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Shares in online marketplace Kogan have sunk to three-year lows after the retailer reported a downbeat start to the new financial year, with the company’s sales going backwards and the business swinging to a loss as consumer demand wanes.
In a missive to shareholders on Friday morning, the Ruslan Kogan-helmed business said overall sales had moderated through the first three months of the year, falling 3.8 per cent to $262.1 million.
Ruslan Kogan’s online group has seen a sharp fall in sales and profits for the third quarter.Credit:Louie Douvis
The retailer also reported an $800,000 loss for the quarter, a massive 110 per cent fall on the same quarter last year and a significant decline on the company’s first half, where it reported $17 million in earnings. Shares in the business plunged 12 per cent to $3.96 after market open, the company’s lowest level since March 2019.
The company said at the start of the year it had geared up for continued elevated sales growth in line with its previous quarters, a prediction that did not come to pass. Kogan blamed this development on “general market factors”, including an overall slowdown in online shopping.
Online retail sales tracked by big four bank NAB over January and February show that online sales did moderate in the second month of the year, however overall online sales are up year-on-year. Other online marketplaces, such as MyDeal, did not report similar slowdowns in sales over the quarter, with MyDeal’s revenue nearly doubling for the period.
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Kogan has struggled to maintain the growth rates it experienced through the early days of COVID-19, with the company admitting early last year it had misjudged the level of ongoing consumer demand through the pandemic and had been left with a glut of inventory, forcing the business to pay higher warehousing costs and aggressively discount stock.
On Friday, the company again admitted it had prepared its inventory and operational levels for a level of consumer demand that did not eventuate, and said it would now look to permanently cut its operating costs to be in line with the slower growth it now expects through the rest of the year.
“While market conditions are challenging at present, the foundations laid over the last 16 years are holding us in good stead,” Ruslan Kogan said.