The Kogan.com Ltd (ASX: KGN) share price will be on watch this morning following the release of its first half update.
How did Kogan perform in the first half?
During the first half of FY 2020 Kogan reported its biggest half of gross sales and gross profit. This was driven by record sales during Black Friday and Boxing Day.
For the six months ending December 31, Kogan's gross sales grew by more than 16% over the prior corresponding period. Gross profit grew a touch slower and was up more than 9% on the first half of FY 2019.
The latter is a slowdown on its first quarter growth. During the first quarter gross profit was outpacing its gross sales with growth of 28% over the prior corresponding period.
One area of its financial performance that improved during the second quarter was its operating costs. Management revealed that they declined marginally over the period.
Combined, this led to Kogan finishing the period with cash of $34.1 million.
Customer delight.
Kogan's founder and CEO, Ruslan Kogan, was pleased with the company's performance in the first half.
He said: "We are proud to have delivered another record half in Gross Sales and Gross Profit, all while undertaking significant investments into the future of the business. The projects that we have rolled out in 2019 will pave the way for the business over the coming years — these include Kogan Marketplace, Kogan First, Kogan Credit Cards and Kogan Energy. We are investing into building strong customer relationships in these new divisions. We expect these divisions to delight our customers and drive loyalty over many years."
Speaking of which, customer numbers increased 10% year-on-year to 1,699,000 during the first half.
Mr Kogan was also pleased with the performance and prospects of the Kogan Marketplace business.
"As we introduce new sellers to the Kogan Marketplace, and rapidly grow that division, we are undergoing a period of transition to an e-Commerce company that is no longer constrained by inventory and is capable of infinite growth without additional capital. In the long term, this creates huge benefits to both our customers and our shareholders as we build one of the major e-Commerce marketplaces in Australia and New Zealand," he added.
In the second quarter the Kogan Marketplace grew its gross sales by more than 44% on the prior quarter.
Outlook.
The CEO appears confident that there's more to come from Kogan Marketplace and the rest of the business.
"We're pleased to have shareholders and partners alike that support our strategy of investing in the long term future of our business. We're just at the very beginning of seeing the benefits from our major investments in warehousing and infrastructure for faster delivery, in Kogan Marketplace for greater product variety, Kogan First for rewarding loyal customers, and more. We're just getting started, and we look forward to delighting our customers with the benefits of these strategic investments for years to come," Mr Kogan concluded.
