Shares in e-commerce firm Kogan.com were crunched on Friday as it joined the growing number of companies reporting weak or weakening sales and earnings figures for the March quarter.
Temple and Webster, Nuix and Redbubble have all seen their shares sold off this week after revealing slowing growth rates, or falling revenues, with lower earnings.
In both cases the weakness means falling short of guidance issued earlier.
Friday saw Kogan join the queue and the shares fell more than 11% in the first hour of trading to $11.10. The shares touched an 11-month low of $11.02 in trading.
Kogan was one of the big winners from the surge in online sales during 2020’s lockdowns during the pandemic but now its boost is running out of puff.
Customer demand during the March quarter slowed, expenses rose and despite a rise in gross profit, adjusted earnings fell 24%.
Kogan said it had been increasing its promotional activity to improve its inventory position (ie to clear unsold stock).
“While short-term trading conditions can fluctuate, we remain focused and committed to our long-term vision,” founder and chief executive Ruslan Kogan said in the statement to the ASX.
At the same time, Kogan said it had witnessed price inflation in many products currently being planned for re-order in advance of the peak Christmas trading period – especially those relying on silicon chips and LCD panels.
Together with inflation in international shipping costs, it said this gave it confidence in the quality of its current inventory.
Gross sales across the Kogan Group – which includes Mighty Ape – grew by more than 47% during the quarter, revenue rose by 65% and gross profit was up 54%.
That was sharply slower than what Kogan reported for the December 31 half year.
Gross sales growth was up 97% seen in the six months to December, revenue was up 88% and gross profit was up 126%, so the March quarter figures represent a significant slowing.
But it should be pointed out that Kogan saw rapid growth in the first three months or so of 2020 as the pandemic hit and lockdowns spread across the country.
Kogan reported in May 2020 that in April, 2020, gross sales were up more than 100% on April 2019, gross profit rose 15% and adjusted earnings were up more than 200%.
So while there is clearly a slowing in its key measures for Kogan, that’s partly a function of the high sales growth a year ago as much as waning consumer interest this year.
Nuix and Red Bubble seem to have been hit by a clear slowing in demand for their products.