Kogan (ASX:KGN) Shares Spike 50% Despite Falling Profit

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Online retailer Kogan [ASX:KGN] rose 50% on Thursday, despite FY22 gross sales rising a slim 0.1% and adjusted EBITDA falling more than 60%.

Kogan reported ‘another year of record gross sales’ as it shifts focus to becoming a leaner, more cost-efficient company.

Despite reporting record gross sales, KGN saw FY22 profit fall by 9.4%.

It didn’t deter the market, though. KGN shares spiked 50% higher in late-Thursday trade.

Despite today’s boost, the retailer is down 50% over the past 12 months:

ASX:KGN kogan stock prices chart


Kogan’s business update

This Thursday morning, Kogan updated the market on its business dealings for the FY22 fourth quarter.

Kogan said it has returned to positive quarterly adjusted EBITDA in Q4, following a ‘successful ongoing recalibration of operating costs’.

Kogan calculates adjusted EBITDA by removing non-cash items including any unrealised gains/losses, equity-based compensation, and one-off non-recurring items.

Kogan also reported its unaudited accounts as at 30 June 2022. Here are the highlights:

  • Gross profit was down 9.4% in FY21.
  • Adjusted EBITDA was down 69% in FY21 and down 37.9% in FY20.
  • Gross sales were up 0.1% in FY21 and up 23.6% in FY20.
  • Active customers grew to 3,972,000.
  • Kogan First (analogous to an Amazon Prime membership) members grew 210% since FY21 to 372,000.
  • Total inventories — a key sticking point in recent quarters for the retailer — fell from $227.9 million at the end of FY21 to $161.1 million.

Finally, Kogan’s Mighty Ape segment continues to outperform Kogan.com, as you can see below:

kogan ASX:KGN core financial table

Source: KGN

Kogan’s share price outlook

CEO Ruslan Kogan offered his thoughts on his company’s performance, pondering the changing times:

Times are changing. In uncertain times, people don’t want to alter their lifestyle but they are happy to shift the way they shop. We know that in an environment where great value becomes even more important, Kogan.com serves an important need.

Our Business was built for this. Efficiency and speed has been at the core of how the Kogan.com team operates for 16 years now. We’re honoured that there are millions of Active Customers in the Group that have seen the value we provide. When the Australian public was asked to vote for their favourite online retailer, Kogan.com was voted the Australia Post ORIAS People’s Choice Retailer of the Year for the sixth year in a row. This is perfect validation of the value we create for the people that matter most – our customers.

We’re not resting on our laurels though. We are making the Business leaner to enable us to pass on cost efficiencies to customers in the form of lower prices.

Ruslan Kogan also flagged that the retailer will discontinue any segment not delivering value to customers or shareholders:

A leaner company means we discontinue parts of the Business that are not delivering value to customers or shareholders, and also gives us the flexibility to respond to significant ongoing changes in the macro environment.’

From retail to EVs

Ruslan Kogan is right, times are changing.

Especially when it comes to cleaner energy.

The way we drive is changing…and the age of the electric vehicle is upon us.

But with the world shifting to EVs, the demand for critical battery tech metals is rising.

Our small-cap expert, Callum Newman, has recently identified three neglected Aussie stocks with great potential in the battery tech space.

To find out more, read Callum’s latest report on ‘Elon’s Chosen Ones’.



Kiryll Prakapenka
For Money Morning

About Kiryll Prakapenka

Kiryll Prakapenka is a research analyst focusing on investigating the biggest trends in investments. Kiryll brings sound analytical skills to his work, courtesy of his Philosophy degree from the University of Melbourne. A student of legendary investors and their strategies, Kiryll likes to synthesise macroeconomic narratives with a keen understanding…

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