International online retailer MySale Group, which owns OzSale, has announced a challenging first half in its trading update for H1 of FY19 and anticipates an underlying EBITDA loss.
It has attributed this to the market disruption caused by changes to Australian GST regulation, together with product mix and inventory issues.
Revenue has also been impacted by the planned reduction in the group's offline activities during FY19.
The group has outlined actions that have been take to accelerate its cost saving program, via increased technology platform efficiencies and rationalised operations.
An improved product mix and increased local sourcing have also been put in place to improve gross profit margins.
Annualised cost savings in excess of $10 million are anticipated.
The group also anticipates delivering a small underlying EBITDA profit for the full year.
Group revenue decreased 17% to $126 million, while online revenue decreased 13% to $120 million.
Gross profit decreased 35% to $29.5 million, while gross margin reduced 23.4%.
There was an underlying EBITDA loss of approximately $5 million.
Active customer numbers reduced 7% to 0.9 million.
The group's cash balances grew ahead of expectations in the period due to working capital management being better than anticipated.
It ended the first half of the year with net cash of $2.7 million.
This was an improvement of $8.9 million from the $6.2 million net debt as at June 30, 2018.
MySale CEO Carl Jackson acknowledged the disappointing results but is confident the second half will be better for the group.
“Whilst performance during the first half of the year has been disappointing, we have taken immediate action to address the issues.
“Our previous plans to streamline and automate the business have been accelerated and these actions are already delivering results.
“The changes to product strategy are materially underway and will be completed in the second half.
“Whilst we have experienced a short-term dip in revenue and profitability, we anticipate the actions initiated will deliver a positive underlying EBITDA in the second half and for the full year.
“The group has a strong balance sheet and the anticipated improvements in working capital are being achieved and cash balances increased.
“We believe the reconfigured business will be stronger, more efficient and continue to provide a compelling consumer offer and deliver unique solutions to our brand partners.”