Kogan shares take a hit amidst disappointing 2022-23 results

Company News

by Glenn Dyer

Shares of online retailer Kogan (ASX:KGN) faced a sharp decline on Tuesday as investors reacted to the company's 2022-23 results. The shares experienced a 16% drop at one point, settling around a 14% decrease by midday. The financials, which lacked encouragement, confirmed that the end of the pandemic and the reopening of the economy had posed challenges, mirroring the struggles faced by many online businesses.

Gross sales saw a decline of 28.4% to $844.8 million, revenue dropped 32% to $489.5 million, and gross profit decreased by 26% to $136.6 million. The company reported an adjusted net loss after tax of $7.7 million and a statutory loss after tax of $25.9 million, with no dividend issued.

Attributing the loss and sales fall to market trading conditions and inventory realignment, Kogan noted that the reduction in excess stocks stood out as a positive point. The company successfully reduced its inventories by 57% to $68.2 million by the end of the financial year. Kogan's management expressed confidence that inventory levels are now better matched to current demand and changing customer preferences.

However, the optimism was dampened by news of a decline in active customers. The total count was 2,945,000, comprised of 2,190,000 for Kogan and 755,000 for Mighty Ape. This signifies a loss of over 1 million active customers over the 12-month period. On a more positive note, Kogan First subscribers grew by 7.8% to exceed 401,000.

Despite the dip in sales and profits, Kogan's founder and CEO, Ruslan Kogan, expressed contentment with the company's performance. He highlighted a significant achievement during the year – platform-based sales emerged as the largest contributor to both sales and profits. These encompass sales made through Kogan Marketplace, Kogan Verticals, and Advertising & Other Income – eliminating the need for inventory holding.

Kogan stated, "We have set ourselves up for success in FY24 and beyond, and in doing so, we have ensured we’re in the best position possible to deliver exceptional value products and services to millions of customers." He further expressed confidence, noting that Kogan.com had returned to sustained and increasing underlying profitability in the second half of FY23.

"We expect the number of Kogan First Subscribers to accelerate following the expansion of the program, continued growth in our Verticals, a return to growth in Kogan Marketplace as well as our recently introduced Advertising Platform, the launch of a new Vertical in New Zealand, and continued improvement in our Product Division’s profitability," he added.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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