Online retailer saw revenue grow 7% and gross profit increase 21%
Companies: MySale Group plc
Online retailer MySale Group plc (LSE: MYSL) released its audited preliminary FY results this morning showing a slight increase in revenue and a strong increase in gross profit, as the group dramatically improved its margins and improved the value and retention of its customers.
Group revenues grew 7% to AUS$252m for the full-year with an accelerating trend in H2 of +10%. This helped the company see strong gross profit growth of 21%, but was primarily driven by significant margin improvement to 26.4%, also improving throughout the year.
Regionally, MYSL's performance improved significantly in South-East Asia (revenue +20%, gross profit +117%), and the United Kingdom (revenue +139%, gross profit +133%).
The company said its focus on improving gross margins and activating customers with higher LTV (lifetime-value) had been very successful, with the average order value increasing 20% and the average revenue per active customer increasing 9%.
Brokers N+1 Singer and Zeus Capital both covered today's announcement, with Singers saying MySale had established a very strong position in the online global off-price market and had a huge growth opportunity:
"FY results highlight successful execution of the plan, a return to profitable growth, accelerating KPIs in H2 vs H1, and a clear strategy to create future value. It has unique international distribution capability and brand relationships in Europe and North America, including exclusives with some...
We expect small EBITDA upgrades today but see risk to the upside as strategic initiatives gain traction. Investors should not be deterred by an optically high c20x cal17 EV/EBITDA as there is clearly scope for value creation."
Whilst Zeus Capital also took a bullish tone in their morning note, upgrading its FY17 forecasts:
"Full year revenue increased by 7% to A$252.3m, with good momentum gained in the second half with 10% revenue growth, while strategic initiatives helped deliver gross profit growth of 21%....
Gross margin improved 300bps to 26.4%. Adj. EBITDA of A$5.5m was ahead of our expectations of A$5.0m, driven by a reduction in overheads to 24% of revenue that has helped to deliver operational leverage. The good trading momentum has continued into the new financial year with the company reporting an encouraging start, ahead of expectations. As a result we are increasing our FY17 forecasts."
Company CEO Carl Jackson said the improvement had been driven by the team's clear focus on improving gross margins whilst providing exceptional value to customers:
''Our active customer base returned to growth in the second half of the year, core customer metrics remained robust, average order value increased and both revenue growth and margin improvement accelerated in the second half of the year, delivering full year performance ahead of expectations, despite some currency headwinds during the year. We have now grown our underlying EBITDA in each of the last three half year periods...
All three group territories have seen increases in revenue and gross profit. However it is in South-East Asia and in the United Kingdom, where we trade predominantly as Cocosa, that the Group has seen the most significant rates of growth. Our strategy for these, newer, territories has been firstly to grow the active member base and then to build profitability."