MySale, the “flash sale” e-tailer backed by Sir Philip Green, promised investors yesterday that it is on track to at least break even this year as it fights back from a catastrophic profit warning and a big pricing blunder during last summer’s flotation.
The Topshop tycoon has seen the value of his stake slump by almost £60m since the Syndey-based MySale listed in London last June.
The Newcastle United owner Mike Ashley is also sitting on an estimated loss of more than £10m, after he bought a 4.8 per cent stake through his Sports Direct retailer shortly after the float.
MySale yesterday admitted it had endured a “challenging” six months to the end of December as it dropped into the red, recording an underlying pre-tax loss of A$11.4m (£5.77m), against a profit of A$5m in the same half in 2013. Sales rose by 8 per cent to A$123m.
The group allows retailers to sell off leftover stock at the end of a season, taking advantage of the fact it can run sales on opposite sides of the globe. It offers more than 2,000 brands, including Calvin Klein.
Shares in the Aim-listed group, which floated at 226p last June, fell 2.5p to 50p yesterday. Its initial public offering descended into chaos after the shares were mistakenly listed in pounds, not pence, causing confusion and triggering automatic selling as the price came up on screens as 2.26.
Then MySale warned in December that ploughing millions into boosting sales in Australia, and investing in marketing, meant profits were set to be lower than expected.
Since the warning, the company has closed its US and Korean operations. It will now concentrate on its eight remaining markets.
MySale also finalised a partnership with Sports Direct, with stock now in distribution centres to target the lucrative Australia and New Zealand sportswear market. Active membership, meanwhile, has risen 14 per cent to 862,000.
Carl Jackson, the chief executive of the Sydney-based MySale, who founded the business with his brother Jamie, yesterday praised Sir Philip and Mr Ashley for continuing to offer “outstanding support” following the launch of MySale’s UK site last year.
“We have two very impressive retailers who understand our business model,” said Mr Jackson, adding that they had encouraged the group “to get back to where it was”.
Sir Philip paid £44m for a 25 per cent stake in MySale before the IPO through Shelton Capital, the investment vehicle owned by his wife.
The broker Zeus Capital said “hard lessons have been learned” but it expects MySale to return to profitability in the second half.
A note from the broker explained: “With the pull-back in marketing, and the extra one-off promotional and marketing costs being stripped out, as well as a reduction in the headcount across all regions, we expect an Ebitda [earnings before interest, tax, depreciation and amortisation] contribution of around A$6.8m for the second half.”