Unloved online retailer MySale (MYSL:AIM) bounces back after flagging a return to underlying profitability. Despite the rebound, backers including retail titans Philip Green and Mike Ashley still nurse paper losses; the shares are languishing below last year's 225p issue price.
MySale operates flash sales sites in Australia, New Zealand, the UK and South-East Asia. If you aren't in the know, 'flash sales' are events limited to three days, in which fashion, beauty and homewares products are offered to a closed member base. They give brands an avenue for disposing of excess stock at a discount and create the impression of exclusivity for consumers.
Following a stock market debut blighted by the incorrect pricing of its shares in pounds rather than pence, MySale irked investors with a severe profit warning in December, blamed on increased competition and weaker economic conditions in Australia and New Zealand. Yet the shares are marked up 12.5% to 45p on the latest news as investors focus on the positive tenor of its pre-close trading update for the financial year to 30 June.
Though annual sales only grew 5% to around $235 million (£110.4 million), MySale highlights a much better second half. Cost-cutting and initiatives to improve gross margins, including less discounting, drove a fourth quarter return to underlying profitability at the earnings before interest, taxation, depreciation and amortisation (EBITDA) level.
Buoyed by improving sales and margin trends, CEO Carl Jackson (pictured above) is now guiding towards a return to EBITDA profitability 'in the coming year'. MySale, which has an online partnership with Sports Direct (SPD), also announces the appointment of Iain McDonald, a non-executive director at online retailer The Hut who boasts considerable experience of the UK online retail market, as its new non-executive chairman.
In a show of confidence in MySale's prospects, McDonald has been granted three million options exercisable at 53p, one million of which will vest if the share price climbs to £1.50. A further 1.5 million options would vest if the price reaches £2.26 and a further half a million should it hit £2.75.