Wotif.com’s share price has now fallen 43% after yesterday’s announcement that its profit for the six months to Dec 31 would be down 19% over the same period last year.
The shares collapsed 32% yesterday and fell another 11% today. At the time of writing they are trading at $2.52, the lowest they have been since listing in June, 2006.
Wotif.com says rising costs, especially in marketing and IT, have combined to push its forecast profit for the six months to Dec 31, 2014, down by around AUD5 million, or 19%, over the previous corresponding period.
CEO Scott Blume said turnover is expected to be flat with a 5% decline in Australia New Zealand hotel accommodation.
He said total group revenue is expected to rise by 4.5% due to higher hotel commissions plus gains from flights and packaging. Costs, though, increased AUD9 million (marketing accounting for AUD4 million, salaries and wages AUD3.8 million).
“The increase in marketing is attributed to the extremely competitive online advertising marketplace where overall costs have increased,” he said.
“The increased spend and total spend have delivered positive return on investment across all lines of business, albeit the ROI has decreased year on year.
“In relation to the salaries and wages increase, approximately 40% relates to IT headcount where we have accelerated our investment in systems development.
“The outlook for for the second half of financial year 13/14 remains volatile with retail conditions in our key Australian and New Zealand market continuing to be soft.”