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Last edited 12 months ago
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#ASX Announcements
stale
Last edited 12 months ago

The thing about the pandemic (getting seriously bored writing that word) is how bonkers it made us all. At the start the price of cars and jet skis were plummeting in value as people were offloading as they had or were worried about losing their job. Then the price of those things skyrocketed as we realised, we were not going anywhere and unless you were in tourism your job was likely ok.

Then came stimulus cheques and apparently, we all went to Harvey, or Kogan and got ourselves a bigger TV. Talking about stimulus, there was also one for businesses called jobkeeper. Some returned the money when they realised things were not terminal. Others didn’t. 

Back to all those TV’s and lounges and essential stuff to allow us work from home, well we only buy them once. It was always going to be tough to continue that sales boom. Results released today show that to be the case even with the Mighty Ape acquisition revenue was basically flat. 

And what happened with the ASX? There was a share suspension and then not. Looks like an ASX mistake. I believe the reversed a number of trades.

Shares initially got spanked by I think I saw 17% down before closing the day a little below 6% off for the day. Not that it matters they are finishing the week off 15% on the back of 50% in the last 6 months. 

There are concerns about inventory holdings which have worried investors too.

Results showed:

  • revenue was up slightly at $419.5M
  • adjusted EBITDA of $17.4M, down 66.4% in comparison with FY21
  • statutory net profit (read loss) after tax was a negative 11.9M
  • dividend suspended with the funds used in investment. 

 

Marketing spend is up significantly but reflecting, I cannot recall seeing any, anywhere. Must not be the target audience. 

If imitation is the greatest form of flattery, Amazon should be glowing, with Kogan emulating a subscription and delivery model. Amazon make a loss on that part of the business subsidised with seller fees. Hopefully Kogan can imitate that part of the equation. 

The other thing that jumps out every time I look at Kogan is their ever-expanding offerings. It makes me think of two things, mile wide and inch deep is tough to be good at anything, and my experience in just because you are good at one product (or service) does not mean you are at another (or that customers associate you with the second). 

This was on my watch list earlier this year at 8 bucks. Think it’d gone from that list for now. 

#ASX Announcements
stale
Last edited one year ago

Report out this morning opened with a statement from Ruslan Kogan “…we’re obsessed with the long term, and our ever-improving customer experience continues to underpin business success”. Guess you must start with a positive.

Now the less than positive. Sales are down from last year, probably not surprising as apparently, we all shopped our heads off in 2021 buying new content consumption devices when we could do not much else.

More concerning though is the fall in gross profit and EBITDA that has been crushed.

And what is with the Might Ape note/ figures in the 6-month comparison purchased in December 2020/ results reflect one month of performane.

The market hated it with shares down over 12% in early trade although they have bounced since then.



#Business Model/Strategy
stale
Added one year ago

It has been interesting to watch the flurry of valuations and the differences between those valuations. This is what makes a market.

Kogan has been compared to Amazon, indeed Strawman's own straw and valuation mentioned Amazon keeping the screws on. I wrote about Amazon in a JB HiFi straw couple of weeks ago, it is worth repeating here. They are still loss making and have not dented the Australian market to nearly the extent their thesis (and analysts) anticipated. That said, on line sales continue to increase the wallet share. 

On to Kogan. What I am about to recite I believe is from Maister book True Professionalism – just because your customers know and trust you for one product/ solution, does not mean that they will for another product/ solution. 

And Kogan is attempting to be a one stop shop. I understand it. Where there is a dollar on the table, don’t leave it there. TV’s to insurance to NBN.

Ruslin seems to be everywhere. I’m sure I have heard him on at least three recent podcasts. He appears to be articulate, passionate, and driven.

He started bringing in TV’s – there are only a couple of panel manufacturers – drawing a long bow that means the quality is all the same. The big difference is this is not accurate, and the surrounding componentry plus the brand backing to provide after sales service does matter.

On after sales service, just search to see disparaging reviews, again acknowledging reviews can be biased.

Retail is hard. Retail is low margin. Is Kogan going to still be here in another 5 years. I vote yes. Is Kogan going to be larger and serving a greater market share. I also suspect yes. Are there better risk v reward propositions? This one also gets a yes.