Investors Unplug Kogan On Earnings Miss

By Glenn Dyer | More Articles by Glenn Dyer

Shares in online electronics retailer Kogan plunged 22% on Monday after a trading update fell short of market forecasts.

The report revealed weaker sales of private-label products which saw Kogan miss expectations for its half-year sales and profit growth.

Updating the market ahead of its half-year results next month, Kogan said it had booked record-high growth for its gross sales and profit, up 16% and 9% respectively.

These figures were well below market expectations, with analysts predicting an 18% lift in gross sales and a 22% jump in gross profit.

As a result, Kogan’s share price plunged 22 percent to close at $6.18, as investors punished the profit miss.

Chief executive Ruslan Kogan defended the company’s performance in its exclusives division, telling the media it showed “solid growth from a much larger base”.

“While it’s still growing stronger than the overall business, it’s not as strong as the 30 percent-plus growth we had for several years during a time when the business was much smaller,” he was quoted as saying.

He indicated growth in the company’s new marketplace division, which offers an eBay-style service where individuals sellers can list their products online, which may have had an impact.

Marketplace’s gross sales grew 44% in the second quarter when compared to the first quarter.

For the first quarter, Kogan’s gross profit grew 28% on the prior corresponding quarter, and exclusives revenue grew 35%. Despite a moderately weak first quarter in 2018-19, the overall slower growth for the half indicates the key Christmas trading period may have been weaker than expected.

The company said yesterday that inventories were $94.2 million as at December 31, 2019, comprising $81.1 million inventory in warehouse and $13.1 million inventory in transit, and inventory turn improved on the prior half. Cash was $34.1million as at December 31 2019, and the company’s debt facility of $30 million was undrawn.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

View more articles by Glenn Dyer →