Losses double at Kogan.com in half-year results, but founder Ruslan Kogan says ‘the ship has steadied’

The horror run of losses at Kogan.com has continued in the first half of the 2023 financial year, with the online retailer’s statuary loss doubling on 12 months ago to $23.8 million as revenue and sales plummeted by around a third.

Releasing its half-year results to December 2022 today, Kogan.com (ASX: KGN) saw gross sales fall 32.5% to $471.1 million and revenue fall 34.3% to $275.6m on 12 months ago.

Gross profit of $62.9 million declined 41.8%, hit by an excess of inventory and discounting to offload it. The inventory was halved from 12 months ago to $98.3 million at December 31, with most of the drop coming in the second half of 2022, after inventory say at $159.9 million as at June 30.

Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) saw a $4.4 million loss for the half, down 125%.

Adjusted net profit after tax (NPAT) was a $9.6 million loss and Statutory NPAT a $23.8 million loss.

The latest figures follow on from a record net loss of $35.5 million after tax in FY22, when revenue also fell by 8% to $718.5 million.

Problems with stock levels at the business first emerged in April 2021, with founder and CEO Ruslan Kogan saying they’d learnt “valuable lessons” at the time.

Kogan now sees green shoots for the business after better results in January, delivered an EBITDA profit of $1.5 million. The company is “expected return to adjusted EBITDA profitability in 2HFY23” it told the market.

The ASX results announcement was headlined “return to profitability on track as excess inventory largely resolved”.

This time last year, announcement was headlined “Over 4 million Active Customers underpin another record half for Kogan.com”.

Today’s half yearly results says the business has 3.323 million Kogan Group Active Customers –  2.55 million for Kogan.com, 773,000 for Mighty Ape.

Many details in the H1FY23 results were already known, with Kogan.com’s share price falling around 20% in the month preceding today’s announcement, then climbing 2.3% to $3.50 in Monday trade.

Kogan.com shares are down around 36% on 12 months ago.

There was growth in the business in other verticals, with revenue up year-on-year in Kogan Mobile Australia (5.9%), Kogan Mobile New Zealand (75.3%) and Kogan Money Credit Cards 96.9%).

Kogan Travel and Kogan Travel Insurance were relaunched, and the business swooped on collapsed furniture retailer Brosa, buying its assets, including a database of 500,000 people, from the administrators for $1.5 million in December.

Ruslan Kogan said “the ship has steadied” at his eponymous business and they are “pleased to be emerging from a turbulent few years”.

He pointed to a strong balance sheet, with the business ending the six months with $74 million in net cash (after loans and borrowings), having funding $14.2 million in tranche 3 of payments on the Mighty Ape acquisition, repaid $25 million in loans and borrowings, and paid $1.5 million for Brosa.

“We have a renewed focus on the ruthless efficiency that’s underpinned our entire existence, and we have doubled down on delivering great value for customers. The first half delivered on multiple fronts,” Kogan said.

“Mighty Ape saw the successful transition of Gracie Mackinlay to CEO and received multiple awards for exceptional customer service. And Kogan First continued to grow as we delivered more and more value for our most loyal customers.

“We look forward to the second half of this financial year with confidence. We have reset Kogan.com for success.”