The Kogan.com Ltd (ASX: KGN) share price has been a very strong performer on Wednesday.
In early trade, the ecommerce company's shares are up 8% to $11.85.
Kogan share price jumps after Q1 update
The catalyst for the rise in the Kogan share price today has been the release of a trading update. Here are a few highlights:
- Gross sales grew 21.1% year on year and 23.2% quarter on quarter to $330.5 million
- Gross profit fell 1.7% year on year but grew 31.6% quarter on quarter to $52.5 million
- Kogan.com Active Customers grew 30.7% year on year and 4.5% quarter on quarter to 3,351,000
- Mighty Ape Active Customers fell 2.1% quarter on quarter to 748,000
- Kogan First members grew 171.1% year on year and 64.4% quarter on quarter to 197,000
What happened during the quarter?
During the quarter, Kogan advised that it focused on further scaling the Kogan Marketplace and Kogan First loyalty program, improving logistics and customer service, and driving synergies through the successful integration of Mighty Ape.
It notes that these initiatives underpinned growth in Kogan.com's active customer base, cementing its position as one of the largest online shopping communities in Australia.
Kogan also revealed that it resolved previous inventory pressures and closed a number of inefficient overflow warehouses. This reduction in inventory levels led to the company significantly reducing its warehousing costs, delivering an average variable cost saving of $0.8 million per month during the quarter compared to the fourth quarter of FY 2021.
At the end of the period, the company's inventory had reduced by 14.7% to $194.3 million. This comprises $154.2 million in its warehouse (down 20%) and $40.1 million in transit. Given how inventory concerns have been weighing heavily on the Kogan share price, this news will no doubt be welcomed by the market.
Management commentary
Kogan.com's Founder & CEO, Ruslan Kogan, was very pleased with the quarter.
He commented: "When it comes to delighting our customers, we set a very high standard for ourselves, and I am proud of the way the Kogan.com team has continued to deliver on our mission of making the most in-demand products and services more affordable and accessible. While overcoming many challenges, the Kogan.com team has continued to deliver strong growth while investing in the future of the business and incubating new ways to deliver more value to our customers over the long term."
