Redbubble announces cost-saving measures, postpones CEO search
Redbubble’s executive team are taking a pay cut and its employees are moving to a four-day work week to help the e-commerce marketplace get through the current uncertain economic environment.
Redbubble, a business which allows independent artists to sell their own designs on everything from outfits to homewares, said it has enacted a number of measures to ensure it prudently manages costs while maintaining ongoing business operations.
These measures include reducing the cash component of the non-executive directors’ remuneration by 20 per cent; trimming the remuneration of interim CEO Martin Hosking to $600,000 per annum, with an additional $300,000 per annum payable at the Redbubble Board’s discretion, either in Redbubble equity or cash, based on Hosking’s achievement in key results areas.
According to Redbubble, it is also encouraging all other employees to move to a four-day week with pro-rated pay. The company has also imposed a hiring freeze until further notice.
“All discretionary spending across the group is halted until further notice,” the company said. “These measures will be regularly reviewed and are expected to remain in force until June 30, 2020.”
The company said its sales, while modestly impacted, had shown resilience after an initial minor contraction in March. Its current financial position is solid with a cash balance of $31 million as of March 31 with zero net debt.
The company said its operations and supply chain remain robust with no discernible disruptions and is initiating prudent cost saving measures to preserve cash.
“Further actions may be considered to ensure resources are focused on driving growth,” it added.
Redbubble said it does not anticipate raising additional capital or taking on debt in the foreseeable future.
“We are controlling the levers that we can and have a firm idea of the things we need to do to preserve cash,” Hosking said. “The underpinnings of the business are strong and we are refocusing the strategy and operations to ensure we can sustain the business and thrive through COVID-19 so that we are best positioned when external circumstances normalise.”
According to the company, from the second week of March and coinciding with the spread of COVID-19 globally, it began to experience fluctuating demand.
“From that time, sales showed modest signs of contraction on a constant currency basis, although the floating and cash impact was minimal due to benefits from currency tailwinds,” Redbubble said. “More recently, group sales have shown resilience. The level of fluctuation in demand has been similar at both Redbubble and TeePublic branded marketplaces.”
The company said increasing reliance on online retail is cushioning the overall financial impact of COVID-19 on the Redbubble Group.
However, Redubble added, given the ongoing uncertainty about the extent and duration of COVID-19 related impacts on the external macroeconomic and operating environment, RB Group considers it appropriate to withdraw its earlier indications that it expected to grow operating EBITDA year on year and achieve positive free cash flows in FY2020.
The company also said its search for a new permanent CEO will be deferred until later in the calendar year to allow Hosking and his management team to focus on these actions.