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Highlights
- Kogan share price at market close on 27 January 2023 was AU$4.50.
- In its Business Update dated 24 January 2023, the eCommerce company has cited considerable progress in 1H FY23 in the sell-through of excess inventory.
- From January 2023, it expects gross margins to progress; and plans to additionally optimise operating costs through 2H FY23.
Kogan share price on 27 January 2023 was AU$4.50 with a market capitalisation of AU$478.48 million. Shares traded up by ~0.5% and have witnessed a growth of 24% in January 2023 to-date. Kogan.com Ltd (ASX:KGN) is a portfolio of retail and services businesses and a prominent consumer brand that claims price leadership via digital efficiency.
Below are key highlights from KGN’s 1H FY23 performance-
- Net Cash (after loans & borrowings) of the company increased to AU$74 million as of 31 December 2022.
- Inventories reduced to AU$98.3 million.
- Group active customers were 3,323,000.
- Kogan First members saw an uptick of over 47% YoY to 404,512 as of 31 December 2022.
- Gross sales of AU$471.1 million decreased 32.5% YoY.
- Gross profit amounted to AU$62.9 million, Adjusted EBITDA was AU$(4.4) million and Adjusted EBIT was AU$(12.7) million.
Image source- Karolina Grabowska | Pexels
What impacted the results?
In the reporting period, KGN made headway in the sell-through of excess inventory. It trimmed down inventory in warehouse by 39% since 30 June 2022. Subsequently, there was growth in net cash (after loans & borrowings) after funding the Mighty Ape Tranche 3 payment (AU$14.2 million), repaying loans & borrowings of AU$25 million and acquiring Brosa, expanding KGN’s share in the online furniture retail market.
On the other side, subdued sales activity was noticed. Kogan says it focused on selling via the final balance of excess inventory. This involved discounting for customers, affecting gross profit and gross margin. The drop in inventory also led to reduced operating costs (across warehousing and marketing), the report says.
What’s next for Kogan.com?
The report further says that KGN plans to optimise operating costs and restructure the business to be back to the operating margin levels prior to Covid-19. It expects better gross margins from January 2023. Besides, there could be further optimisation of operating costs through the second half.
In regard to the Brosa acquisition, KGN says it looks forward to the brand’s relaunch in the second half and deliver to the 500,000 Brosa customer base. The company also claims to be confident in the months to come, in terms of its capability to return to an active, agile, and inventory-light business that has solid operating margins and profitability.
Founder and CEO Ruslan Kogan believes that when customers are observing their costs cautiously, ecommerce turns out to be even more vital. Amidst the impacts of inflation and interest rates, it will be interesting to witness how KGN performs in the current financial year.
