Trade Me in hiring mode as profit rises
Trade Me has sought to reassure shareholders about its growth prospects while announcing plans to take on an extra 30 staff in Christchurch and a profit rise of 26 per cent.
About $120 million was wiped off Trade Me’s value on August 8 because of concerns about competition from Amazon, with its share price having since fallen further to a 10-month low.
Speaking to analysts about its annual result, chief executive Jon Macdonald said it was ‘‘easy to be defeatist’’ in the face of large global competitors, but Trade Me had always faced competition and was ‘‘better placed than ever to keep growing’’.
In a defiant letter to shareholders, Macdonald said Trade Me had ‘‘fundamentally changed several times over’’ during the past 10 years.
On top of its existing business, Trade Me would ‘‘look to other sectors’’ where its online marketplace model might come to play, he said.
‘‘We’re particularly interested in big New Zealand markets where there are stodgy players and old-school business models ripe for transition to more efficient, transparent and democratic online platforms,’’ he said.
Trade Me’s full-time staff numbers grew by 44 to reach 543 at the end of July.
‘‘We’re proudly anchored in Wellington and the majority of our team is in the capital, but our Auckland office is now 150-strong,’’ Macdonald said.
‘‘We also have big plans to expand our team in Christchurch and will be looking to hire around 30 primarily tech people over the coming months.’’
Trade Me’s revenues for the year to June were up 7.7 per cent to $235m, and its operating profit rose 12 per cent to $93m.
Macdonald forecast similar revenue growth this financial year but said a ‘‘soft property listing market’’ meant there was ‘‘some downside risk’’.
Investment would increase and he forecast Trade Me’s operating and net profit would grow at a lower level than last year. The profit rise and forecast was not enough to please investors, who sent Trade Me’s share price down 2 per cent to $4.75 during morning trading on the NZX yesterday.
Trade Me Motors was the company’s biggest classified listings business, accounting for $64m of revenues.
The company is currently facing opposition to its proposed takeover of car dealer software firm Motorcentral, with critics warning the Commerce Commission it could lead to Trade Me throttling rivals to Trade Me Motors.
Macdonald said he expected a ruling from the commission in ‘‘a couple of months’’.
Chairman David Kirk said Trade Me was keeping an eye on United States retail giant Amazon, which he described as a ‘‘prospective competitor’’.
‘‘Amazon is, we understand, planning to establish operations on the ground in Australia later in 2018,’’ Kirk said.
‘‘We won’t be able to match Amazon for product breadth or on price for all products, but in many other aspects of the experience of buying and selling online we can be highly competitive.’’
Trade Me users are currently being targeted by a common scam, with false emails claiming members have made a purchase and inviting them to click on a link to contest a charge on their account.
The company said the emails were from ‘‘just another scammer’’ and advised customers to delete them.