Shares of online retailer Kogan [ASX:KGN] rose on Wednesday (26/10/2022) despite Q1 FY23 Gross Sales slumping 38.8% year-on-year and Gross Profit falling 40%.
Kogan said the September quarter was an outlier as it cycled excess inventory and high sales volumes in Q1 FY22 brought forward by pandemic-enforced lockdowns.
KGN said it’s looking forward to H2 FY23 ‘with confidence’:
‘The Company looks to 2HFY23 with confidence in its ability to return to a nimble, agile and inventory-light business that delivers strong operating margins.’
KGN shares were up 5% in late Wednesday trade but are down 60% year to date:
Source: Tradingview.com
Kogan explains plan amidst declining profits
In Kogan’s own words, Q1 FY23 was a quarter of ‘subdued sales activity’, cycling a prior corresponding quarter ‘heavily impacted by COVID-19 lockdown orders’.
Q1 FY23 was less about sales growth and more about ridding itself of bloated inventory.
Kogan said the ‘vast majority’ of its inventory sell-through will end by early 2023.
Here are the (unaudited) Q1 FY23 trading figures:
- Inventories reduced to $132.1 million from $159.9 million
- Gross Sales down 38.8% year-on-year to $202.3 million
- Gross Profit down 40.4% year-on-year to $31.3 million
- Adjusted EBITDA loss of $0.3 million
- Group Active Customers down 12.3% year-on-year
- Kogan First Subscribers up 48.8%
- Kogan Mobile Active Customers up 5.1% year-on-year
Source: KGN
Kogan stated the decline in Gross Profit was impacted by lower Gross Margins, linked to the boosted sell-through of its excess inventory, which also allowed a cutback on operating costs.
KGN CEO Ruslan Kogan commented:
‘Great value and choice have never been more important than now. Inflation and rising interest rates are putting pressure on households across Australia and New Zealand. It’s in the Kogan.com DNA to obsess over delivering the most in demand products and services at the best possible prices.
‘We know that during periods of belt tightening like this, our responsibility to be the best place for Aussies and Kiwis to get a bargain on their key household items is more important than ever. While there is a lot of uncertainty in the world, we’re optimistic and excited to continue delighting our millions of customers and the growing base of loyal Kogan First subscribers.’
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Regards,
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For Money Morning
