Kogan.com (ASX:KGN) shares plummet as FY21 profit falls by ~87%

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Kogan.com (ASX:KGN) shares plummet as FY21 profit falls by ~87%

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 Kogan.com (ASX:KGN) shares plummet as FY21 profit falls by ~87%
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Highlights

  • Australia's largest online retailer Kogan.com Limited released its FY21 results marked by solid revenue growth but a massive fall in NPAT.
  • FY21 revenue was up ~57%, aided by record-breaking gross sales. However, NPAT was down ~87%, impacted by high inventory and freight costs.
  • The decline in profit, coupled with dividend suspension, dampened investor mood as Kogan shares fell sharply after the announcement.

Kogan.com Limited (ASX:KGN),  an Australian eCommerce major with a growing portfolio of retail and service businesses, released its FY21 financial results (period ended 30 June 2021), marked by an impressive gain in revenue but a massive decline in profits.

Impacted by the decline in profit and suspension of dividends, Kogan.com shares dropped significantly, trading at AU$11.380, down 13.329%, at 1:35 PM AEST.   

Source: Copyright © 2021 Kalkine Media

Let us take a look at Kogan.com’s FY21 performance -

Kogan’s FY21 revenue up, but profit drops 87%

Kogan’s NPAT dropped to AU$3.5 million, marking a decline of 86% compared to the previous year. This massive drop in profit reflects inventory, logistics as well as Mighty Ape acquisition costs. However, the Company posted a solid 56.8% increase in revenue, to AU$780.7 million, also delivering a CAGR of 33.4% since FY2019.

Other key highlights from FY2021 are-

  • Gross profit stood at AU$203.7 million, up 61%.
  • The adjusted NPAT was recorded at AU$42.9 million, increasing by 43.2%.
  • Adjusted earnings per share (EPS) was up 27.2% to AU$0.41.
  • The Company decided not to pay dividends to support its growth plans and has not declared a final dividend for FY21.
  • As of 30 June 2021, Kogan.com had net cash of AU$12.8 million.

Source: Copyright © 2021 Kalkine Media

RELATED READ: Three ASX retail shares with decent upside potential

Commenting on Kogan.com’s FY21 performance, Ruslan Kogan, Founder and CEO, stated-

Outlook for FY2022

Kogan.com is a dynamic portfolio of business and has a positive outlook for continued growth. In FY2022, the Company anticipates improved operating leverage, consistent with its long-term track record. Other FY2022 goals include-

  • The Company will aim to grow its First memberships, reaching the medium-term target of 1 million members Growth in Exclusive Brands.
  • Increase in Kogan Marketplace Integration of Mighty Ape team and operations.
  • For improving its capabilities, Kogan anticipates potentially implementing logistics projects that its balance sheet can support.

Kogan’s excellent start in FY2022

The July 2021 unaudited management accounts show:

  • The Company reported growth of 5.1% in gross sales during the month compared to July 2020.
  • For the first month of FY21, adjusted EBITDA stood at AU$2.1 million, reflecting high operating costs that are gradually reducing the inventory of AU$215.4 million.
  • Kogan has a strong balance sheet to support the planned business growth initiatives.

Furthermore, the Company highlighted that the first 18 days of August 2021 had shown a strong acceleration above July 2021 performance, with gross sales up 24.5% vs July.

RELATED READ: 10 ASX companies that posted profit in this earnings season

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