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COMMENT: Kogan Is On A Roll, So What’s Next?

Kogan is proving to be one of Australia’s real online success stories despite my dire predictions 18 months ago.

Kogan.com’s underlying net profit more than doubled to $8.3 million in the December-half. The result exceeded consensus forecasts which were around $6.7 million.

Sales climbed 46 per cent to $209.6 million, slightly ahead of market forecasts around $206 million, with all product divisions – private label, third party international, third party domestic and new verticals – achieving strong growth as the number of active customers rose 40.5 per cent to 1.16 million.

Their latest results show that they are growing across all aspects of their business. What is not broken out is the difference between their Dick Smith online store and the Kogan branded offerings.

It appears that House Brands, Mobile and new verticals are delivering growth over branded consumer electronics products which are sold by the likes of JB Hi Fi and Harvey Norman. Recently JB Hi Fi reported that their online operation delivered strong growth of 40.6 per cent to $119.3 million.

The Company has reported growth of 51.1% versus Revenue growth of 45.7% driven in part by Kogan Mobile.

Revenue exceeded 1HFY17 by 45.7% ($65.7 million) across all product divisions, Active Customers and New Verticals.

With their house brand products which is the past has been a drain on capital the Company achieved growth of 47.3% revenues were approximately $66M which is small compared to the revenues that the likes of Aldi are achieving with their house brand products.

Ruslan Kogan, CEO of Kogan

Right now, several retailers are assessing their house brand strategies due in part to the risk of carrying the cost of selling house branded products, which if they don’t sell become a weight on the balance sheet.

Several retailers are now moving to push the risk back to distributors or house brand specialists such as Temp who are a major supplier to Aldi, BigW, Harvey Norman, Bunnings, and several other major retail chains.

The success of Kogan Mobile puts pressure on organisations like CatchConnect who this week rolled out a lack lustre mobile product offering that appears to be more about growing a database in the hope that they can flog more Catch of The Day products.

Kogan Mobile delivered YoY revenue growth of 340.9%. This was achieved due in part to the Companies successful implementation of their exclusive brands strategy led to YoY revenue growth of 47.3% within the mobile division.

Ruslan Kogan told ChannelNews earlier today that gross margin increased by 1.4pp to 19.4%, as a result of rapid growth in new verticals spanning life, health, pet and their recent mobile roll out.

What is of particular interest is that Kogan now has an active customer base that rose 40.5 per cent to 1.16 million, the growth of this base delivers for Kogan a consumer who is prepared to shop online and is comfortable with online marketing.

What is not known is how many of these customers were former Dick Smith. Prior to Kogan acquiring the Dick Smith name and customer database Dick Smith’s then marketing director was bragging that they had 750,000+ active customers, which at the time ChannelNews challenged.

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