The Kogan.com Ltd (ASX: KGN) share price has rebounded from a poor start.
In late morning trade, the struggling ecommerce company's shares are up 3% to $3.52.
This follows the release of its half-year results earlier today.
Kogan share price higher despite sales decline
- Gross sales down 32.5% to $471.1 million
- Revenue down 34.3% to $275.6 million
- Gross profit down 41.8% to $62.9 million
- Statutory loss after tax of $23.8 million
- Adjusted loss after tax of $9.6 million
What happened during the half?
For the six months ended 31 December, Kogan reported a 34.3% decline in revenue to $275.6 million.
This reflects a decline in active customers and significant weakness in its Exclusive Brands and Third-Party Brands sales caused by consumers shifting back to in-store shopping following the pandemic. Though, it is worth noting that this didn't stop rival Amazon Australia from growing its sales very strongly during the last 12 months.
One thing that has been impacting Kogan over the last couple of years has been its failure to manage inventory efficiently. It loaded up on stock during the COVID ecommerce boom and was left with excess inventory when shoppers shift back to previous habits.
The good news is that Kogan accelerated the right-sizing of its inventory during the half, with group inventory levels reducing to $98.3 million from $137.9 million at the end of June and $159.9 million a year earlier. This allowed the company to achieve operational efficiencies during the first half. Variable costs fell 39.6% to $59.4 million and fixed costs reduced by 9.9% to $55.5 million.
However, this couldn't stop Kogan from posting a statutory loss after tax of $23.8 million for the half. On an adjusted basis, the company's net loss came in at $9.6 million.
Management commentary
Kogan's under-fire founder and CEO, Ruslan Kogan, commented:
We're pleased to be emerging from a turbulent few years. The ship has steadied, we have a renewed focus on the ruthless efficiency that's underpinned our entire existence, and we have doubled down on delivering great value for customers.
The first half delivered on multiple fronts. We were pleased to welcome 500,000 Brosa subscribers to the Kogan.com community following our acquisition of one of Australia's largest online furniture retailers. Our Verticals, namely Kogan Mobile Australia, Kogan Mobile New Zealand and Kogan Money Credit Cards, grew YoY as we provided services at incredible prices. Mighty Ape saw the successful transition of Gracie Mackinlay to CEO and received multiple awards for exceptional customer service. And Kogan First continued to grow as we delivered more and more value for our most loyal customers.
Outlook
Although its sales were still down 33.2% in January, Kogan managed to record a small EBITDA profit for the month. This was thanks to gross margin improvement and operating cost reductions.
Ruslan Kogan concluded:
We look forward to the second half of this financial year with confidence. We have reset Kogan.com for success, and in doing so, have ensured we continue to delight our millions of Customers during these challenging times.
