The Booktopia Group Ltd (ASX: BKG) share price is having a day to forget.
In morning trade, the online book retailer's shares are down 10% to a record low of $1.45.
This means the Booktopia share price is now trading 37% lower than its December 2020 IPO listing price of $2.30.
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Why is the Booktopia share price crashing lower today?
The weakness in the Booktopia share price this morning has been driven by a disappointing trading update.
According to the release, while its sales have remained solid during the first half, its costs have jumped and are weighing heavily on its profits.
For example, based on trading so far in December, Booktopia is expecting to achieve first half revenue of more than $127 million. This represents a 13% increase on the revenue of $112.6 million reported in the prior corresponding period.
However, due to additional labour costs incurred managing Sydney's COVID lockdowns, the ongoing set-up costs of a second distribution facility, and the recruitment of a number of new executives, Booktopia's EBITDA is expected to be between $4 million and $4.5 million during the half.
The low end of the range is a 50% reduction on the EBITDA of $8 million it recorded in the prior corresponding period.
Management commentary
Booktopia's Founder and CEO, Tony Nash, commented: "The first half has presented a number of challenges and I am very proud of the way our team responded to ensure we were able to limit the impact, particularly on our customers. Trading conditions and customer demand over the last two months will give us strong momentum as we move into the second half and the 2022 academic sales season."
"The Group has strong confidence, based on current levels of demand, that the large number of customers acquired throughout 2020 and 2021 will continue to purchase through Booktopia's online platforms, and our investments in new stock and distribution infrastructure will deliver value for the Group. We are committed to continuing the growth of the business and making investments in our team and facilities to ensure we can meet the growth targets we have set ourselves," he concluded.
