Booktopia takes desperate steps to stay afloat and cuts dozens of jobs

Booktopia has announced its chief executive is departing, dozens of jobs will be eliminated, and it is withdrawing its earnings forecasts.

The company has arranged $1 million in emergency financing as it struggles to stay afloat.

The online bookseller said chief executive David Nenke had tendered his resignation on Monday morning, with immediate effect. Chief financial officer Fiona Levens resigned on May 15.

Booktopia also said on Monday it was withdrawing its guidance issued in February it would make $1 million to $3 million in 2023/24.

In addition at least 50 roles would be considered for redundancy at its Rhodes headquarters in a bid to save $6.1 million in 2024/25.

To help pay for costs associated with those redundancies the company has secured a $1 million revolving debt facility with AFSG Capital at an 18 per cent interest rate.

The company has issued $400,000 in shares to secure the debt facility and agreed to pay $200,000 when it first borrows from it. GST will be paid on top of those fees, taking their cost to $660,000.

Booktopia is seeking consent from its existing secured lender, Moneytech, regarding the debt facility and certain financial reporting covenants.

The company said economic headwinds and the continued soft performance of the Australian book market had been affecting its core business, selling physical books via two websites, Booktopia.com.au and angusrobertson.com.au.

Tertiary students have also been making cost-conscious decisions around their study and learning materials, affecting performance in that category, Booktopia said.

Booktopia suffered a $16.7 million loss for the six months to December 31, compared to a $3.9 million loss a year ago.

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Its underlying earnings before interest, tax, depreciation and amortisation was down 34 per cent to a $1.8 million loss and it sold 20.6 per cent fewer books and other items – 3.1 million for the half-year.

As a cost-saving measure Booktopia’s directors have agreed to have their fees paid in the form of shares for the next six months, during which time chairman Peter George will assume the role of executive chairman.

‘The sustained volatility of the economic climate, in addition to changing consumer spending behaviours, have continued to contribute to business results that have been below our expectations,’ Mr George said.

Booktopia also said it was working to improve its website, including making it easier for customers to make purchases.

Around midday on Monday, Booktopia shares were down 7.0 per cent to 5.3c, giving it a market capitalisation of just $13 million. BKG shares traded as high as $2.99 back in August 2021.