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Redbubble’s cost-cutting program a quick fix, says GlobalData

Redbubble’s cost-cutting program may only partially help keep the business afloat, says data and analytics company GlobalData.

Last week, the online marketplace culled 20 per cent of its workforce to counter “challenging” trading conditions.

However, GlobalData retail analyst Raviteja Neralla says consumers are more likely to restrict their expenses and prioritise spending on essential goods amid inflation, instead of making expenses on discretionary items such as Redbubble’s offerings.

“Australia has been going through a period of a sharp rise in inflation since the beginning of last year. From 3.5 per cent in the December 2021 quarter, consumer price inflation increased to 5.1 per cent in the March quarter last year.”

In GlobalData’s Q4 2022 consumer survey published at the end of November, 90 per cent of Australian respondents said they were extremely or quite concerned about the impact of inflation on their household budget. As part of the same survey, 14 per cent of respondents said they will start keeping to a strict household budget, 42 per cent said they would continue to do so, and 23 per cent will do this more frequently in the next three months.

Neralla pointed out that Redbubble’s loss of revenue largely resulted from a price rise (about 6 per cent) in May last year.

“In such a scenario, the company’s decision to increase its prices proved detrimental to consumer demand. Despite the company’s ambitious cost-cutting plan for the year, investors have turned bearish because of the change in consumer behaviour.”

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