The Kogan.com Ltd (ASX: KGN) share price is sinking on Tuesday.
In morning trade, the ecommerce company's shares are down 6% to $4.07.
This follows the release of Kogan's half year update this morning.
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Kogan share price drops on half year update
- Gross sales down 32.5% to $471.1 million
- Gross profit down 42% to $62.9 million
- Record loss before interest and tax of $31.3 million
- Active customers down 18.4% to 3,323,000
What happened during the half?
For the six months ended 31 December, Kogan reported a 32.5% decline in gross sales to $471.1 million.
This reflects a 35.7% decline in Kogan Marketplace sales, a 41% reduction in Exclusive Brands sales, a 49.2% fall in third-party brands sales, and a 9.1% drop in Mighty Ape sales.
Things were even worse for its earnings, with gross profit falling 42% to $62.9 million and its loss before interest and tax increasing to a record of $31.3 million. Management advised that this was driven by its soft top line performance along with significant discounting to clear through the bulk of excess inventory.
One small positive is that Kogan's inventory position is improving. It finished the period with inventory in-warehouse 39% lower than at the end of June. Management notes that it has now cleared through the bulk of its excess inventory. As a result, it is expecting margins to improve in the second half.
Management commentary
Kogan's under-fire founder and CEO, Ruslan Kogan, didn't comment on the company's abject performance during the half. However, he revealed that he remains positive on the future despite the current economic environment. He said:
The impacts of inflation and interest rates have begun to affect the lives of Australians and New Zealanders. We've been growing Kogan.com for more than 16 years now, so we've been through many cycles and we know that when customers are watching their costs carefully, ecommerce becomes even more important. Since Kogan.com launched out of a garage in 2006, we've been obsessed with making the most in-demand products and services more affordable. We are proud to be making that possible for our millions of customers and the growing base of loyal Kogan First Subscribers.
As you can see above, the Kogan share price is now down 40% over the last 12 months.
