Booktopia has announced the departure of its CEO, the elimination of dozens of jobs and the withdrawal of its profit forecasts.
The company has secured $1 million in emergency financing as it struggles to stay afloat.
The online bookseller said CEO David Nenke had submitted his resignation on Monday morning, effective immediately. Chief financial officer Fiona Levens resigned on 15 May.
Booktopia also said on Monday it would withdraw its guidance issued in February that it would earn between $1 million and $3 million in 2023/24.
In addition, at least 50 positions would be considered for redundancies at its Rhodes headquarters in a bid to save $6.1 million in 2024/25.
Australian online bookstore Booktopia has announced that at least 50 jobs will be redundant as it tries to stay afloat. The move could help the company save $6.1 million.
Booktopia suffered a loss of $16.7 million for the six months to December 31 and said cost-cutting decisions by college students have contributed to the company’s loss.
To help pay for the costs associated with those layoffs, the company has obtained a $1 million revolving line of credit with AFSG Capital at an interest rate of 18 percent.
The company has issued $400,000 in stock to secure debt service and agreed to pay $200,000 when it first borrows. GST will be paid on top of those fees, bringing its cost to $660,000.
Booktopia is seeking consent from its existing secured lender, Moneytech, with respect to the facility and certain financial reporting covenants.
The company said economic headwinds and the continued weak performance of the Australian book market had been impacting its core business, the sale of physical books through two websites, Booktopia.com.au and angusrobertson.com.au.
Tertiary education students have also been making cost-conscious decisions around their study and learning materials, affecting performance in that category, Booktopia said.
Booktopia shares once reached $2.99 and now trade at 5.3 cents.
Booktopia suffered a loss of $16.7 million for the six months to December 31, compared with a loss of $3.9 million a year ago.
Its underlying earnings before interest, taxes, depreciation and amortization fell 34 percent to a loss of $1.8 million and it sold 20.6 percent fewer books and other items – 3.1 million in the half.
As a cost-saving measure, Booktopia’s directors have agreed that their fees will be paid in the form of shares for the next six months, during which time chairman Peter George will take on the role of chief executive.
“The sustained volatility of the economic climate, in addition to changing consumer spending behaviors, has continued to contribute to business results that have been below our expectations,” said Mr. George.
Booktopia also said it was working to improve its website, including making it easier for customers to purchase.
Around midday on Monday, Booktopia shares fell 7.0 percent to 5.3 cents, giving it a market capitalization of just $13 million. BKG shares were trading at $2.99 in August 2021.