Kogan has reported a successful 1HFY23 despite subdued sales as the company slashed prices to reduce excess inventory, and paid off its borrowings in anticipation for second half growth.
The retailer has this morning announced it has made significant progress in the sell-through of the excess inventory that presented challenges for the company last year. According to the business update announcement, Kogan has reduced in-warehouse inventory by 39 percent since 30 June 2022. This has supported net cash growth to $74 million after having funded the Mighty Ape Tranche 3 payment at $14.2 million and the successful acquisition of Brosa. A further repayment of loans and $25 million in borrowings was also accounted for.
The half also saw Kogan First membership grow 47.6 percent YoY to 404,512 as at 31 December 2022.
“The impacts of inflation and interest rates have begun to affect the lives of Australians and New Zealanders,” said CEO and Founder Ruslan Kogan. “We’ve been growing Kogan.com for more than 16 years now, so we’ve been through many cycles and we know that when customers are watching their costs carefully, ecommerce becomes even more important. Since Kogan.com launched out of a garage in 2006, we’ve been obsessed with making the most in-demand products and services more affordable.
We are proud to be making that possible for our millions of customers and the growing base of loyal Kogan First Subscribers. We are also proud and excited to have added Brosa to the Kogan Group, expanding our share of the online furniture retail market. Along with our acquisition, we are now looking forward to welcoming, delighting and delivering great value to the 500,000 Brosa customers, as we relaunch the brand in the second half of the financial year.”
While Kogan is optimistic for the rest of FY23, it should be noted the company reported Gross Sales declined 32.5 percent YoY at $471.1 million. According to the business update, performance was impacted by soft trading conditions and the cycling of a period in the prior year impacted by COVID-19 lockdown orders. The company’s Gross Profit of $62.9 million was reportedly impacted by soft topline performance mentioned above along with significant discounting to clear through the bulk of excess inventory.
According to the business update, having now cleared through much of it’s excess inventory, Kogan will continue optimising operating costs and streamlining the business to return to the levels of operating margins previously delivered prior to the COVID-19 pandemic. The update states, “the Company expects gross margins to improve from January 2023, and to further optimise operating costs progressively through the second half of the financial year. The Company looks to 2HFY23 with confidence in its ability to return to an agile, nimble and inventory-light business that achieves strong operating margins and profitability.”
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