Shares of MySale, an Australian-based company that sells heavily discounted fashions, tumbled after management gave a profit warning on slower sales in Australia, as reported by the Financial Times. Sir Philip Green purchased half of the company’s share prior to its IPO in June, and now the stock is 42% below its IPO price.
Management warned that profits would be “materially below market expectations” as competition increases in the industry. While sales in Australia are likely to be flat, membership, which is required by customers, has increased globally. MySale has flash sales to encourage customers, and has spend $9 million to increase membership. This strategy has worked, since membership has increased by 3 million to 15 million, but that there is no rule saying members will necessarily make more purchases.
CEO Carl Jackson is using the decline as a chance to buy shares on the cheap, and purchased 3.745 million shares. Carl and his brother James, who are co-founders of the company, own 34% of MySale. The brothers were encouraging a takeover offer of MySale, but shareholders indicated they do not want the company to be taken over.
Sir Philip Green is Chairman of the Arcadia Group that runs top British retailers Selfridges, TopShop, Wallis, Burton and others. He was born in South London in a Jewish family. His father was a successful property developer.