Kogan retrograde, hit by growth difficulties

This figure was impacted by stock compensation expenses related to the granting of options after the Company’s AGM in November 2020; and suffered shipping costs of $ 5.8 million due to on-time warehousing and supply chain disruptions.

There is also a provision of $ 5.1 million for installments of final payment from Mighty Ape was also incurred which it acquired last December for $ 122 million.

At the start of trading, the stock fell $ 1.26, or 12%, to $ 8.89 each.

RBC analyst Tim Piper said the news suggests the company is at breakeven based on underlying EBITDA in the fourth quarter.

“Some of the issues impacting margins and costs are transient and will be resolved, however, we remain of the view that the FY22 profit guidance is too high and expect significant declines in consensus,” a- he said in a note.

Mr Piper noted that a big concern was the current level of consumer demand which has moderated in recent months despite steep price cuts, promotional activity and high marketing costs.

On Friday, Kogan.com said in April that the shipping issue has been resolved and does not anticipate any hardware issues in the future.

“A major challenge caused by market dislocations following COVID-19 has been managing inventory levels to support rapid growth,” he said.

“In order to provide the delivery experience customers want, Kogan.com has increased their inventory levels from the end of 2020, resulting in continued high warehousing costs.”

Customer demand in April remained in line with the third quarter, and below levels seen in the nine months leading up to December 2020. It increased promotions to move inventory, which reduced gross margins and led to costs higher marketing rates.

At the same time, Kogan.com said price inflation was crossing global supply chains and consumer products were reordered for the peak of Christmas trade, as well as cost inflation. international shipping.

Kogan.com said the company’s long-term fundamentals remain attractive given its position in the Australian and New Zealand online retail markets, with online retail sales currently only accounting for a small percentage of sales. total retail sales in both countries.

Mr Piper added that the coming months look “tough” for Kogan, but working on the inventory backlog will help improve margins, and ending demurrage charges means the company is heading in that direction.