Booktopia in administration after troubled automated warehouse move

Booktopia has entered voluntary administration after struggling with the expense of transitioning to a $12 million robot-enabled warehouse facility and to raise further funds.

The Australian e-tailer began building a new highly automated customer fulfilment centre (CFC) in Sydney last year in a bid to support future expansion.

However, due to the CFC’s operational disruption and costs, ASX-listed Booktopia’s most recent half-year revenue and profit took a dive.

Having been in a trading halt since mid-June to secure more funding, the company today announced it had entered voluntary administration, appointing McGrathNicol [pdf].

In February last year, Booktopia secured $12 million in funding to support the building of its CFC in South Strathfield, which would come with an “advanced, scalable, flexible robotics platform that will significantly improve put away and picking activities”.

Using robots and iPack Solution’s packaging technology, the warehouse was intended to distribute over 12 million units each year.

But, in its half-year results for the period ending December 31 2023, Booktopia posted a 22 percent fall in revenue and a loss after tax of $16.7 million [pdf].

Its loss was “heavily impacted” by "a large volume of one-off costs” from the CFC, including the new warehouse management system, equipment relocation and consultancy fees.

Meanwhile, the drop in revenue was “reflective of operational disruption resulting from the transition to the company's new [CFC]”.

This disruption led to lower inventory levels, longer delivery times and reduced marketing, which all contributed to a fall in sales.

Now, following a series of departures, including of CEO David Nenke and attempts to improve its cash position [pdf], the company is undergoing “an urgent assessment of [its] business” by McGrathNicol.

A meeting of creditors is due to take place by July 15 2024.