The Redbubble Ltd (ASX: RBL) share price is rocketing higher on Wednesday morning.
At the time of writing the ecommerce company's shares are up 25% to 75 cents.
What did Redbubble announce?
This morning Redbubble provided a comprehensive update on the impact of the coronavirus outbreak on its supply chain, balance sheet, and current trading conditions.
In respect to its supply chain, the company advised that it is globally diverse and has high degrees of redundancy that are expected to endure through the current environment.
Management also advised that its operations and supply chain remain robust with no discernible disruption of the fulfilment and delivery of orders to date.
Redbubble's financial position also remains strong. At the end of March the company had a cash balance of $31 million and zero debt on its books.
Pleasingly, based on its current business performance and cost reduction measures it is taking, the company does not anticipate raising additional capital or taking on debt in the foreseeable future.
Trading update.
Speaking of its business performance, the company provided an update on current trading conditions.
According to the release, from the second week of March and coinciding with the spread of COVID-19 globally, Redbubble began to experience fluctuating demand. Since then, its sales have showed modest signs of contraction on a constant currency basis. Though, the cash impact was minimal due to benefits from currency tailwinds.
In light of this volatility, management does not believe it is in a position to reaffirm its guidance. As a result, it has withdrawn its guidance for year on year operating EBITDA growth and positive free cash flows in FY 2020.
Interim CEO, Martin Hosking, commented: "We are responding to the macro environment and the business signals that we are seeing. We are controlling the levers that we can and have a firm idea of the things we need to do to preserve cash. The underpinnings of the business are strong and we are refocusing the strategy and operations to ensure we can sustain the business and thrive through COVID-19 so that we are best positioned when external circumstances normalise."
