The board of Melbourne-born global marketplace Redbubble Limited is facing a reshuffle following its AGM later next month as it navigates a year of court battles and workforce reductions.
Non-executive director Jennifer (Jenny) Macdonald will resign from the Redbubble board of directors following the group’s AGM on October 24, 2023. Another long-standing director is also expected to step down during FY24, as part of a board renewal process.
Macdonald has been on the board of Redbubble Limited since February 2018 and became chair of its audit, risk and compliance committee in October 2019.
“It has been a pleasure to serve on the Redbubble Limited board for the past five years,” McDonald said. “After reviewing my workload in light of new commitments, I have made the difficult decision to step down.
“I remain confident in the long-term potential of the group and will continue to offer my support from the sidelines.”
The board will conduct a formal search process to identify a suitable candidate to replace Macdonald.
Chair of Redbubble Limited Anne Ward thanked McDonald for her service on behalf of the board.
“Over the past five years, the group, and its operating environment, have evolved significantly and Jenny has played an important role in helping us navigate this challenging period,” Ward said.
“The Board has started a formal process to identify suitable candidates to replace Jenny, and to accommodate further changes to the board, through an orderly process of renewal, without disrupting the recent progress that has been made to return the group to profitability."
The news comes after a bumpy year for Redbubble. In July, two long-running court battles for its US-based subsidiary, Redbubble Inc, came to a head. Redbubble Inc received two “favourable decisions” regarding copyright infringement in ongoing litigation tabled by US fashion retailer Brandy Melville and gaming company Atari Interactive.
In the Atari Interactive case, the gaming company sued Redbubble for contributory and direct trademark infringement, according to court documents released in July. On appeal, Atari challenged the district court’s summary judgment rulings and certain trial rulings.
The United States Court of Appeals for the Ninth Circuit, which oversaw the case, upheld the district court’s judgment in Redbubble’s favour.
In the Brandy Melville case, the Ninth Circuit agreed that Redbubble cannot be held contributorily liable when third parties misuse Redbubble’s service to infringe without the company's knowledge, and remanded the case to the district court to decide any remaining issues under that legal standard.
Meanwhile, the Redbubble group reduced its workforce by 23% in May 2023 in a bid to further cut costs.
The online marketplace noted in May that it is aiming to reduce its operating expenditure by a further $13 million to $15 million on an annualised basis. The majority of the cost savings will be achieved by reducing the group's workforce by 75 roles.
Redbubble Group CEO Martin Hosking said the business has been restructured as part of the process.
"Since being appointed CEO, my primary focus has been returning the group to profitability as soon as possible. It has become clear that to achieve this, we need to further reduce our cost base. As a result, we have made the difficult decision to remove a number of roles from the group.
“As part of this process, we have restructured our business to more clearly define the group function and two operating companies, Redbubble and TeePublic."
Amid these shifts, Redbubble recorded a gross profit after paid acquisition (GPAPA) margin of 28.5% in the fourth quarter of FY23, up 550 basis points above prior corresponding period (PCP).
This is also 350 basis points above the historical average, according to the company.
Despite the improved performance in the fourth quarter, the FY23 GPAPA margin was down 120 basis points on the PCP to 20.9%, due to softer performance in the first half.
Looking ahead, the group claimed trading conditions will remain soft in its key markets, particularly the US, in the near term. Redbubble also operates in Europe and Australia.
Due to this, the company noted it will focus on cost of goods sold (COGS), promotions and paid marketing activities to maximise GPAPA.
The group expects its FY24 GPAPA margin to be between 23% and 26%.
The group also expects to see the full benefit of cost-saving measures implemented in FY23 in FY24, with operating expenditure predicted to be between $92 million and $100 million in FY24.
“As we look ahead, we remain cautious and expect market conditions to remain challenging,” Hosking said. “As a result, we are focused on what we can control - ensuring we are operating as efficiently as possible and maintaining strong cost discipline.
“We continue to believe in the potential of our two marketplaces, Redbubble and TeePublic, and are confident that both businesses can deliver sustainable growth.”