Online retailer Kogan.com is down nearly 40 percent on sales compared to this time last year.
Reported in the release of Kogan’s 2022 annual general meeting update, the company’s gross profits for the financial year-to-date (July-Oct 31) sat at 41.1 million, down 40.6 per cent on the same period in 2021. The company has been dealing with a surplus of inventory this year as it over ordered as a precaution against supply chain issues. This caused the group to sink to a bottomline loss of $36 million in 2021-22 compared with a $3.8 million profit a year earlier.
But Kogan CEO and founder, Ruslan Kogan doesn’t believe that this trading result is indicative of projected trading performance. Instead, Kogan is optimistic about the future. “Once the final sell through of inventory is completed, we plan to have the Kogan Group return to the historic growth trajectory and profitability that it has been able to deliver,” he said. “The trading results reflect a period of subdued sales activity in e-commerce, whilst also cycling strong results in the prior COVID year,” Mr Kogan said. “We are now in a phase of consolidation, with the aim of returning to the levels of profitability and operating leverage that we previously delivered in the years between our IPO and the earlier stage of the pandemic.”
As a result of this news, ASX:KGN shares are climbing as shareholders are confident in Kogan’s optimistic outlook and thoroughly laid out plans for the next 18 months.
According to the update, the company will be implementing a range of enhancements to their verticals that seek to drive further growth in FY23 and beyond. These new implementations include a stronger investment in Kogan Mobile, the introduction of a purchase and balance transfer offer with Kogan Money Credit Cards, and a relaunch of ‘Kogan Insurance’ with its new partner QBE. According to AFR, the e-commerce group has also stripped back underperforming product categories to save on warehouse costs as well as suspended in house delivery services.
“We look to the second half of FY23 with confidence as the Kogan Group returns to being an agile, inventory-light business with strong operating margins,” Mr Kogan stated.
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