- Online retailer Kogan has been one of the better performers on the ASX in the last six months, benefitting from the growing movement towards online shopping.
- Kogan’s gross sales, gross profit, and adjusted EBITDA surged by 117%, 165% and 466% respectively during August 2020; the announcement supported a ~6% increase in the Company’s share price.
- In FY2020, KGN reported a 39.3% growth in gross sales and nearly 56% increase in NPAT.
- The key drivers of the Company’s performance were growth in its platform, product division, Kogan Marketplace, and the launch of new verticals.
ASX 300 listed Company, Kogan.com Ltd (ASX:KGN) is a pioneer of Australian eCommerce with a growing portfolio of retail & service businesses.
The Company witnessed a growth of 152,000 in active customers in August 2020. Kogan highlighted that the increase in active customers is the largest monthly increase in the history of the business. Further, there was an increase of over 117% YoY in gross sales. Gross profit was up by more than 165% YoY and Adjusted EBITDA skyrocketed by 466%.
The business update for August 2020 had a positive influence on the shares. By the end of the day’s trade on the ASX, Kogan shares rose by 6.136%, settling at A$20.410. The share price was close to KGN’s 52-week high. Kogan has a market cap of A$2.03 billion and 105.62 million outstanding shares.
The Company’s shares have been generating impressive returns with a massive growth of 407.39% in the last six months. The stock has provided a return of ~213% in the previous year, driven by Kogan's strong FY2020 performance.
A Glance at FY2020 Result:
On 17 August 2020, Kogan announced its FY2020 results for the year ended 30 June 2020. Key highlights include:
- Gross Sales increased by 39.3% to A$768.9 million as compared to the prior corresponding period (pcp).
- Revenue went up by 13.5% to A$497.9 million.
- Gross profit improved by 39.6% to A$126.5 million.
- Adjusted EBITDA was up by 57.6% to A$49.7 million on pcp.
- Net profit after tax went up 55.9% to A$26.8 million.
- There was an increase in the number of active customer base by 35.7% to 2,183,000.
- com declared a fully franked dividend of 13.5 cents per share. It improved by 64.6% as compared to FY2019.
- As of 30 June 2020, the Company’s net cash of the Company was A$146.7 million along with an undrawn bank debt facility of A$30 million.
During FY2020, delivered the acquisition and integration of Matt Blatt. Matt Blatt is a pioneer in online furniture retail.
Key Drivers of Kogan’s Performance FY2020:
- Platform Growth: During the period, Kogan First memberships scaled considerably when the customers recognised the significant value offered to them through the loyalty program. The business also improved its marketing activities to enhance the number of Active Customers. Further, the Company made an additional investment to grow its platform.
- Product Division: Through the exclusive brands, the Company could achieve year-on-year Revenue growth of 26.4% on pcp. The exclusive brands resulted in gross profit growth of 43.7%. It contributed 51.3% to total gross profit in FY2020.
The Company was able to achieve the gross profit via its constant investment in
Exclusive Brands inventory to widen its range and also meet the customer demand from the rising Active Customer base.
- Kogan Marketplace: It was because of the Kogan Marketplace, the Company was able to witness a growth of 71.2% in Gross Sales during the second half of FY2020. Kogan Marketplace has improved the number of sellers considerably. Still, there exists a long backlog of sellers which are ready to be onboarded.
The extraordinary growth of Kogan Marketplace has led to a period of change for the Business. The Company has made a continuous effort to improve the proprietary marketplace platform, which allows the Business to attain ongoing growth without a subsequent investment in inventory.
- New Verticals: In other verticals like Kogan Mobile, the Company’s performance was consistent with FY2019. It contributed 10% to the overall gross profit. Thus, setting up a solid foundation for the growth of Kogan Mobile New Zealand.
There was an increase in the number of Kogan Internet Customers by 90.9%, resulting in commission-based revenue rising by 144.9% over the same period.
Kogan also launched new verticals as well during the first half of FY2020. These include Kogan Cars, Kogan Credit Cards, Kogan Superannuation, Kogan Energy and Kogan Mobile NZ. These verticals are growing.
- Variable Cost: KGN’s variable cost comprise of warehousing and selling costs. The increase in the variable cost was because of the rise in the volume of transactions plus the stock holdings. This supported the business to provide its biggest gross sales and gross profit ever.
- Investment on KGN’s Team: The Company made strategic investments in team members to retain vital talent and align their interests with its Shareholders.
In FY2021, Kogan.com has plans to develop and improve the Kogan Marketplace. The focus would also be on growing the Active Customer base by investing in the platform, expanding Exclusive Brands and Third-Party Brands product divisions. Further, the Company would also be reviewing ongoing acquisition prospects.
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