MyDeal (ASX:MYD) share price falls despite record November sales

MyDeal.com.au Pty Ltd (ASX: MYD) updated the market with record November sales and an expanding private label business on Thursday. The MyDeal share price opened 3% higher on the news, but has been unable to hold onto its gains. At the time of writing, MyDeal shares are down 1.53% to $1.29. 

What is MyDeal?

MyDeal is a pure-play e-commerce business with an online retail marketplace specialising in household goods. According to the company, it offers consumers a vast product range from independent sellers at competitive prices. MyDeal recently raised $40 million from its initial public offering (IPO) at an offer price of $1.00 per share. 

The MyDeal share price went as high as $2.20 on its first day of listing. However, its shares have drifted lower in recent weeks to their current $1.29 level. 

Trading update with record performance 

November was a record trading period for MyDeal with gross sales of $30 million, up 192% year on year and 63% month on month. The company’s active customers grew to a record 778,867, up 236% YoY. Furthermore, 52.9% of all transactions were from returning customers, up from 49.7% in the first quarter of FY21.

The business delivered gross sales of $105 million for the first five months of FY21, which exceeds gross sales for the entirety of FY20 ($103 million). 

Private label business to drive margin expansion 

MyDeal’s private label business, Duke Living, also achieved significant sales growth of 71% month on month, or $1.2 million, in November. The company’s private label business sources products from manufacturers and/or wholesalers and sells them directly on the MyDeal marketplace as well as other marketplaces. 

MyDeal founder and managing director, Sean Senvirtne, believes that the higher margin private label is in its infancy with under 200 products as at today’s date. He expects Duke Living to grow as it rapidly expands its product range. Expanding its private label product offering and sales is expected to deliver higher margins for the greater business while offering competitive prices for customers. 

Australia enters ‘COVID-normal’ 

The announcement highlighted Australia entering a period of ‘COVID-normal’, with easing of social distancing and lockdown restrictions. Despite these changes, MyDeal is continuing to see strong website traffic from all states and territories. The company’s website visits from Victoria and the rest of Australia were up 174% and 168% respectively in November 2020 compared to March 2020.