Kogan share price jumps 5% as FY24 starts strongly

A return to growth is exciting investors.

| More on:
surging asx ecommerce share price represented by woman jumping off sofa in excitement

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Kogan.com Ltd (ASX: KGN) share price is up 5% after the e-commerce business revealed its FY24 first quarter update.

Kogan reported quarterly sales growth and profitability, which has pleased investors.

FY24 first quarter highlights

The following numbers are from the three months to 30 September 2023, compared against the three months to 30 September 2022:

  • Gross sales fell 6.5% to $189.2 million
  • Gross profit increased 19.5% to $37.4 million
  • Kogan FIRST subscribers rose 14% to 440,000
  • Earnings before interest, tax, depreciation and amortisation (EBITDA) improved $16.5 million to $6.9 million
  • Earnings before interest and tax (EBIT) increased $16.6 million to $2.8 million
  • Inventory reduced 45.3% to $72.2 million

While the year-over-year sales decreased, Kogan said that excluding the seasonality boost of Black Friday and Christmas trading, this was the first quarter-over-quarter increase since the first quarter of FY22. The ASX retail share believes the planned period of "consolidation" within the company has concluded.

Kogan's gross profit margin improved 9.8 percentage points year over year, thanks to the 'sell-through' of excess inventory and a growing proportion of platform-based sales.

Platform-based sales' contribution for Kogan.com grew to 65% of gross sales and 75% of gross profit. Kogan said that the recently launched advertising platform is "growing rapidly."

The company finished September 2023 with $56.8 million of cash and no external debt. It had $23.8 million of net cash at September 2022. During the last year, it has repaid its bank debt, made the third tranche payment for Mighty Ape and spent $19.7 million on the share buyback.

A growing cash balance and profit generation are helpful signs for the Kogan share price.

Kogan CEO comments

The CEO and founder, Ruslan Kogan, said:

This most recent quarter has been full of excitement for Kogan.com. In addition to returning the Business to a position of continuous profitability growth and financial strength, we've been busy delivering new ways to delight our customers. This quarter we launched Mighty Mobile, under the Mighty Ape brand. Through Mighty Mobile, we have introduced the first ever unlimited-data mobile plans in New Zealand.

As we now approach the busiest time of the year with Black Friday, Christmas and Boxing Day, our team recognises that many of our millions of Aussie and Kiwi customers are continuing to face cost of living pressures. We are confident that the incredible deals we have lined up over the coming months will help in these tough economic times.

Kogan share price snapshot

Since the start of 2023, the Kogan share price has risen by 34%. It has been a volatile period for the company, as we can see on the chart below.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Kogan.com. The Motley Fool Australia has recommended Kogan.com. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Retail Shares

Exhausted young Caucasian woman lying on comfortable sofa in living room sleeping after hard-working day, tired millennial female fall asleep on couch at home, take nap or daydream, fatigue concept
Retail Shares

Young people are cutting spending the most. Which ASX retail shares may be affected?

New data shows under 40-year-olds are cutting their spending the most in the cost-of-living crunch.

Read more »

A mature age woman with a groovy short haircut and glasses, sits at her computer, pen in hand thinking about information she is seeing on the screen.
Retail Shares

Harvey Norman share price higher despite falling sales and first strike AGM vote

Almost 82% of shareholders voted against the company remuneration report at the AGM today.

Read more »

Photo of two women shopping.
Retail Shares

ASX retail shares stronger following Black Friday and Cyber Monday sales

Official retail data released today indicates shoppers delayed their spending in October ahead of the sales.

Read more »

A woman sits on sofa pondering a question.
Opinions

I'm close to buying this beaten-up ASX 300 share next

Here's a company I think is well worth considering.

Read more »

A young boy wearing a hat, sunnies and striped singlet looks fierce and flexes his arm in victory.
Small Cap Shares

Why this ASX small-cap stock is an 'undervalued growth opportunity' for 2024: fundie

The ASX small-cap share has managed to increase profits and earnings despite difficult market conditions.

Read more »

A young woman holding her phone smiles broadly and looks excited, after receiving good news.
Retail Shares

Guess which ASX All Ords stock has rocketed 29% in just 3 days

The ASX All Ords stock has enjoyed a big turnaround this week.

Read more »

A woman wearing jewellery shrugs
Retail Shares

Lovisa share price falls despite 17% sales growth, imminent China expansion

Total sales growth and global expansion continue for this retailer.

Read more »

Modern accountant woman in a light business suit in modern green office with documents and laptop.
Retail Shares

Can Wesfarmers shares reach $55 by Christmas?

Are shareholders going to get an early Christmas present?

Read more »