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Kogan An online shopping cart case – channelnews

Kogan has become the basket case of the online shopping world, profits are plummeting, their warehouses are full of inventory that is struggling to sell despite massive stockouts at most retailers.

Their ASX announcement today saw Kogan’s share price crash to a multi-year low of $4.00 after the online retailer reported falling sales and losses.


Kogan’s gross sales down 3.8% to $262.1 million

Gross profit down 11.2% to $41 million

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) down 110.5% for a loss of $0.8 million

David Shafer, Chief Executive of Kogan Mobile, Inaki Berroeta, Managing Director of Vodafone Australia, and Ruslan Kogan, Founder and Managing Director of Kogan, after reaching an agreement with Vodafone. followed up its billion-dollar deal with TPG Telecom by partnering with online retailer Kogan, which will use the telecom giant’s network to once again sell mobile plans under its name.

The dire outcome comes as shoppers return to retail stores that are making profits and growing despite the same supply chain disruptions that Kogan is facing. founder and CEO Ruslan Kogan, who pocketed tens of millions of investors’ money after the company went public, says a general slowdown in e-commerce in the market during of the March quarter contributed to its problems.

“Over the coming year, the company will recalibrate its organizational costs to current growth levels to support a return to historical operating margins previously generated,” Mr. Kogan said.

Kogan, which has struggled with bloated inventory, congested warehouses, rising costs and moderating sales over the past 18 months as rivals such as JB Hi Fi, The Good Guys and Harvey Norman have seen their business soaring thanks to management that can handle the volatile market conditions that Kogan struggles with.

“There is a big difference between smart management and experienced management,” said one supplier.

During COVID, Kogan has seen its revenue steadily decline after an initial burst of transactions triggered by Covid-19 lockdowns and online shopping.

This initially sent shares of soaring to just under $25 at the end of 2020, but since then a series of earnings downgrades and missed profit targets have damaged its stock. and has since only fallen $4.00 today.

At the adjusted level of earnings before interest, taxes, depreciation and amortization, the entire company posted a loss of $800,000 in the March quarter.

E-commerce unit posted a loss of $3.5 million in Adjusted EBITDA, but this was partially offset by the Mighty Ape business in New Zealand which posted a profit of $2.8 million.

In its March quarter business update, inventory levels were still high at $194 million, consisting of $170 million in warehouses and $24 million in transit.

Kogan says there has been a reduction in stock levels in transit.

Analysts Motley Fol said Kogan’s problems were due to weakness in its core categories of exclusive Kogan brands and third-party brands. They reported sales declines of 18.8% and 21.8%, respectively.

This offset a positive performance from the Kogan Marketplace business, which recorded a 19.8% increase in gross sales for the quarter.

However, it’s unclear whether the growth on this side of the business is due to the cannibalization of sales from other categories.

Again, management did not anticipate this slowdown in sales and positioned its inventory for high gross sales growth.

However, he concedes that consumer demand has not met these expectations.

This left him with high inventory levels.

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