Kogan “recalibrating” for softer e-commerce market

The company today posted a third quarter FY22 trading update detailing how despite positioning the business for growth in gross sales, with levels of inventory built up accordingly, consumer demand failed to meet expectations.

As such, gross sales were down slightly by 3.8 per cent year on year during 3Q to $262.1 million, and gross profit fell 11.2 per cent to $41 million.

The company says the moderation in gross sales was driven by general market factors, including a slow-down in e-commerce activity in Australia.

As such, Kogan says it will be “recalibrating its operating costs in line with current growth levels to support a return to the historical operating margins previously generated”.

“While market conditions are challenging at present, the foundations laid over the last 16 years are holding us in good stead,” Kogan founder and CEO Ruslan Kogan said.

“Our current focus on recalibrating inventory levels and core operational costs is aimed at returning the Company to its historical margins and also to position the business for its next phase of growth.”

The retailer also announced its active customers grew to 4.1 million as at 31 March 2022, up 3.6 per cent year on year, while EBITDA on an adjusted basis was an $800,000 loss.

The trading update follows Kogan posting an $11.9 million December half loss in February - its first half-yearly loss since debuting on the ASX in mid-2016.

The company attributed the loss to continuing supply chain interruptions as a result of the current COVID situation.