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Mar 1, 2017
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Philip Green-backed MySale sees earnings rise, upbeat on Gilt and Sports Direct links

Reuters API
Mar 1, 2017

Flash sales e-tailer MySale Group should have brought a smile to the faces of beleaguered UK retail entrepreneurs Sir Philip Green and Mike Ashley on Wednesday.

A day after paying out £363 million to plug a pension black hole in failed BHS, billionaire Philip Green was given a little financial relief as MySale reported a jump in first-half core earnings.

MySale had a strong first half

The Topshop owner's family owns a 22% stake in Australia-based MySale, while Mike Ashley's Sports Direct, which has been hit by working conditions scandals and slowing sales, holds 4.8%, according to Reuters data.

The company, which holds flash sales of fashion, cosmetics and homewares at discounted prices, confirmed figures released earlier this year that showed it made underlying earnings before interest, tax, depreciation and amortisation (Ebitda) of A$3 million in the six months to December 31, up from A$1.8 million in the same period of 2015.

Online revenue increased 19% to A$127.1 million as the firm's active customer base also increased 19% to 870,000.

"The growth of our underlying Ebitda for four consecutive half year periods endorses our strategic plan and we remain confident in the full-year’s prospects," said CEO Carl Jackson.

MySale listed on London's junior Alternative Investment Market (AIM) in June 2014 at 226p but issued a profit warning the same year. Over the last year the stock has risen 173%. It was unmoved on Wednesday at 120.1p, valuing the business at £183 million ($226.39 million).

That may be a surprise as the company had plenty of good news on the day with the average order value (AOV) up 3% to A$86 and robust average revenue per active customer at A$295. The mobile channel represented 58% of orders and the returns rate remained at “industry leading levels” of only 5%.

And for the future MySale is upbeat as it plans increased investment in its technology platform as well as boosting its strategic plan to increase own-buy, which is now 19% of sales. It also expects good things of the strategic partnership with US retailer Gilt that started this year.

And despite the second half of the year being traditionally stronger for the firm, H1 offered lots of encouragement on the back of its work to prioritise the growth of gross profit and secure higher lifetime-value customers. This, combined with a carefully controlled cost base, is what drove that Ebitda higher.

It is clearly hoping to drive it higher still in this half and is touting its tech spend, its marketing spend (around 7% of revenue) that it has focused into measurable, digital channels to attract and engage new and existing customers, and its new partnerships to achieve this.

Of those new partnerships, it said the Gilt link should “provide a significant product selection available to all the group's territories.”

And a strategic partnership launched with Sports Direct sees it in a period of planning, testing and optimising the merchandising and marketing of the UK sports retailer’s inventory to the ANZ customer base.

Meanwhile, MySale’s nascent retail marketplace channel is being called a step change in the potential addressable audience and in future revenue opportunities. Designed with m-commerce at its heart, it operates, on a supplier drop-ship inventory basis, in sports, home and gifting. It has the three ANZ websites of ''dealsdirect'' ''oo'' and ''topbuy'' acquired in fiscal 2016’s second half as its foundation.

The company said the platform will further support its brand partners and their sales ambitions.

Additional reporting by Sandra Halliday

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