Kogan.com (ASX:KGN) - Kogan Founder and CEO, Ruslan Kogan
Kogan Founder and CEO, Ruslan Kogan
Source: Kogan.com
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  • Kogan.com (KGN) trades in the red on the ASX after revealing a dip in net annual profits despite sturdy growth in revenue over FY21
  • Gross sales surpass $1 billion for the first time, increasing 52.7 per cent on the previous financial year to $1.18 billion
  • While gross profits increased at a similar level over the 2021 financial year, net profit after tax (NPAT) fell almost 87 per cent to just $3.5 million
  • Kogan says costs associated with some inventory struggles and the purchase of its Mighty Ape business led to the soft NPAT
  • Shares in Kogan.com are down 13.1 per cent and trading at $11.41 each at 12:30 pm AEST

Online retailer Kogan.com (KGN) is trading in the red on the ASX today after revealing a dip in net annual profits despite sturdy growth in revenue over FY21.

The ecommerce company said gross sales surpassed $1 billion for the first time ever, increasing 52.7 per cent on the previous financial year to $1.18 billion. Similarly, revenue grew 56.8 per cent in the 2021 financial year to $780.7 million.

The growth came as the Kogan.com active customer base increased by almost 47 per cent to 3.2 million people.

However Kogan said while gross profits increased at a similar level over the 2021 financial year, net profit after tax (NPAT) fell almost 87 per cent to just $3.5 million. For reference, Kogan tabled $26.8 million in NPAT over the 2020 financial year.

The company attributed the dip in NPAT to costs associated with the December 2020 purchase of Mighty Ape, as well as to some inventory management and logistics costs.

Still, Kogan Founder and CEO Ruslan Kogan said despite its challenges, the company still broke records for general sales, customer numbers, and Black Friday sales, all the while expanding into New Zealand.

“While we recently celebrated our 15th birthday, we feel like we’re just getting started,” Mr Kogan said.

“Over the next year, we’ll be rolling out new and exciting projects to further support our loyal Kogan community with Kogan First membership rewards, new and improved delivery solutions, and further enhancements to the online shopping experience.”

Kogan flagged its inventory challenges back in May in light of unpredictable demand.

The company experienced strong demand for the first six months of the financial year and predicted that demand in the second half of the year would be similar or even grow further.

In light of this prediction, Kogan stocked up on inventory and invested into its operational capacity to make sure it would be able to deal with this demand.

However, as it turns out, demand did not meet expectations — leaving Kogan overstocked on inventory. This brought about supply chain and logistics disruptions for Kogan, alongside some unexpected demurrage (or shipping related) costs.

Kogan said thanks to a strong focus on promotional activity as it worked to rebalance its inventory levels, inventory was now approaching the “right level” for the business and, as such, it expected to improve operating leverage moving forward.

Nevertheless, it seems the fall in net profits may have been steeper than investors were expecting, even with Kogan flagging the inventory woes earlier this year.

Shares in Kogan.com were down 13.1 per cent and trading at $11.41 each at 12:30 pm AEST.

KGN by the numbers
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