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Will the launch of a credit card with Citigroup restore the Kogan.Com Ltd (ASX:KGN) share price?

The Kogan.Com Ltd (ASX: KGN) share price is up 3.5% in early trade after it announced it was launching a credit card with Citigroup.

The multi-year agreement will see Citi issue the card, provide system infrastructure, servicing, back office processing, regulatory & compliance oversight and branded digital platforms. Kogan.Com will market and distribute the credit cards and provide ‘loyalty fulfilment.’

The Kogan Money credit card will aim to be competitively priced and offer “unique and compelling loyalty incentives” for customers to shop on Kogan.Com and elsewhere.

Citi and Kogan.Com will share in the ongoing economics, but further details will be released when the credit card is available in 2019.

David Shafer, Executive Director of Kogan.Com, said “Kogan.Com is proud to be partnering with Citi, the world’s largest credit card issuer, to deliver Aussie consumers a Kogan Money Credit Card which will provide outstanding value when shopping on Kogan.com and elsewhere.

“We chose to partner with Citi because of their forward thinking and ability to leverage digital efficiency to deliver compelling value to Kogan customers. This partnership will be a clear-win for our customers and Citi customers.”

Will this turn around Kogan.Com’s fortunes?

After a few sales of shares by management and seemingly toughening trading conditions things don’t look as rosy for the online retailer as it did six months ago.

If some of Kogan.Com’s newer ideas take off then they could be sizeable earners. This credit card idea, along with the recent Kogan Super and Kogan Home Loans announcements, make sense. Kogan.Com likes to be a low-cost leader and customers in those categories like to find the cheapest price.

Foolish takeaway

Kogan.Com is a funny one. It is growing revenue at a fairly impressive rate, but the share price has been trashed.

It’s trading at only 19x FY18’s earnings with a grossed-up dividend yield of 6.4%. If Kogan.Com can keep growing profit like it has been then today’s price could be very attractive. But, with everything that’s happened, it’s hard for me to call it a clear buy today until we see the half-year result.

I’d rather invest in these dependable ASX profit growers for my portfolio, which is why I already own shares of two of them.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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