Why the Booktopia (ASX:BKG) share price is rocketing 15% to a record high

The Booktopia Group Ltd (ASX:BKG) share price is rocketing higher today after reporting stellar first half sales and earnings growth…

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The Booktopia Group Ltd (ASX: BKG) share price has returned from the public holiday in style.

In morning trade the online book retailer's shares were up a massive 15% to a record high of $3.06.

When the Booktopia share price hit that level, it meant it was up 33% from its December IPO price of $2.30.

Why is the Booktopia share price rocketing higher?

Investors have been buying Booktopia's shares today following the release of an update on its first half performance.

According to the release, Booktopia continued to experience strong demand for its products throughout the Christmas period.

And thanks partly to its recent investment in additional automation and the increased capacity of its distribution centre, it delivered a record month in December and a record half year performance.

The first stage of its $20 million expansion and automation project at the Lidcombe Distribution Centre in Sydney was completed in November. It increased Booktopia's outbound capacity from 30,000 units to 60,000 units per day.

This allowed the company to ship a record 728,000 units during the final month of the year, bringing its total shipments to 4.2 million units for the half. This is a 40% increase on the same period last year.

This underpinned a 52% increase in unaudited half year revenue to $113 million and a 506% increase in adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) to $8 million.

Outlook

Management notes that the increase in trading volumes compared to the previous year is consistent with other online retailers and a continuation of the shift towards online shopping experienced throughout 2020 because of the pandemic.

In light of this and the ongoing uncertainty around COVID-19, it has warned that its first half performance should not be seen as an indication of the potential full year result.

However, Booktopia's CEO, Tony Nash, remains very positive on the future.

He commented: "The Christmas period saw strong demand from customers. Our investment in additional capacity and automation allowed us to meet customer orders in a timely fashion and ensured we were able to have the biggest December in the history of the company."

"We are confident the momentum and growth we experienced in 2020 should continue throughout the year and beyond and as a result the business is on track to meet forecasts provided in the company's prospectus," he added.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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