Booktopia inks $6.5m capital raise but warns of worsening trading conditions

Booktopia has raised $6.5m to consolidate its distribution facilities but the online bookseller has also confirmed softer trading conditions hit its performance.

Online bookseller Booktopia has raised $6.5m to consolidate its customer fulfilment centres and distribution facilities into a single facility, but the retailer has also confirmed softer trading conditions hit its performance, with the company lurching to a $5m loss for the full year.

The bookseller posted full-year underlying earnings of $6.2m in 2022 but challenging trading conditions first flagged in January persisted through the second half.

It is the latest retailer to confess to worsening consumer spending and retreating sales. Treasury Wine Estates, Baby Bunting, Universal Store, Maggie Beer and Michael Hill have unveiled sales or profit warnings over the past few weeks.

Booktopia, which has also struggled with boardroom brawls and executive departures, also announced on Monday that a consultancy deal with former CEO and founder Tony Nash would be terminated and that Steven Traurig, a major shareholder, would step down as a director on July 28.

Booktopia said it had received firm commitments from institutional and sophisticated investors to raise about $6.5m before costs, through a two-tranche placement of 54.16 million ordinary shares at an issue price of 12c and 27 million of attaching unquoted options, with one option issued for every two placement shares at an exercise price of 23c, expiring two years from the date of issue. The second tranche subject to shareholder approval.

Shares in Booktopia were unchanged at 16c on Monday.

The proceeds of the placement will go towards the completion of its latest customer fulfilment centre at Strathfield in Sydney, with the remainder to boost Booktopia’s working capital position. The new customer fulfilment centre is expected to be fully operational by late August.

Booktopia chairman Peter George said after two years of losses, completing the facility would reset the cost base of the business.

A $5m loan agreement with entities associated with Mr Nash and Mr Traurig has been renegotiated with a three-year extension and the loan converted to equity, subject to shareholder approval.

The trading update said that while Booktopia is starting to see the benefits of the initiatives announced to the market in January, trading remained challenging through the second half. This was compounded by increased labour costs and other disruptions associated with the preparation for, and commencement of the transition to the new customer fulfilment centre, the company said.

“Looking ahead to fiscal 2024, with the annualising benefits of the initiatives previously announced, and the realisation of the operating efficiencies and increased capacities of the (fulfilment centre), Booktopia forecasts an underlying EBITDA profit of $13.5m.