Kogan.com shares surge after return to profit and resumes dividends
Kogan.com shares rallied strongly after the online marketplace returned to profit for the first time since 2021 and resumed paying dividends.
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Shares in online marketplace Kogan.com surged more than 23 per cent on Monday after the retailer returned to profitability for the first time since 2021, and also resumed paying dividends after a three-year hiatus on the back of improving sales.
Kogan.com, founded by entrepreneur Ruslan Kogan, has emerged profitable again after a torrid run of losses, to post an interim net profit of $8.68m, a rebound from a loss of $23.82m in the previous corresponding period as bloated warehouses and a downturn in consumer spending pinched its earnings through 2021 and 2022. The profit was slightly ahead of some analyst expectations.
However, sales were down for the first half of fiscal 2023, falling 9.9 per cent to $248.22m, as the online retailer switched to platform-based sales as well as reducing its bloated inventory position through discounting and promotions, so the retailer could better align with the softer trading conditions.
Shares soared on the results to $7.57 and are up more than 116 per cent in the last 12 months. The stock is still well down on its highs from just under $25 in the first few months of the global Covid-19 pandemic when consumers stuck at home jumped online to shop.
Kogan.com also made a return to paying dividends, announcing an interim dividend of 7.5c per share, payable on My 31.
Other parts of the Kogan Group did achieve revenue growth. Kogan’s business around mobile phones, insurance and internet services grew by 25.6 per cent period-on-period, Kogan First (its loyalty program) grew 109.7 per cent and advertising income grew 75.7 per cent following the launch of the new advertising platform in August.
Profitability of the group also improved during the half, as Kogan.com platform-based sales’ contribution grew to 63 per cent of total Kogan.com gross sales. In terms of its net profit, there was the cost of equity-based compensation to its staff which cost $2.1m (down from $14.2m in the first half of 2023) and unrealised losses of $100,000 in relation to foreign exchange contracts.
In terms of outlook, the company said January 2024 unaudited management accounts showed adjusted pre-tax earnings of $4.9m.
“While our business transformation to a more efficient, platform and software-based model is in its early days, it’s promising to see that it’s starting to pay dividends,” Mr Kogan said.
The online retailer ended the half with cash of $83.3m and no external debt
Jarden analyst Ed Woodgate said the retailer delivered a strong trading update but he remained concerned about apparent share losses to online pure play retailers Amazon and Temu.
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Originally published as Kogan.com shares surge after return to profit and resumes dividends
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