Changes are happening - please bear with us while we update our site.

Changes are happening - please bear with us while we update our site.

FY21 result: Kogan (ASX:KGN) share price is sinking

The Kogan.com Ltd (ASX:KGN) share price is reacting badly to the e-commerce retailer's FY21 result which showed a huge drop in profit.

The Kogan.com Ltd (ASX: KGN) share price is in focus today after the e-commerce retailer announced its FY21 result.

Kogan’s FY21 result

Kogan has been telling investors about a very difficult second half of FY21 for a while, including demurrage costs. This has come through in the statutory numbers it reported.

Other e-commerce businesses have also seen volatility in recent months like Redbubble Ltd (ASX: RBL), Temple & Webster Group Ltd (ASX: TPW) and Cettire Ltd (ASX: CTT). The Kogan share price has been very volatile since COVID-19 appeared.

Gross sales increased by 52.7% to $1.18 billion, whilst revenue increased by 56.8% to $780.7 million.

Kogan.com active customers increased by 46.9% to 3.2 million. Mighty Ape finished with 764,000 active customers.

There are a few moving parts to Kogan, so let’s look at some of the different segments.

Kogan’s exclusive brands saw revenue grow by 62.5% to $378 million, with gross profit growth of 63.4%. Third party brands revenue growth was 18.9% to $271.7 million, with gross profit growth of 10.1%.

Kogan Marketplace saw gross sales rise by 91% and revenue increased by 79% to $23.4 million.

For the seven months to 30 June 2021, Mighty Ape added $80.2 million of revenue for Kogan, $19.9 million of gross profit, $6.9 million of adjusted EBITDA (EBITDA explained) and $3.7 million of adjusted net profit. For the 12 months to 31 March 2021, Mighty Ape forecast $14.3 million of EBITDA, which was achieved.

Now back to the overall business.

Overall profitability

Total gross profit increased 61% to $203.7 million. Total adjusted EBITDA increased 24% to $61.8 million. But statutory EBITDA more than halved to $22.5 million.

Adjusted net profit was up 43.2% to $42.9 million. Management believe this is a good measure of underlying profitability as it removes items like foreign exchange, share-based compensation, and ‘one-off non-recurring items’. Those items include $7.7 million of COVID-19 related logistics costs and $12.8 million of Mighty Ape acquisition costs.

Actual net profit was down 86.8% to just $3.5 million. Adjusted earnings per share (EPS) was up 27.2% to $0.41 whilst statutory EPS fell 88.3% to $0.03.

Net cash at the end of the period was $12.8 million. But Kogan decided not to pay a final dividend.

Is there a good outlook for the Kogan share price?

In FY22 it’s expecting to deliver “strong growth” in Kogan First members, ongoing growth in exclusive brands, further enhancement and development of Kogan Marketplace and the benefits of the full integration of Mighty Ape.

Kogan expects to implement logistics projects that wouldn’t require significant capital and can be supported by the current balance sheet.

July 2021 showed some positive signs. Gross sales grew 5.1% year on year, with a gross profit margin improvement on June 2021, though below July 2020. It made adjusted EBITDA of $2.1 for the month, reflecting high operating costs which are gradually reducing. The business had $215.4 million.

In the first 18 days of August 2021, it has seen growth compared to July 2021 with 24.5% growth of gross sales and 25% growth of gross profit.

Summary thoughts on the Kogan share price

In reaction to this report, the Kogan share price is down 9%. A lower price may be helpful for prospective investors.

If it Kogan can stabilise and start growing profit margins again, whilst seeing continued revenue growth, it could be a decent idea from here because of the network effects of being a scalable e-commerce business.

If you’re looking to learn how to do your own ASX company valuations, take our free share valuation course, which takes you through 6 common share valuation techniques, step by step. Or try our Beginner Shares Course if you’re just starting out. Both are free.

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

At the time of publishing, Jaz does not have a financial or commercial interest in any of the companies mentioned.
Skip to content