Shares in online retailer Kogan.com again sold off on a weak trading update and early figures on interim earnings for the six months to December 31.
The shares fell more than 12% to $6.15 after touching a low of $5.77 as investors the real story from the update wasn’t another rise in revenue and a commendable reduction in unsold stocks, but earnings weakness.
Kogan.com revealed a steep fall in its earnings for the first half of fiscal 2022 thanks to executive compensation and acquisition costs weakened the business’ earnings line.
In a trading update this morning, Kogan revealed its adjusted earnings before interest, tax, depreciation and amortisation fell 58% to $21.7 million for the six months to the end of December.
This was attributed to “significant equity-based compensation expenses” following the business’ annual general meeting in 2020, where founders Ruslan Kogan and David Schafer were awarded $110 million in a controversial incentives grant.
The earnings drop was also due to the business’ recent finalisation of its acquisition of New Zealand online business Mighty Ape.
Gross profit fell 4.4% to $112.4 million for the period but the company’s total sales, including from Mighty Ape, grew 9.4% to $698 million, thanks largely by rapid growth in the company’s third-party Kogan Marketplace division. Active customers across Kogan and Mighty Ape also grew, topping 4 million.
The company said additional costs and delays in shipping and logistics had hurt the business’ earnings, noting that it was still experiencing supply chain disruptions. Kogan also spent more on advertising this half, which also ate into earnings.
Founder and CEO of Kogan.com, Ruslan Kogan, said in the update:
“Over four million Aussie and Kiwi shoppers have recently experienced the choice, value, and delivery benefits of the Kogan.com Group. Every decision and action we take is for our customers, and the world class Kogan team jumps out of bed every morning to create a great experience for online shoppers.
“We have continued to re-invest in our customers through the Kogan First loyalty program to offer the best deals on a wide range of products, delivered quickly and efficiently. After launching late last year, Kogan Delivery Services is already making an impact with more than 100,000 orders delivered directly to customers since launch.”
A positive for Kogan in the update was the reduction in the previously high levels of unsold stocks at the end of the previous financial year.
It said inventories were cut from $227.9 million (comprising $191.8 million in warehouse, and $36.1 million in transit) as at June 30, 2021 to $196.8 million (comprising $158.5 million in warehouse and $38.3 million in transit) as at December 31 2021.