Kogan.com founder Ruslan Kogan says the company is ready to capture consumers who want better prices than what’s on offer in traditional bricks-and-mortar retailers as the business looks to move past a $23.8 million loss in the first half.
The e-commerce marketplace revealed to investors on Monday that it had been forced to make steep price cuts and sell some products as a loss, as it worked hard to clear excess stock after the company over-invested in products during the COVID rush.
Online retail entrepreneur Ruslan Kogan is optimistic Kogan is over the worst.Credit:Eamon Gallagher
Kogan’s inventory was sitting at $98.3 million at the end of December, down from $159.9 million at June 30 of last year.
Ruslan Kogan said the business had taken the pain of selling products at a loss to boost the sustainability of the company, and was optimistic it could now capitalise on value-focused shoppers.
“It’s pretty tough on the consumer at the moment. We sit at the value end of the equation… there is always going to be someone at that part of the market.”
“[Shoppers are thinking] ‘maybe I won’t just buy the big brand item from one of the big stores. Maybe I’ll have a look at this Kogan dishwasher’.”
The company had returned to profitability in January, with adjusted earnings of $1.5 million for the month as conditions stabilised.
But Kogan acknowledged that inflationary pressures were impacting operations, forcing a coming price increase for the group’s membership program, Kogan First, from $79 a year to $99.
Kogan is not the only pure-play e-commerce retailer to face challenging conditions as trading returns to normal more than a year on from the lifting of pandemic restrictions.
Wesfarmers-owned marketplace Catch posted a $108 million loss this month, with management also saying it had over-invested during the COVID period.
Online beauty marketplace Adore Beauty also cited “subdued consumer sentiment” on Monday when it told investors it no longer expected double-digit revenue growth in the second half of this year.
Adore Beauty’s new CEO Tamalin Morton said inflation and discounting had affected the result. Credit:
“[The second half] is likely to be flat on the prior corresponding period, as the company focuses on margins and remaining profitable,” the company said.
Adore posted a loss of $90,000 for the six months to December, down from a $2 million profit at the same time last year.
Chief executive Tamalin Morton called out increased discounting and inflationary pressures as reasons for the result.
“While many of our customers consider beauty products part of their daily routine, revenue and
margins inthe first half of financial year 2023 were impacted by increased promotional activity and inflationary cost pressures,” she said.
Adore shares opened flat and were 0.3 per cent higher to $1.03 on Monday morning, while Kogan shares gained 2.4 per cent as investors responded to the news the company had put the worst of its inventory troubles behind it.
Despite this, the share prices of pure-play retailers have been hit hard over the past six months as companies struggle to adjust to life after lockdowns.
Kogan shares have declined 28.2 per cent over the past six months, while Adore’s stock is down by 37.9 per cent.
Online-only furniture retailer Temple & Webster has also been punished by investors this month after reporting its half-year financials, with its shares down by 28.4 per cent over the past six months.
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.
Most Viewed in Business
From our partners
Source: Read Full Article