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The transition from market darling to pariah has been quick but painful.
From its inception, Booktopia was a disruptor business, one of a wave of online retailers capitalising on technology to eliminate the need for brick-and-mortar stores.
It had all the ingredients of a successful model that would take market share away from the large physical chains and the small community bookstores that dotted the suburbs.
Amazon, its largest competitor, was already making serious inroads into the book market.
Investors loved the idea and during its 2020 float shares were issued at $2.30 a piece and rose initially to $2.90.
The timing couldn’t have been better for Booktopia, who in those heady days boasted a market capitalisation of around $400 million.
Booktopia co-founders Tony Nash, left, and Steve Traurig ringing the bell at the online book retailer’s ASX listing in 2020.Credit: Steven Siewert
The COVID-19 pandemic was the financial equivalent of a shot in both arms for the company. In the first instance, COVID forced the community to hunker down at home with time to read a book, and secondly, buyers were less able to visit a bookstore. Thus, online book sales boomed.
Even with the growth in ebooks and audiobooks, which comprise about 11 per cent of the industry revenue, demand for physical books was still strong thanks to COVID.
Despite strong revenue in 2022, it was clear that all was not well at Booktopia as its earnings that year fell a very concerning 54 per cent.
The company developed a major cost problem during the 2022 financial year, during which it spent money on acquisitions, splurged on warehouse facilities and logistics technology, and incurred a $6 million penalty after the Australian Competition and Consumer Commission pinged it for making misleading statements in its online refunds.
That problem ballooned further when it responded with a series of costly retrenchments.
A year later, in the 2023 financial year, the company reported an 18 per cent fall in revenue and a loss of $29 million – after which it managed to secure $9.3 million in an equity raising.
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But a series of disappointments had soured the investor market and the share price got caught in a rut on a downward trajectory.
When Booktopia reported its most recent financial statement for the first half of 2024, its struggles were a flapping red flag – revenue had fallen off a cliff and its profit was as red as the flag.
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