Trade Me to stick to its knitting for now
Trade Me chairman David Kirk would be surprised if the online powerhouse had not expanded overseas within the next five years, but it was not currently looking at any specific foreign opportunities, he said yesterday.
The company's focus for the next two or three years would instead probably remain with the domestic market but it could do some "groundwork" on international expansion before then "even though it is not the highest priority we have", he said.
Trade Me was unlikely to try to break into the online auction market in Australia, for example, but might find other options for growth, perhaps in smaller, developing markets. That could involve acquisitions or starting up overseas from scratch, Kirk said.
"I am being non-specific, but we will do what makes sense.
"In five years' time I would be surprised if we didn't have at least some international investments and earnings. There is nothing in the short term but we do have to start laying the foundations."
That could simply involve "looking around", and people had also come to Trade Me with opportunities, he said.
Chief executive Jon Macdonald told several dozen shareholders at the company's annual meeting in Wellington yesterday that new homegrown competitors to Trade Me, which included Wheedle, were "nowhere to be seen". But he warned investors that the company was facing tough competition from overseas e-commerce firms which were selling online to New Zealand consumers.
Without improvements, Trade Me risked "falling behind" when it came to providing the experience people now expected when shopping online, he said. "To be straight with you, that means spending more," Macdonald told investors.
"That means we expect our growth to be subdued in the coming year. While we will remain a high-margin business, we do need to grow our team and increase our marketing spend."
Kirk said Trade Me was "still very focused" on achieving earnings growth each year, but the increase in revenues and ebitda might fall below last year's levels.
Fairfax's decision to sell its 51 per cent stake in Trade Me last December had proved beneficial for the online auction house and listings site, he said. The sell-down and influx of new investors had propelled the company into the NZX10 and ASX200 indices.
Shareholders passed a resolution to increase the annual cap on Trade Me's directors' fees from $650,000 to $800,000.
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