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Kogan outperforms forecasts, welcomes Amazon

Kogan.com reported its first full-year earnings today, its first since listing on the ASX, significantly outperforming its prospectus forecasts on all key metrics and last year’s earnings.

The online retailer posted revenue of $289.5 million, up 37.1 per cent on 2016. Revenue from third-party domestic product sales was up 51.3 per cent, while private label revenue was up 20.8 per cent.

Pro-forma EBITDA was $13.2 million, up 230 per cent on FY16 and 91.3 per cent higher than predicted in its prospectus forecast, reflecting revenue growth and margin expansion.

Pro-forma NPAT was $7.2 million, up 800 per cent on FY16 and 188 per cent higher than predicted in its prospectus forecast.

Kogan.com grew its active customer base by 36 per cent to 955,000 from 30 June 2016, which founder and CEO Ruslan Kogan attributed to the company’s expanding portfolio and strategic marketing initiatives.

Gross margin was 17.9 per cent. The retailer ended the year with a strong balance sheet, with net cash of $32 million, and will pay a fully franked final dividend of 3.8 cents per share, bringing total dividends for FY17 to 7.70 cents per share.

Speaking with investors today, Kogan said the company’s evolution from a private label TV retailer with two products in the range, to a portfolio company with verticals in services like mobile, NBN and insurance, as well as retail and travel, has become its competitive advantage.

“Those increased touchpoints is what keeps [customers] coming back and what has led to the increase we’ve seen in our active customerbase,” he said. As the base expands, the business can also grow its private label range, since more products will achieve the required sell-through.

“We have over 1,000 unique private label SKUs on our website. We have a very data-driven analytical approach to which products get introduced based on demand metrics. We service demand, rather than create demand,” he explained.

Kogan went on to credit the company’s data-drive approach as a key reason for its success. “We’re obsessed with delivering value to loyal customers,” he said, adding that the company’s “data-driven culture is an extremely important factor” for topline growth.

Looking at the year ahead, Kogan said the company will provide quarterly trading updates, rather than full-year guidance for 2018. But he did offer one piece of insight about the months ahead: “We will use Amazon as a sales channel,” Kogan said in response to a query about the e-commerce giant’s impact on his business.

He went on to say that Kogan.com would use Amazon as a sales channel for its private label products, as it already does with Ebay and Trade Me.

“We are excited about the entry of Amazon to the Australian market because it creates an additional sales channel for our business,” he clarified. “It does grow online retail markets. If you look at the US, Germany, UK, online retail sales there have a much higher penetration.”

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