Online marketplace Kogan.com, is heading down down down, with the business that is refusing to honour orders from a business they recently acquired reporting a massive pre-tax loss of $31.3m for the December half despite this being one of the strongest quarters for online retailers
The latest loss is the biggest ever reported by Kogan, whose directors have pocketed millions from the struggling online operation with losses tipped to get worse as Australia heads into a recession downturn according to financial analysts.
In trading update to the ASX Kogan.com said gross sales in the December half were down by 32.5 per cent to $471.1m, in comparison JB Hi Fi that has been stripping business away from Kogan.com because people basically trust them over the Kogan operation that has been fined numerous times by the Australian Competition & Consumer Commission for questionable business dealings saw their shares jump 5% last week after a robust first half earnings report.
In comparison to Kogan JB Hi Fi sales growth was strong throughout the half, with total sales up 8.6% to $5.3 billion.
This was driven by elevated customer demand for consumer electronics and home appliances, and well-executed Black Friday and Boxing Day promotional periods.
Online sales were $752.1 million, representing 14.2% of total sales with large junks of this being stripped from the Kogan web site.
Sales at JB Hi-Fi Australia rose 5.6% while sales in New Zealand were 9.8% higher.
It’s now been revealed that thousands of customers of collapsed furniture business Brosa which was recently acquired by Kogan face the real possibility, that they may never see the products they ordered despite the company being rescued from administration by Kogan management.
The business had over 500,000 customers.
At this stage it’s not known whether any cash was sitting on the books when the business was placed into administration.
Administrators at KordaMentha called Kogan a “white knight” when they acquired the business, it’s now been revealed that Kogan management jettisoned Brosa customers despite many of them paying for their furniture.
It’s also not known how much money Ivan Lim the former CEO of the business, pocketed out of the Company prior to the business failing.
According to the SMH Kogan intends to relaunch the business.
The Kogan sale agreement to buy the failed business specifically did not cover delivery for every customer who had an order in with Brosa at the time of its collapse.
It now appears that Kogan is claiming that those customers who paid for products that can be located by administrators will get their furniture.
ChannelNews has been told that several orders were taken, and money paid by customers, however the business failed to place orders on their manufacturers because of issues paying the manufacturers in the past.
Brosa’s products were made in China, Indonesia and Vietnam.
According to filings with the ASX today Kogan is still trying to sell down excess inventory with the business admitting that they only managed to sell down 39% during the peak holiday period after stuffing their warehouses with stock in anticipation of a big sales run after COVID lockdowns.
Much of that inventory is now ageing with competitors such as Harvey Norman, Bing Lee and JB Hi Fi now taking on new stock for 2023 products.
The Company expects gross margins to improve from January 2023 after months of heavy discounting in an effort to clear stock.
Founder and CEO of Kogan.com, Ruslan Kogan, said: “The impacts of inflation and interest rates have begun to affect the lives of Australians and New Zealanders. We’ve been growing Kogan.com for more than 16 years now, so we’ve been through many cycles, and we know that when customers
are watching their costs carefully, ecommerce becomes even more important”
There was also no mention of how competitors are stripping revenue away from Kogan who in December only managed to attract 6.8M to their web site Vs over 20M by JB Hi Fi according to SemRush Research that also revealed that Kogan’s December traffic was down close to 10% in December one of the peak online months of the year.
In 2022 it posted a full-year loss of $35.457m.
