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Kogan share price slumps on insider selling news

The Ltd (ASX: KGN) share price has slumped 3% lower this morning after senior management sold down their shares in the company.

What did Kogan announce this morning?

Kogan confirmed the sale of approximately 5.2 million shares in the company by entities associated with Ruslan Kogan and David Shafer.

Mr. Kogan is the founder, CEO and Executive Director of the Aussie retail group while Mr. Shafer is the Chief Operating Officer and Executive Director.

According to this morning’s release, the sales reflect approximately 5.6% of Kogan shares on issue while also advising that “they have no intention to sell any further securities prior to the release of the FY20 financial results.”

How did Kogan perform in FY19?

On Tuesday, Kogan reported its full-year results with revenue from ordinary activities up 6.4% on the prior corresponding period (pcp) to $438.7 million.

The biggest revenue drivers for the Aussie retailer was its Exclusive Brands segment, which saw 41.6% year-on-year growth, the company’s Kogan Mobile business and the launch of its Kogan Marketplace initiative throughout the year.

Kogan’s profitability also surged, with profit before tax climbing 11.4% to $23.4 million while net profit after tax (NPAT) rocketed 21.9% higher to $17.2 million for the year.

The Kogan share price responded accordingly, climbing 17.8% higher so far this week to Thursday’s close before this morning’s drop.

Foolish takeaway

Investors never like to see insider selling and this morning’s announcement is no exception, with 5.6% of shares sold sending the Kogan share price lower.

However, the Kogan share price is up more than 60% so far this year and continues to diversify its earnings with the latest addition being its Kogan Super business in conjunction with Mercer.

The online retail group has thus far avoided much of the downturn we’ve seen in the Retail sector to consistently post profits and deliver value to its shareholders.

While I’m not looking for retail exposure or to add Kogan to my portfolio, it certainly seems like a solid diversification option based on its recent results history.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended 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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