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Kogan Falls to 3-Year Low

The Ltd share price has fallen to a three year low today after the company announced further losses in their trading update.

By the end of the day, the e-commerce company’s shares were down almost 14% to $3.91.

The key points in the update included:

  • Gross sales down 3.8% to $262.1 million

  • Gross profit down 11.2% to $41 million

  • EBITDA down 110.5% to a loss of $0.8 million

  • Active customers increased by 28,000 over the three months to 4,099,000

This was driven by weakness across its core Kogan Exclusive Brands and Third-Party Brands categories. Their sales declines of 18.8% and 21.8%, respectively.

This was despite a strong performance from the Kogan Marketplace business, which reported a 19.8% increase in gross sales for the quarter. Management failed to predict this softening of sales and positioned its inventory for elevated growth in gross sales. However, it concedes that consumer demand did not meet these expectations. This left it with inventories of $193.9 million at the end of the period.

Once again, the company has unfortunately not provided any guidance for the remainder of the year. Over the coming year the company will be recalibrating its operating costs in line with current growth levels to support a return to the historical operating margins previously generated.

Founder and CEO, Ruslan Kogan, commented:

“While market conditions are challenging at present, the foundations laid over the last 16 years are holding us in good stead. Our current focus on recalibrating inventory levels and core operational costs is aimed at returning the Company to its historical margins and also to position the business for its next phase of growth.”

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