Retail tycoons Sir Philip Green and Mike Ashley were both left nursing multimillion pound paper losses yesterday after close to £140m was wiped off the value of MySale, the website that runs clearance sales for fashion brands, following a major profit warning.
The shares tumbled 91.75p to 81.5p, a fall of 53% after the company said pre-tax profits would be “materially below market expectations” after it encountered challenging trading conditions in its home markets of Australia and New Zealand.
Its chief executive Carl Jackson said competition had “increased noticeably and the economic outlook has weakened” in both countries over the last five months.
Green’s Shelton Capital fund, controlled by his Monaco-based wife, Tina, invested in MySale before its initial public offering in June and held on to a 22% stake. The profit alert wiped £30m off the value of that holding leaving it worth only £27m when the market closed. Ashley’s Sports Direct took a near 5% stake in June as a route to establishing a retail presence in the antipodean markets.
MySale holds up to 60 flash sales a day offering discounts on fashion, homeware and cosmetics for a short period of time – usually three days – with members alerted to the sales by email.
Run by Jackson with his brother Jamie who founded it in Sydney in 2007 and holds the role of executive vice-chairman. The business model gives retailers a second chance to dispose of unsold winter or summer stock.
MySale’s debut on the junior market got off to a rocky start after a pricing error saw its shares priced in pounds not pence, accidentally triggering a sell off on its opening day. The company floated at 226p but its shares have now lost more than 60% of their value.
Analysts were surprised by the severity of the profit warning as the company was said to have given an upbeat presentation to investors relatively recently. “This statement is a material body blow to an investment proposition that had already started life in a challenging way,” said Shore Capital analyst Clive Black.
In the wake of the flotation MySale pushed into new markets, including the UK and US, with a total 3.1m new members signing up in the last five months. Although sales were up 4% year-on-year in the five months to 30 November there were “significant regional variations”.
Unlike Australia and New Zealand, where sales were flat year-on-year, the company reported strong growth in Asia with a near 30% uplift in sales. Launches in the US and UK had also surpassed expectations, it said. To boost sales in its flagging domestic markets the company has ploughed A$9m into initiatives such as extra promotions.
