest back control of the online bookseller.
On Monday, Booktopia said that, to improve shareholder returns and in response to changing consumer sentiment, greater online competition and inflation, the company had completed a review of costs and pathways to enhanced efficiencies.
These initiatives would include adjusting the pricing on various products to reflect increasing costs and improve overall gross margins. This optimisation will realise about $2m-$3m in annual earnings improvement.
Booktopia has also changed how it recovers third-party postage and delivery costs, resulting in a $4m-$5m annualised earnings improvement, it told investors.
Advertising savings would deliver between $1m and $2m in savings. The company said it had also exited an investment in Welbeck ANZ, a publishing business.
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Originally published as Online book retailer Booktopia axes up to 40 jobs as it cuts costs
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