Australian flash Sales etailer MySale has warned it is likely to report a challenging first half in its interim trading update in February, due to its rapid expansion and one-off marketing costs during the period, as it announces the closure of its under-performing US and South Korean websites.
Revenues for the six months to December 31, 2014, are expected to be up 8% on the same period the year before. However, the business anticipates making an EBITDA loss due to a number of one-off investments in marketing and other product initiatives in the first five months of the financial year, to stimulate revenue growth.
MySale said it has now closed its underperforming US and South Korean websites in order to focus on its key markets of Australia and New Zealand, Southeast Asia and the UK, where it has nearly 1.8 million members.
The company, which sells retailers’ excess stock at a discount, said the cost of acquiring members in the US had been higher than expected. It has closed its US website until further notice, although local buying and warehouse operations are unaffected.
It has withdrawn from South Korea for similar reasons, and said the two closures would significantly reduce its cost base.
MySale now operates in Australia, New Zealand, the UK, Thailand, the Philippines, Malaysia, Singapore and Hong Kong.
Revenues for the full year to June 30 are expected to grow at a similar rate to the first half. The board anticipates the EBITDA margin will be positive in the second half, as the one-off marketing initiative will not be repeated and management has taken steps to reduce general promotion and operating expenses.
At December 31 the company’s cash balance was Australian $59m (£31.2m).
Chief executive Carl Jackson said: ”We had a challenging first half, brought on in part by our rapid expansion. Despite this our core business model remains sound and we have delivered strong growth in members which will contribute to the turnaround in financial performance in the second half.
“The group is well insulated with a strong cash position and its low inventory business model where the vast majority of revenue is generated on a consignment basis.
“Our focus in 2015 will be on excellent sourcing, flawless execution, cost discipline and continued member conversion to maximise our EBITDA performance. We continue to see substantial growth opportunities for the business, particularly in the high growth Southeast Asian markets and also in the UK.”
The half year report will be published on February 27.