MySale launches strategic review, begins sale process
today Jun 24, 2019
Beleaguered MySale Group bowed to the inevitable on Monday and announced a strategic review of its operations that could result in the company being sold. The Australia-based flash sales specialist, only recently sold its UK-focused Cocosa operation to rival Brandalley for just £1.5 million.
The London-listed company said its board “has decided to commence a review of the group's options with a view to maximising value for its stakeholders.”
Those stakeholders no longer include Mike Ashley. Late last month it emerged that Sports Direct had completely divested its holding in the company. Ashley-led Sports Direct had once been its fourth largest shareholder, but with the share price falling, the UK retail giant would have made a major loss on the investment.
The strategic review “will consider all types of corporate activity, including options to raise additional capital to support the ongoing restructuring and rationalisation, reduce the group's debt, the sale of certain parts of the group or the whole, and de-listing of the company's shares to trading on AIM.”
It added that the review, which will include “a formal sale process”, builds on cost-saving and rationalisation initiatives that have already started. The company may need "additional funding" in the short term but expects a turnaround in fiscal 2020.
The review comes as the company has continued to experience challenging trading conditions in Australia, its largest market, “primarily due to the market disruption caused by changes to GST regulation introduced in July 2018, [but] exacerbated by the group's product mix, international cost base and inventory location.”
The ongoing effects of all this have had “a negative impact on the group's financial performance with declines in revenue, gross profit and gross margin.”
The cost-saving initiatives that have already started reflect the firm’s new “ANZ first” strategy. As mentioned, it sold its UK operation and is exiting the US too, shutting down its office there. It’s streamlining its supply chain to ANZ and South East Asia with its international suppliers now bulk-shipping product to the Australian distribution centre where it’s then shipped direct to customers, “thereby delivering freight savings and operational leverage.”
And it said that its investments over the last two years in its proprietary marketplace platform “are being used to successfully create revenue opportunities and operational efficiencies.” Revenue opportunities include functionality such as the members-only Select programme that offers extra benefits to customers, while significant automation of buying and merchandising have allowed it to cut costs and boost efficiency.
The group is also planning to launch MySale Marketing Services in Q1 2020. This is intended to generate advertising and subscription revenues and leverage data insights from its tech platform and “monetise the ANZ and SEA websites by delivering additional commercial revenues.”
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