The Kogan.com Ltd (ASX: KGN) share price is charging higher on Wednesday.
In morning trade, the struggling ecommerce company's shares up 9% to $3.59.
Why is the Kogan share price jumping?
Investors have been bidding the Kogan share price higher despite the release of a disappointing first quarter update.
It's rarely a good sign when a retail company waits until its second paragraph before mentioning how its sales fared during the quarter. But it isn't surprising that Kogan wanted to focus on other things after finally revealing that "[t]he quarter reflected a period of subdued sales activity."
According to the release, for the three months ended 30 September, Kogan reported a whopping 38.8% decline in gross sales to $202.3 million.
This reflects significant weakness across the business. For example, Kogan reported a 49.8% decline in exclusive brands gross sales to $51.6 million, a 53.2% decline in third-party gross sales to $24.2 million, and a 43.6% reduction in marketplace sales to $62.3 million.
Kogan also reported a 12.3% decline in active customers to 3,596,000 despite a 48.8% increase in Kogan First subscribers.
One positive was that the company has been working through its excess inventory, which has reduced warehouse costs. Though, not enough to stop its earnings from being crushed during the quarter.
Kogan's gross profit fell 40.4% to $31.3 million, its adjusted EBITDA plunged 103% to a loss of $0.3 million, and its EBIT dropped 158.7% to a loss of $4.1 million.
'Optimistic and excited'
Kogan's under pressure founder and CEO, Ruslan Kogan, spoke positively about the future and didn't touch on the company's abject performance. He said:
Great value and choice have never been more important than now. Inflation and rising interest rates are putting pressure on households across Australia and New Zealand. It's in the Kogan.com DNA to obsess over delivering the most in demand products and services at the best possible prices.
We know that during periods of belt tightening like this, our responsibility to be the best place for Aussies and Kiwis to get a bargain on their key household items is more important than ever. While there is a lot of uncertainty in the world, we're optimistic and excited to continue delighting our millions of customers and the growing base of loyal Kogan First subscribers.
