January 2023 Business Update
Kogan.com ends the period with a strong cash balance, having substantially
right-sized inventory levels
Kogan.com Limited (the Company; Kogan.com; ASX: KGN) is pleased to announce
significant progress in the sell-through of excess inventory during the half, having
reduced inventory in-warehouse by 39.0% since 30 June 2022. The reduction in inventory
levels supported growth in net cash (after loans & borrowings) to $74.0 million, after
having funded the Mighty Ape Tranche 3 payment ($14.2 million), repaid loans &
borrowings of $25.0 million and successfully acquired Brosa
1
. The half also saw Kogan
First subscribers
2 grow to 404,512 by 31 December 2022 (47.6% growth YoY) and Kogan
Mobile Australia reach the most ever Active Customers in its history (4.2% growth YoY).
The half did, however, reflect subdued sales activity for the Company, whilst cycling a half
in the prior year that was impacted by COVID-19 lockdown orders. During the half, the
Company focused on selling through the final balance of excess inventory which
involved unprecedented discounting for customers, impacting Gross Profit and Gross
Margin. The reduction in inventory did result in reduced operating costs, across both
warehousing and marketing.
Having now cleared through the bulk of this excess inventory, the Company will continue
optimising operating costs and streamlining the Business to return to the levels of
operating margins previously delivered prior to the COVID-19 pandemic. The Company
expects gross margins to improve from January 2023, and to further optimise operating
costs progressively through the second half of the financial year. The Company looks to
2HFY23 with confidence in its ability to return to an agile, nimble and inventory-light
business that achieves strong operating margins and profitability.
2 Excludes Kogan First customers who are in a trial period, and includes only non-trial subscribers.
1 For details on this transaction, please refer to the ASX announcement ‘Kogan.com acquires Brosa’ released on
22/12/2022.
Founder and CEO of Kogan.com, Ruslan Kogan, said:
“The impacts of inflation and interest rates have begun to affect the lives of
Australians and New Zealanders. We’ve been growing Kogan.com for more than 16
years now, so we’ve been through many cycles and we know that when customers
are watching their costs carefully, ecommerce becomes even more important.
Since Kogan.com launched out of a garage in 2006, we’ve been obsessed with
making the most in-demand products and services more affordable. We are proud
to be making that possible for our millions of customers and the growing base of
loyal Kogan First Subscribers.
We are also proud and excited to have added Brosa to the Kogan Group,
expanding our share of the online furniture retail market. Along with our
acquisition, we are now looking forward to welcoming, delighting and delivering
great value to the 500,000 Brosa customers, as we relaunch the brand in the
second half of the financial year.”
The Company provides the following update which, where applicable, is based on
unaudited management accounts for 1HFY23. The update compares the 1HFY23
management accounts to the audited 1HFY22 results, unless stated otherwise:
● Net Cash (after loans & borrowings) grew to $74.0 million as at 31 December
2022. This result was achieved after having funded the Tranche 3 payment in
respect of the Mighty Ape Acquisition of $14.2 million, repaid loans & borrowings
of $25.0 million (with a remaining balance of $10.0 million at 31 December 2022)
and payment of the Brosa acquisition purchase price of $1.5 million, during the
half.
● Inventories reduced to $98.3 million (comprising $84.1 million in-warehouse and
$14.2 million in transit) as at 31 December 2022 from $159.9 million (comprising
$137.9 million in-warehouse, and $22.0 million in transit) as at 30 June 2022.
● Group Active Customers
3 were 3,323,000. Kogan.com ended the period with
2,550,000 Active Customers and Mighty Ape had Active Customers of 773,000.
● Kogan First members grew 47.6% YoY to 404,512 as at 31 December 2022.
● Gross Sales of $471.1 million declined 32.5% YoY. Performance was impacted by
soft trading conditions and the cycling of a period in the prior year impacted by
COVID-19 lockdown orders.
● Gross Profit of $62.9 million was impacted by soft topline performance
mentioned above along with significant discounting to clear through the bulk of
excess inventory.
● Operational Cost efficiencies continued to be achieved during the half, as excess
inventory reduced. Variable costs as a percentage of Gross sales reduced to 7.6% in
1HFY23 from 8.5% in 1HFY22.
● Adjusted EBITDA
4 was $(4.4) million. EBITDA was $(23.0) million.
● Adjusted EBIT
4 was $(12.7) million. EBIT was $(31.3) million.
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DYOR
i hold KGN
am not sure how the market will take this , but if it dips enough , i will nibble some more
will be looking for a price very close to $3 ( or less )