Australia’s largest online bookstore is set to undertake a strategic reset amid difficult retail trading conditions with Booktopia Group (ASX: BKG) to layoff 50 staff and shake up its leadership team with current CEO David Nenke resigning, effective immediately.
The strategic overhaul, headlined by the redundancies from Booktopia’s corporate headquarters in Rhodes, Sydney, aims to deliver annualised cost savings of $6.1 million by FY25.
The restructuring follows a comprehensive review of the company’s operations and costs, initiated earlier this year. The move is designed to bolster Booktopia’s financial stability and drive a return to improved earnings. The company’s board has outlined several key changes, including a temporary leadership shift and the return of its founder, Tony Nash, to an executive role.
In the interim of Nenke’s departure as CEO, Booktopia Chairman Peter George will assume the role of Executive Chairman, overseeing full operational responsibilities for the next six months. Additionally, Tony Nash, a current director and founder of Booktopia, will step in as Executive Director and Sales Director for the same period.
The executive overhaul follows the resignation of Fiona Levens as Chief Financial Officer on 15 May 2024.
Booktopia’s restructuring plan also includes securing $1.0 million in funding through a revolving debt facility with AFSG Capital Pty Ltd. This facility is intended to cover redundancy-related costs.
George commented on the restructuring, “The sustained volatility of the economic climate, in addition to changing consumer spending behaviours, have continued to contribute to business results that have been below our expectations.
“The Board remains committed to building a profitable and sustainable business in the short and long term. We have regrettably had to make the very difficult decision to reduce our headcount significantly.”
While these steps are intended to stabilize the company’s finances, Tony Nash’s return has sparked controversy among shareholders. Nash, who stepped down from his CEO role in 2022, has faced scrutiny over his leadership during Booktopia’s IPO and subsequent financial challenges.
Despite these concerns, the board remains confident in Nash’s ability to contribute positively in his new role. The company is also focused on improving its online platform to enhance customer experience and boost sales. Strategic initiatives include optimising website speed for mobile and desktop users and introducing a guest checkout feature to streamline the purchasing process.
As Booktopia navigates these changes, it has withdrawn its previous financial guidance provided to the market in February 2024. The company plans to share further details on its revenue and earnings in its full-year accounts, expected to be published in August.
The layoffs and restructuring are a part of Booktopia’s broader effort to adapt to a challenging economic landscape and shifting consumer behavior.
For the Half Year ended 31 December 2023, Booktopia reported revenue of $86.3 million, down 22% in the comparative period year-on-year from $110.1m.
Booktopia listed on the ASX in 2020 under the leadership of Nash at an IPO Offer Price of $2.30 per share. BKG shares have responded poorly to the organisation restructuring news to be trading around $0.053 in early morning trade.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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