Why Kogan’s Share Price Tumbled Today

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By Published On: April 23, 20210 Comments

Kogan's share price dipped 10.4 percent today when trade opened this morning. Here's what is driving the sudden change for the online leader.

This comes after the online retailer reported its Q3 update, which reported slow sales growth compared to its boom throughout the pandemic.

As of writing, Kogan’s shares are down 13.87 percent, trading at $10.74 a share. According to Motley Fool, the retailer’s shares have dropped 58 percent from their 52-week high.

The online retailer, which was an undoubted winner of the pandemic-fuelled online boom, reported more than 47 percent growth in gross sales in Q3 FY21 and 65 percent revenue growth. These numbers were driven by a 77 percent increase in active customers to 3.2 million for Kogan, and 742,000 for the acquired NZ business, Mighty Ape.

Kogan’s shares slipped 13.87 percent on April 23 | via Yahoo! Finance

Despite these increases in revenue and gross sales, its EBITDA declined by more than 24 percent. The retailer cited customer demand fluctuating below the levels seen in the nine months to December 2020, when e-commerce was reaching an all-time high.

As such, Kogan was required to store larger inventory levels than expected, which incurred higher storage expenses and demurrage fees. Said fees are expected to be resolved from May 2021.

The ‘significant increase’ in operating costs, together with the business’ ongoing investment in Marketing and People, has further driven the decline in EBITDA. The retailer has also signalled that price inflation in products planned for reordering in advance of the peak Christmas trading season – additionally, the retailer cited international shipping costs as a catalyst for the inflation.

In addition, a provision of $5.1 million for the payment of Tranches 3 and 4 of Mighty Ape was made during this period, contributing to the fall in EBITDA for the quarter.

Ruslan Kogan, Founder and CEO of Kogan, noted that despite the fluctuation of short term trading conditions, the business remains focused on its long term vision.

“We have maintained a strategy throughout the pandemic to be there for our customers during a period they need us the most,” he said in the Q3 report. “While short term conditions can fluctuate, we remain focused and committed to our long term vision.”

Since January 25, Kogan’s valuation has dipped 42.5 percent and now has a market capitalisation of $1.3 billion.

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