The embattled online book retailer,which has been scrambling to secure emergency funding,has appointed McGrathNicol restructuring partners Keith Crawford,Matthew Caddy and Damien Pasfield to reassess the business and explore a sale or recapitalisation.
Tony Nash’s Booktopia has been handed over to administrators.Julian Andrews
Australia’s biggest online bookseller,Booktopia has been buckling under increasing financial strain for years after three straight years of unprofitability,a share price that has lost 98 per cent of its value,and a revolving door of senior executives including its most recent chief executive David Nenke,who.
It has made at least 90 jobs redundant in the past 18 months. Tony Nash,the co-founder who was ousted,was temporarily brought back into the business as an executive director and sales director.
Book chain and rival Dymocks is mulling the purchase of some of Booktopia’s assets,particularly its fulfilment and distribution centres.
Dymocks will consider whether any of Booktopia’s assets are worth acquiring.Rhett Wyman
“We would be silly not to have a look and see if there’s anything there that might be useful to us,” Dymocks chief executive Mark Newman said on Wednesday.
But Booktopia’s name and online domain are of less interest to Dymocks,which has its own e-commerce arm.
“We wouldn’t look to buy the brand because we have a much stronger brand ourselves that’s been around 145 years.”
Dymocks will also ramp up its social and digital marketing,Newman said,adding that Booktopia’s announcement had already driven more traffic to its website. “It’s just about making sure we are still visible,present,and we’re there to serve any of those customers who choose to shop with us.”
The average retail price of a book is just over $18,which hasn’t changed in about two decades.
“It is a tough environment … It’s always sad when any business in your industry doesn’t work out. We’re obviously sorry to see what’s happened there,” Newman said.
E-commerce giant Amazon,which began as an online bookseller,but has less market share than Booktopia in Australia in terms of book sales,has been contacted for comment.
The company’s shares will remain suspended during the administration process. Booktopia said questions should be directed to administrators,who have been contacted for comment.
Robbie Egan,the CEO of Australian booksellers association BookPeople,said the collapse of Booktopia would be difficult for the industry,particularly Australian authors and smaller publishers that relied on Booktopia for sales.
“I feel for people who are impacted. This is a real value destruction exercise that’s going to be taught in business,” said Egan. “There are massive ripple effects … Cashflow[for smaller publishers] is destroyed.
“I really hope as an industry we hold it together,it’s absorbed reasonably efficiently,so people keep getting paid.”
Booktopia was founded in 2004 by Nash,his brother Simon and brother-in-law Steve Traurig and built a significant market share of nearly 60 per cent over the following two decades.
Booktopia co-founders CEO Tony Nash (right) and CCO Steven Traurig ring the ASX bell at the listing in December 2020.Steven Siewert
It amid a rush of other e-commerce retailers that listed on the stock exchange,such as Adore Beauty,buoyed by the surge in online shopping. Earlier that year,it secured a capital injection of $20 million from a consortium of private investors led by Champ Ventures and JBS Investment.
Booktopia’s last trading share price was 4.5¢.
In its most recent results update,Booktopia booked losses of $16.7 million and revenue that plummeted 22 per cent to $86.3 million for the first half of fiscal 2024. Its woes have been further exacerbated by a pullback in consumer spending driven by higher interest rates and higher costs of living.
Complaints about Booktopia have been mounting in recent months as customers report lengthy delivery times,poor customer service and a diminished range.
A spokesperson for the ACCC said administrators should,in due course,provide information about the status of outstanding orders,credits,gift cards,refunds and other reimbursements. Customers may get their money back by asking their financial institution or card provider to reverse payment,known as a chargeback.
Inquiries for administrators should be directed to booktopiaenquiries@mcgrathnicol.com.
The first creditors meeting will be held on July 15.
At 4.19pm on Wednesday,the ASX compliance team issued a notice stating Booktopia had breached a rule stipulating that a company’s financial condition must be adequate to continue being listed.
Booktopia’s shares will now be suspended under listing rule 17.3 – an ASX-imposed suspension – until the bourse is satisfied that Booktopia is financially adequate to keep trading.
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