Kogan.com shares fall on weaker than expected quarterly sales
Investor panic has hit Kogan.com shares after the online retailer revealed weaker than expected sales and margins over the third quarter.
Investors have looked beyond upbeat forecasts by online marketplace Kogan.com of an improving earnings trajectory and continued growth for its loyalty program over the third quarter to panic over flagging sales and disappointing pre-tax earnings to send the shares crashing almost 30 per cent.
Shares in Kogan.com collapsed by 27.7 per cent on Wednesday to $5.08 after the online retailer released its third quarter sales and adjusted earnings performance, as well as providing an update to its loyalty program.
The market reacted violently to the trading update, sending Kogan.com shares diving, with analysts pointing to a disappointing sales number for the quarter and lower than expected margins, although the market did seem to be more content with growth for the loyalty scheme and news that Kogan.com would launch a new travel and hotels pillar to its ranks.
Towards noon however shares in Kogan.com remained weak, and were down 26 per cent to $5.19.
On Wednesday Kogan.com announced that gross sales for the third quarter of $178.3m was down 6.2 per cent while revenue of $105.9m was down 2.4 per cent for the quarter. This compared to some analysts’ second half growth expectations of closer to 3 per cent.
Kogan.com said in the trading update that gross profit was up 13.8 per cent to $39m driven by improved gross margin of 36.8 per cent, up 5.2 percentage points over the quarter.
It said that group active customers were 2.66m and that for its Kogan FIRST loyalty scheme it grew to over 472,000 subscribers as at March 31, representing growth of more than 16 per cent year on year.
Kogan.com did not provide guidance for its net profit but said that adjusted earnings of $5.3m was against just $200,000 recorded for the third quarter of 2023. At the end of the third quarter Kogan.com was sitting on $34.1m in cash and no debt.
RBC Capital Markets analyst Wei-Weng Chen said the third quarter update was softer than expected.
“A slightly softer than expected top line from Kogan.com in the third quarter. Revenue fell 2.4 per cent vs. the previous corresponding period which compares to market expectations for low single digit growth and margins were slightly below market expectations,” the analyst said.
RBC Capital Markets was looking for sales growth of around 3 per cent, against the 2.4 per cent level reached, and gross margins of around 38 per cent against 36.8 per cent recorded for the quarter.
Kogan.com chief executive was more positive about the performance of the online retailer over the quarter, especially for its loyalty scheme.
“Kogan FIRST has become the north star for the business, creating immense value for our loyal customers.”
Mr Kogan also announced it would continue to grow the benefits through the program, launching Kogan Travel hotel deals.
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