The Kogan.com Ltd (ASX: KGN) share price is storming higher on Wednesday morning.
At the time of writing, the e-commerce company's shares are up 7% to $6.24.
Why is the Kogan share price jumping?
Investors have been bidding the Kogan share price higher today following the release of the company's second-half update. Here's a summary of its performance during the half compared to the prior corresponding period:
- Gross sales down 22.5% to $373.7 million
- Gross margin improved 9 percentage points to 34.4% in
- Gross profit down 3.6% to $73.6 million declined 3.6%
- Adjusted EBITDA up 624% to $11.2 million
- Inventory reduced 57% to $68.2 million
- Kogan.com active customers down 31% to 2.19 million
What happened during the half?
For the six months ended 30 June, Kogan reported a 22.5% decline in gross sales to $373.7 million. Management advised that this reflects soft market conditions caused by inflationary pressures and interest rate rises, as well as the realigning of the inventory levels.
A whopping 31% decline in Kogan.com active customers to 2.19 million over the 12 months is also likely to have weighed on its performance. The question for investors to consider is whether these inactive customers are not shopping at all or have shifted to rival Amazon.
Nevertheless, thanks to a significant reduction in inventory levels, Kogan's margins have started to recover and supported its profitability.
Combined with the recalibration of its operations to the prevailing market conditions, this led to the company's adjusted EBITDA coming in at $11.2 million during the second half. This is up from $1.6 million a year earlier.
Management commentary
Kogan's founder and CEO, Ruslan Kogan, was pleased with the company's finish to the year. He said:
It has been an important year for Kogan.com as we drove efficiency through our business. Frugality, relentless pursuit of continuous improvement, data-driven decisions, and tough negotiations on behalf of our customers are all traits that are in our DNA. It's what we do day in, day out.
We know millions of customers are struggling with cost of living pressures, and we've been able to recalibrate our business to better support them in these times. Our focus on making the most in demand products and services more affordable and accessible has never been more important.
Our focus on driving efficiency in the Business means that we are now more agile than ever, with a low cost-of-doing-business, combined with a market leading offering across millions of products, and all the essential services.
