Redbubble nosedives 25pc on profit slump, as consumer confidence falls to lowest in a year
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The recent spread of Omicron variant has battered the Australian retail sector, with consumer confidence now falling to the lowest level in more than a year.
The ANZ/Roy Morgan survey released this morning showed the consumer confidence index was at 97.9, which is a 7.6% drop from last week and the lowest since October 2020.
The index is usually a good gauge of people’s willingness to make discretionary purchases.
This morning, online marketplace Redbubble (ASX:RBL) reported a 25% drop in gross profit for the first six months to $108 million, with EBITDA also plunging by 84% to $8m.
RBL’s stock price nosedived 22% on the news, taking its fall to more than 60% over the last 12 months.
The company has warned of more bad news ahead, saying that it now expected full year revenue to decline further.
Redbubble was one of the hottest stocks in 2020 as panic forced people to stock up on face masks. In FY21, sales of face masks made up more than 10% of the group’s revenue.
The market darling rallied from 50c in March 2020 to $7.35 by January 2021, when the vaccine rollout popped the bubble.
But in today’s announcement, the company said it’s holding $143m in cash balance for a rainy day.
“I am confident of the tremendous potential for the Redbubble Group. To capture this, we will continue to invest in our technology platforms, artist and customer experiences, and our brands,” said Redbubble CEO, Michael Ilczynski.
“We have multiple growth levers at our disposal, and given our strong cash balance, we will continue to invest in order to realise the potential upside that can be unlocked by aggressively pursuing this opportunity.”
Meanwhile, home entertainment retailer JB Hi-Fi (ASX:JBH) reported a 1.6% fall in sales to $4.86 billion for the first half of FY22, compared to the previous corresponding period (pcp).
EBIT was also down 9.1% on the prior year to $420.5 million.
However, the company noted that over a two-year period, sales rose by 23%, and EBIT by 60%.
“We are pleased to report strong sales and earnings for HY22. In challenging circumstances, we have again demonstrated our ability to adapt and respond to meet the strong demand from our customers, both in-store and online,” said group CEO, Terry Smart.
At $49.95, the JBH stock price is still trading above its pre-pandemic level of around $40.
The company also owns the Good Guys brand, which positions itself within the Gen X demographics market.