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Having last week revealed its plans to improve its full year earnings by up to $15 million, Booktopia (ASX: BKG) has announced a new finance package to support the development of its new customer fulfilment centre (CFC) in Sydney’s west.
The online bookshop yesterday told shareholders it secured a site for its 20,000sqm South Strathfield CFC which is expected to be operational in the second quarter of FY24.
Backers of the package include non-bank lender Moneytech Finance for working capital requirements and AFSG Capital to assist in funding the new CFC fit-out.
Moneytech’s Trade Finance Facility has an initial term of 24 months on a 10.2 per cent interest rate, while AFSG’s support is in the form of a short term unsecured debt facility which includes funding from major shareholders Tony Nash - the company’s founder, former CEO and current director - and Steven Taurig.
“The new CFC will support the efficient fulfilment of over 12 million units per annum with flexibility built into the design for further expansion whilst reducing labour costs per unit in the CFC,” Booktopia said.
Booktopia chairman Peter George, who stepped into the role on 1 December 2022, said completing the funding package was an important milestone for the e-commerce business.
“The new CFC is critical to ensuring Booktopia can deliver industry-leading efficiency in the medium and long term,” George said.
“The advanced robotics platform and future-proof design will ensure we can continue to evolve with changing technologies and deliver books in the fastest possible time at the lowest possible cost, well into the future.”
The company’s update follows the unveiling of a new earnings strategy last week, expected to deliver approximately $12-15 million of annualised improvements to earnings to be realised in FY24 and beyond.
These initiatives include adjusting the pricing on various products to reflect costs, changing how it recovers third-party delivery costs, optimising its advertising program to focus more on high-conversion channels and reducing its property/lease obligations requirements.
Shares in the company rose by 33 per cent following the announcement to hit 28 cents. Since then, investor appetite has remained solid, with BKG shares slipping by just one cent in the following days of trading.
The company’s share price is still materially lower than it was this time last year when BKG was trading at around $1.24 per share, and well off the company’s historic peak of nearly $3 - achieved in August 2021.
These changes afoot at Booktopia follow a tumultuous 2022 for the company which saw its founder and CEO step down from the top role in the wake of a poor set of third-quarter financial results.
Founder Tony Nash remained with Booktopia in a new role exclusively focused on growth at the e-comm operator, however he was eventually asked by the board to leave that role too two months later.
Nash remained a BKG director and substantial shareholder - a position from which he agitated to install new directors to the company.
That boardroom battle led to a complete rout of non-executive positions with the company’s four independent directors including the chairman tendering their resignations in September.
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