KGN has seen revenue decline 8.0% to $718.5 million, reflecting a compound annual growth rate (CAGR) of 20.1% since FY20 and gross profit decline 9.3% to $184.4 million, reflecting a CAGR of 20.7% since FY20. EBITDA was $(21.8) million in FY22.
KGN stated, that as the Business works through a period of consolidation to return to growth in profits, the Board has decided to not declare a dividend.
As is consistent with KGN through the years, the company will not be providing earnings guidance for FY23. However, it will provide regular business updates during the year. KGN is declaring FY23 with a positive outlook. KGN is looking forward to the continued expansion of Kogan Marketplace including the anticipated launch of an advertising platform, the roll-out of enhancements across Kogan Verticals, further growth of Mighty Ape, growing Kogan First Membership as they head toward their medium-term goal of 1,000,000 subscribers and continued strong contribution from their Exclusive Brands Division. The Business also stated that it looks forward to returning to positive operating leverage, having commenced the process of driving efficiencies in operating costs and product ranges which has led a return to Adjusted EBITDA profitability in 4QFY22. July 2022 unaudited management accounts showed Group Adjusted EBITDA of $1.5 million and operating costs reducing by 19.3% year-on-year following ongoing efficiency improvements.
Ruslan Kogan said:
“For more than 10 years, eCommerce grew in Australia at a consistent and stable rate. This enabled Kogan. com to plan for growth in a measured and precise way.
The consistency of this growth was rocked by the onset of the COVID-19 pandemic, when customers turned to Kogan.com, and we found that — almost overnight — our business started to double in sales. Kogan. com quickly became the destination that millions of Australians relied on for the most essential items. This acceleration of sales continued for many months in the first year of the pandemic, and we bet that the trend was not going to stop. To ensure we could be there for our customers when they needed us most, we increased both our range and volume of inventory, as well as our logistics footprint to match this expected level of growth.
We were wrong. As the true volatility of the situation settled in — caused by stay at home orders and lockdown ambiguity — eCommerce did not continue to grow as anticipated. This led to us holding excess inventory, and an associated increase in variable costs and marketing costs to sell through the inventory. As we’ve discussed at length through regular updates this past year, profitability in FY22 was impacted.
When I started Kogan.com 16 years ago, I made a bet that online shopping would define the future of retail. My certainty of that is even stronger today than it’s ever been.
The simple fact is this: More Aussies and Kiwis will be online shoppers tomorrow than today. Millions of customers are discovering the benefits of shopping from the comfort of their homes, and having a huge range of products delivered to their door at great prices.
This is what our team has always obsessed over: delighting customers by making the most in-demand products and services more affordable and accessible. We were pleased to have this hard work recognised when the Australian public voted Kogan.com, for the fifth time running, the Australia Post ORIAS People’s Choice Retailer of the Year.
In order to continue to deliver this outstanding service, we need to increase the cost of access to Kogan First going forward. With the ongoing increase and evolution of subscriber benefits, as well as the impacts of inflation in delivery costs, the price of Kogan First will be increasing to $79.00 per year. We will continue to enhance the benefits our Kogan First members get with ongoing investment in the program.
We’ve right-sized our business, optimised for efficiency, and we’re pleased to see eCommerce adoption start to normalise and return to its steady and continued growth. As always, we will continue to deliver unbeatable value for our customers.”
