Zip Co books record quarter but BNPL stays under pressure, as MyDeal CEO sees boom in online shopping

Data released by the ABS last week showed that Australians spent at record levels heading into the end of last year.

The figures revealed that Aussies spent a total of $33.4 billion at retail /online stores in November, taking advantage of pre Christmas sales. Online sales remained high, representing 12.5% of all sales.

And that pre-Christmas rush — both in Australia and globally — has flowed through to Q4 growth for a handful of retail stocks on the ASX.

BNPL player Zip Co (ASX:Z1P) kicked things off with the release of its December quarter results this morning.

The company said it delivered record group quarterly revenues of $167.4m, on total transaction volume (TTV) of $2.6bn.

That marks a lift of 22.4% from the September quarter, where it booked revenues of $136.8m on TTV of $1.9bn.

The numbers indicate a slight decline in the group’s revenue margin on TTV, from 7.2% to 6.4%.

The US market continues to be Zip’s main revenue driver, the company said, with Australia not far behind while sales in new markets like Canada, Mexico, and the UAE doubled during the year.

Zipfest, a four day pre-holiday shopping event held in October in the US, resulted in over 70,000 app downloads and around 20% in transaction growth during the week, the company added.

“The business continues to execute on its strategy with growth driven by both customer and merchant acquisition, and the increasing levels of engagement as we pursue our mission of becoming the first payment choice everywhere and every day,” CEO Larry Diamond said.

Zip is expected to be the largest pure play BNPL play on the ASX board when Afterpay (ASX:APT) delists itself from the bourse.

The listing of Afterpay’s successor Block Inc (ASX:SQ2), is expected to be today or sometime this week.

Like other BNPL plays, Zip had a year to forget, with its share price tanking by 40% in the last 12 months to trade at its lowest level since before the pandemic.

Today’s trading update failed to get the market excited, as Z1P shares fell by around 2% in morning trade.

However, this price weakness has brought the company’s share price back to a more palatable trading range for UBS bank.

In a research note in December, UBS analysts Tom Beadle and Karyn Cao upgraded the stock to Neutral (from Sell), with a price target of $5.20.

By UBS’ standards, that marks relatively high praise after the bank established itself as the resident BNPL bear — routinely valuing Afterpay at around $30 when the stock was soaring above $100 earlier this year.

Zip share price today:

MyDeal also delivered a record quarter

Online lifestyle product markerplace MyDeal.Com.Au Ltd (ASX:MYD) also delivered another record quarter.

Gross sales for the quarter increased by 19.5% on the prior comparative period to $83.1 million, the highest ever for the company.

MyDeal has now nearly 1 million active customers on its platform, 60% of whom are returning customers.

Speaking with Stockhead via email this morning, MyDeal CEO, Sean Senvirtne said we’re seeing more people transition to online shopping to avoid the crowds at shopping centres.

“Although overall spending is down across the online sector, MyDeal has been well positioned to capture not only this trend of offline to online, but in doing so, we’ve been effective in capturing more of the online retail share, which has lead to continued growth,” he said.

And Senvirtne sees the shift to online to continue in 2022 and beyond.

“We may see a softening in retail sales as the year unfolds, but we are bullish about the growth of MyDeal and believe we will see more people transition more of their spend to online for discretionary purchases. ”

MyDeal share price today:

Mosaic Brands delivered solid quarter

Fashion retailer Mosaic Brands (ASX:MOZ) reported $119 million of online sales for the first half of FY22, a 21% increase against pcp.

Its EziBuy platform makes up 10% of online sales.

Overall, group revenue (including physical in-store sales) for H1 amounted to $298 million.

Total group EBITDA for H1 is now expected to be approximately $8 million, 16% above broker estimates, despite a large number of store trading days lost in the half.

“This latest result further highlights the global trend of the over-50’s consumer embracing the online channel, with sales for the first half of FY2022 up 21% for Mosaic Brands, including a record Black Friday sales period,” says CEO Scott Evans.

The company expects to quadruple its offering online over the next three years, from the current 2 million items to 8 million by 2025.

Mosaic Brands sells well known fashion brands such as Noni B, Katies, Rockman and Rivers among others.