Major retailer’s future in limbo as it requests extension to trading halt

A well known Aussie retailer that had previously enjoyed a boom in sales, raking in millions, is now investigating the financial viability of the businesses.

A major Aussie retailer’s future remains in limbo as it requested an extension to a trading halt, revealing it faces financial difficulties even after it made major lay offs.

Online seller Booktopia previously requested to the Australian Securities Exchange (ASX) on Monday to pause trading.

But on Friday it requested a further extension to its trading halt until 28 June.

“The company is not yet in a position where it is capable of making an announcement around the outcome of its strategic review including that of seeking additional funding,” Booktopia’s general counsel Alistair Clarkson wrote to the ASX.

The much-anticipated announcement comes just two weeks after the company laid off 50 staff and its former CEO resigned after spending less than a year in the role.

Booktopia has been a popular online store during coronavirus lockdowns. Picture: Supplied

However, the company is still seeking an option to ensure its “financial viability”, the company revealed to the ASX.

Mr Clarkson wrote the company continues to face “liquidity challenges” and was seeking to identify alternative sources of funding both to meet its redundancy costs as well as provide it with ongoing working capital.

“The company continues to seek support from suppliers, existing shareholders and from other potential shareholders. It is also exploring alternative strategic options,” he told the ASX.

He added interest had been shown by some parties who were undertaking due diligence to determine if financial “support will be forthcoming”.

“The timetable for coming out of suspension is predicated on the form any potential funding takes and the company expects it will be in a better position to advise on the viability and form of that funding by the end of next week,” he added.

The book company’s sales surged, raking in $223.9 million in turnover in the 2021 financial year. Picture: Supplied

Continued trading on the ASX would jeopardise it ability to seek support and find funding, the letter concluded.

Earlier this month, the embattled ecommerce business cut 50 roles from its Sydney head office in the northwestern suburb of Ryde.

That followed from the 40 people Booktopia made redundant in January last year.

Also in June, Booktopia hit a rock-bottom share price of 4.5c a share, a drop of 98 per cent.

On June 3, then chief executive David Nenke resigned, after just shy of a year in the role, and Booktopia co-founder and the former CEO Tony Nash had to step in.

A slew of its senior executives have also resigned in recent months, including its chief financial officer. Its chief marketing officer resigned last year.

The company’s results for the first half of the current financial year left much to be desired.

Its revenue dropped from 21 per cent to $86.3 million, prompting the review into the business which is set to be announced shortly.

“With this decline in revenue and with the organisational restructure about to be implemented, the company is no longer in a position to provide guidance and withdraws the guidance provided to the market in its announcement made on 9 February 2024,” the company said in a statement on the ASX.

The consumer crunch has hit Booktopia. Picture: Supplied

Booktopia had enjoyed a wave of sales during the Covid-19 pandemic, when people were stuck indoors with extra cash to spend.

The book company’s sales surged, raking in $223.9 million in turnover in the 2021 financial year.

The following financial year it made even more, at $240.8 million.

But with the weakening economy and consumers cutting back on discretionary spending, it’s brought into question whether the operation can continue to run.

– with Alex Turner-Cohen

Originally published as Major retailer’s future in limbo as it requests extension to trading halt