The share price of comparison business, iSelect Limited (ASX: ISU), traded as much as 33% lower today, following a trading update this morning.
In a statement to the ASX, iSelect said it had, "encountered several strategic and operational issues across FY2015 and into H1 FY2016." Ultimately, the company said its 2016 normalised profit before taxes and interest would be between $15 million and $18 million.
Issues ranging from increasing staff, falling sales, lack of spend on new technology and development, and marketing assets contributed to the reduced profit outlook.
For its half-year (i.e. during the six-month period to 31 December 2015), iSelect expects to report a $5 million loss, before interest and taxes.
"The reduction in EBIT is disappointing, but what has become clear since my appointment as CEO is the importance of ongoing and additional strategic investment in the business to ensure iSelect creates long term growth for shareholders." Scott Wilson, CEO of iSelect, said. "What has pleased me following the completion of the review is that the fundamentals of the business are strong and the Company has the financial stability to deliver on the opportunities available."
Mr Wilson said the company will invest in the customer experience, marketing, and its people and platforms.
"The Company will be focusing on its core business following a period of significant change in the first half of FY2016," Wilson added. "Since my appointment, a number of changes have been implemented which have provided positive momentum and I expect trading to return to normal levels in H2 FY2016. I also expect that the successful execution of the key strategic initiatives, which require a number of one-off investments, will enable iSelect to better serve the changing needs of our customers and will lay the foundations for growth in FY2017 and beyond."
The company, which is currently undertaking a share buyback for up to 10% of ordinary shares, will also hold a general meeting to seek shareholder approval to increase the capital management initiatives as its Board sees fit.
