Join our daily newsletter At The Bell to receive exclusive market insights
- Shares in online retailer Kogan (KGN) have slumped for the second time on the same set of half-year results
- When Kogan shared some key financial figures in January, shares dropped over 30 per cent in three days
- Today, the company released its official half-year financial report, and shares are once again slipping
- The company raked in record sales and profits, but revenue fell short
- The recently-launched Kogan Marketplace is to blame for the revenue decline, as only seller fees are recognised as revenue for Kogan
- Further, though gross profits grew, the numbers suggest the second quarter was particularly weak compared to the first
- Nevertheless, Kogan will be paying shareholders a fully franked 7.5-cent interim dividend
- Shares in the company are down just under three per cent today, currently worth $5.02 each
Shares in online retail conglomerate Kogan (KGN) have slumped for the second time on the same half-year results today.
The company shared some of the key figures for the first half of the 2020 financial year in a business update back in January, causing shares to nosedive over 30 per cent in three days.
Today, the company released its official half-yearly financial report, and shares are once again on the decline.
A mixed report
At first glance, the results seem rather positive: Kogan raked in record gross profits and gross sales over the last half-year, supported by the company’s highest-ever Black Friday and Boxing Day sales.
Gross sales rose by 16.4 per cent compared to the same period in 2018, coming in at $322.9 million. Similarly, gross profit was 10.6 per cent up on the previous half-year at $49.9 million.
Revenue, however, was 5.3 per cent lower at $219.5 million for the second half of 2019 compared to 2018’s $231.8 million.
Kogan’s young Amazon and eBay rival, Kogan Marketplace, seems to be the section of Kogan’s business leaving investors concerned.
While Kogan Marketplace contributed heavily to company gross sales and profits, only seller fees are recognised as revenue from the business, meaning the Marketplace is also to blame for the lowered revenue figures.
Still, Kogan Marketplace was launched in March 2019 and, according to Kogan, was a strong contributor to gross company sales increasing 44.6 per cent in the December quarter compared to the September quarter.
With net profit after tax for the half-year rising 20.8 per cent on the previous year to $8.9 million and Kogan’s active customer base increased 10 per cent to just under 1.7 million customers, it seems the positives from the report should outweigh the negatives.
A tricky second quarter
Nevertheless, while overall half-year profit growth was strong, Kogan reported a 28 per cent increase in gross profits in the first quarter of the 2020 financial year. As such, the 10.6 per cent profit increase for the half-year suggests perhaps the second quarter of the year was weaker than expected.
Keeping in mind the record Black Friday and Boxing Day sales to inflate these numbers further, perhaps investors are concerned the second quarter was particularly weak compared to the first.
Confident management
Nevertheless, Kogan Founder and CEO Ruslan Kogan said the company is proud to have brought in increased sales and profit in the face of heavily expanding the services offered by the company.
Along with Kogan Marketplace, 2019 saw the company launch its Kogan First loyalty program brand, its Kogan Credit Cards brand, and its Kogan Energy gas provisions brand.
“The projects that we have rolled out in 2019 will pave the way for the business over the coming years,” Ruslan said.
“We are investing into building strong customer relationships in these new divisions. We expect these divisions to delight our customers and drive loyalty over many years,” he said.
He said the company is at the “very beginning” of the benefits expected from its several brands and wide distribution network.
Importantly, the company is thanking investors with its wallet: Kogan is shelling out a fully franked 7.5-cent dividend to shareholders, which is 22.9 per cent higher than the last interim dividend of 6.1 cents per share.
Still, the company seems to have fallen victim to high market expectations. In mid-afternoon trade, Kogan shares are down 2.52 per cent and selling for $5.03 each. Kogan has a $472.61 million market cap.
