When it first signalled it was in trouble on June 3 this year, the bookseller announced its chief executive was departing, and it was withdrawing its earning forecasts.
The company also planned to borrow $1 million at 18 percent interest rate to pay for 50 redundancies at its headquarters Sydney—an expense it could not afford to meet from the $212,000 in cash reserves it had at the time.
It was going to issue $400,000 in shares to secure the revolving debt facility from AFSG Capital, with an additional $200,000 to be paid in shares upon initial borrowing.
Booktopia is Australia’s biggest bookseller and also owns Angus & Robertson.
The business suffered a $16.7 million loss during the six months to Dec. 31, an enormous jump compared to a $3.9 million loss a year ago. Its shares have not been traded on the ASX since June 13.
However, the company announced on June 28 that the revolving debt facility had been cancelled and on July 3 brought in McGrathNicol restructuring partners Keith Crawford, Matthew Caddy, and Damien Pasfield as administrators.
They said they would reassess the business and explore a sale or recapitalisation. Its shares will remain suspended during the administration process.
The business has been in difficulty for several years. It has recorded losses for the past three years, and its shares have lost 98 percent of their value after they floated on the ASX in December 2020 at $2.30.
Senior executives have come and gone, with its most recent chief executive, David Nenke, resigning after exactly one year in the role.
It has also made at least 90 jobs redundant in the past 18 months.
While Amazon’s shuttering of global competitor Book Depository last year should have been a major boost for Booktopia, Amazon itself remains a major competitor in the Australian market.
At the same time, retailers like Big W, Kmart, and Target sell a significant volume of discounted books. Additionally, Spotify last year introduced an extensive library of free audiobooks to its premium subscribers.
However, its biggest challenge was one it set itself. The company has been struggling with the expense of transitioning to a $12 million highly automated customer fulfilment centre (CFC) in Sydney.
In it’s half yearly results report in February, the company attributed its second-half loss in 2023 to “a large volume of one-off costs” from the CFC, including the new warehouse management system, equipment relocation, and consultancy fees.
Meanwhile, the revenue drop was “reflective of operational disruption resulting from the transition to the company’s new [CFC].”
That disruption led to lower inventory levels, longer delivery times, and reduced marketing—all contributing to a fall in sales.
The problems experienced by Booktopia aren’t a result of Australians reading far fewer physical books.
