Sep 26, 2017
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MySale makes a loss but underlying profits surge

Sep 26, 2017

MySale Group reported its results for the year to June 30 on Tuesday morning and they showed a business that’s progressing. Sales rose and it was in the happy position of underlying profits rising even faster. That said, the tiny net profit of a year ago turned into a net loss this time, with the balance sheet hit by a number of one-off charges, so the company clearly still has work to do before it can turn into a moneymaking machine.

MySale's UK Cocosa business surged in its latest year

The UK-listed flash sales retailer operates in Australia, New Zealand, Southeast Asia and Britain. It grew as it added new technology and new brands, as well as implementing new payment options. Those initiatives helped push revenue up 6% to A$286.4 million, or 9% currency-neutral, while online revenue rose 10% to A$238.7 million, driven by the firm’s growing active customer base.

Mobile activity continued to grow, representing 59% of orders, while the returns rate remained at a low level of 5%.
Gross profit was up 14% to A$76 million and the gross margin rose 191bps to 28.3% with underlying pre-tax profit up 226% to A$3.3 million. Underlying profits on an Ebitda basis rose 59% to A$8.7 million. However, the company reported a net loss of A$1.5 million after a profit of A$0.2 million a year ago.

The group has been focusing on activating customers with higher lifetime-value but its average order value stayed flat at A$87 during the year. The average revenue per active customer was A$292.

In the UK, where it trades mainly under the Cocosa brand name, revenue surged over 30% to A$13.1 million, or 59% currency-neutral. The growth was underpinned by increased numbers of active customers. But the gross margin fell as it used products and pricing as promotional tools to develop the customer base.

The company’s revenue in Australia and New Zealand rose 5% to AS221.5 million as average order values increased. And in Southeast Asia, revenue rose 7% to A$33.8 million or 11% currency-neutral, driven by the group's localisation plan that tailors merchandising, pricing, payment and shipping solutions to local consumers.

During the latest year, MySale said its tech, supply and customer developments significantly strengthened its capability. It expanded its marketplace platform, created its Endless Aisle concept to leverage platform and supply-side strengths, added more long-term partnerships with major brand”, launched Ourpay (a buy now, pay later offer), and acquired Identity Direct at end of the year.

The company’s active customer base rose 11% to 0.9 million and with Identity Direct included, it rose to one million, with the integration of that business being ahead of schedule, the company said.

The company also said it has had a good start to the current year with revenue growth accelerating and underlying profitability “growing strongly”. Underlying Ebitda is expected to be at least in line with the upper end of market expectations.

CEO Carl Jackson said the firm’s partnerships with global brands had been key during the last year: ''There is a structural shift underway in how online and offline retail brands manage their inventory cycle with increased integration and efficiency key criteria. MySale's established international platform is uniquely placed to partner with these brands and deliver the integrated inventory solutions and new sales channels that they seek.”

It secured a number of new brand partners over the last 12 months, the most notable being the launch of a strategic relationship with HBC’s gilt.com. The partnership launched with Sports Direct also gave it access to over 150,000 products from the sports Direct inventory. This is now operational and the company said volumes continue to grow.

And its Ourpay launch was also an important step forward with the service proving popular with customers, we’re told. The company expects to see further take-up within its own customer base and says it also has the potential strategic option to leverage it as a standalone product. It will shortly launch a subscription-delivery model for customers which will be fully integrated into the Ourpay platform.

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