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Online book retailer Booktopia (ASX: BKG) is aiming for some relief from its current bind with the announcement that it has secured a new 20,000sqm customer fulfilment centre (CFC) expected to drive significant operational efficiencies.
The Sydney-based business, which has seen its share price plummet 79 per cent since the start of the year, confirmed last month that its founder and major shareholder Tony Nash was to step down from his role as CEO with immediate effect, having previously agreed to continue in the role until a replacement was found.
Nash tendered his resignation in May following a poor set of third-quarter financial results, which saw EBITDA drop 63 per cent from the previous year to $5.5 million, but had intended to stay on in an executive capacity until he was placed on gardening leave in July.
The new CFC is expected to be operational in time for Christmas 2023 and will be based at South Strathfield in Sydney’s west, close to its current distribution centre in Lidcombe Business Park.
“We continue to see opportunities for growth in the Australian book market, and the investment in a new customer fulfilment centre is not only critical to business performance but also to ensure Booktopia is able to meet its customer promise now and into the future,” Booktopia acting CEO Geoff Stalley said.
“The new CFC re-shapes our supply chain and unlocks a significant opportunity to increase profitability and generate cash with a purpose-built design that is efficient and scalable”.
Following years of high growth and increased demand during COVID, and with the lease on the existing facility due to expire in 2023, the constant retrofitting of the centre has proved to be a constraint on the company’s growth and efficiency.
Booktopia is currently in advanced discussions for a financial package to support a $14 million investment in new equipment across FY23 and FY24.
The capital will help underpin the company’s future distribution capacity, with the new facility supporting the fulfilment of over 12 million units per annum and will include flexibility built into the design for further expansion.
The new 'future-proof' CFC has been designed to include an advanced, scalable and flexible robotics platform, which will significantly improve put-away and picking activities and help improve working conditions for staff through reduced manual handling.
Founded in 2004 by brothers Tony and Simon Nash and their brother-in-law Steve Traurig, Booktopia sells books, eBooks, DVDs, audiobooks, magazines, maps, calendars, puzzles, stationery and cards throughout Australia and New Zealand.
The company, which was listed on the ASX in December 2020 after completing a $43.1 million capital initial public offering, also operates from a 500sqm warehouse in Artarmon and a 4,000sqm facility in Lane Cove Industrial Park.
Shares in Booktopia (ASX: BKG) have risen by 10.34 per cent to $0.32 as of 10.00am AEST following the announcement.
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