Why the Booktopia (ASX:BKG) share price just crashed 10% to a record low

It has been a bad day for Booktopia's shares…

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

a person slumped over a pile of books while reading them with bookshelves in the background.

Image source: Getty Images

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.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Booktopia Group Limited. 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.

More on Retail Shares

A woman looks quizzical while looking at a dollar sign in the air.
Retail Shares

Why Wesfarmers shares remain the gold standard of ASX retail investing

Down over the past year, Wesfarmers shares have become more attractively priced. The business underneath has barely missed a beat.

Read more »

A young woman lies on her lounge with a pink blanket covering her face and the top half of her body as she hides away from seeing the Nick Scali share price fall today
Retail Shares

Down 75%: Is this beaten down ASX retail stock a buy?

Temple & Webster's share price has been hammered, but there is still opportunity in this ASX retail stock.

Read more »

Buy, hold, and sell ratings written on signs on a wooden pole.
Broker Notes

With first-half profits jumping to $1.6 billion, are Wesfarmers shares a buy today?

A leading analyst provides his forecast for Wesfarmers' rebounding shares.

Read more »

Two happy woman on a sofa.
Retail Shares

5 ASX retail shares whose 12-month price targets just got slashed

Broker Jefferies has cut the 12-month share price targets of 5 retail stocks by up to 44%.

Read more »

Close-up of a business man's hand stacking gold coins into piles on a desktop.
Retail Shares

Here's the dividend forecast out to 2028 for Wesfarmers shares

The Kmart and Bunnings owner could deliver plenty of dividend growth in the coming years…

Read more »

Australian dollar notes in the pocket of a man's jeans, symbolising dividends.
Retail Shares

If I invest $8,000 in Wesfarmers shares, how much passive income will I receive in 2027?

How large could the dividend be next year?

Read more »

A young woman looks happily at her phone in one hand with a selection of retail shopping bags in her other hand.
Retail Shares

Why JB Hi-Fi shares can turn things around despite a tough retail environment

JB Hi-Fi shares have had a rough time of late. However, solid growth provides a catalyst for investors to consider…

Read more »

A man in a business suit whose face isn't shown hands over two Australian hundred dollar notes from a pile of notes in his other hand to an outstretched hand of another person.
Retail Shares

Billionaire Brett Blundy is buying again. Is this battered ASX retail share about to turn?

Adairs shares are rising after a high-profile retail investor bought in.

Read more »