Kogan.com has posted a $35.5 million loss for FY22, a massive drop from the $3.5 million profit the company enjoyed just twelve months prior.
Revenue fell 8 per cent to $718 million, with an EBITDA loss of $21.8 million.
Shares fell by 7.37 per cent this morning, to $3.52. This is a fall of 73.2 per cent from this time last year.
Inventory bloat has continued to plague the online retailer, who attempted to capitalise on a brief uptick in demand during the pandemic.
Kogan founder and CEO Ruslan Kogan admits the decision to increase range and inventory during the COVID-19 digital sales rush was a misguided one.
“As the true volatility of the situation settled in – caused by stay at home orders and lockdown ambiguity – e-commerce did not continue to grow as anticipated,” he said.
“This led to us holding excess inventory, and an associated increase in variable costs and marketing costs to sell through the inventory. As we’ve discussed at length through regular updates this past year, profitability in FY22 was impacted.”
He further stressed this point during an earnings call, saying hindsight is a beautiful thing.
“Based on the data we had available to us at the time we predicted the trend would not stop or slow. As a result, we made the decision to increase both our range and volume of inventory, as well as our logistics network to support the volume,” Kogan said on the call.
“Hindsight is a beautiful thing and it turns out we were wrong.
“As the pandemic settled, e-commerce could not grow in the way many in the industry expected. This left us holding too much inventory and an associated increase in warehousing costs.”
The company will also increase the price of its Kogan First subscriber program to $79 a year, up from $59 to reduce inflationary increases in delivery costs.
Kogan said this year saw the company “significantly impacted by ongoing COVID-19 related interruptions and associated fluctuations in demand, experienced across the entire retail industry, resulting in increased logistics and other operating costs.
“The company has made significant progress to achieve a leaner business model in the second half of FY22, by right-sizing inventory and reducing associated operating costs.”
Kogan did not provide earnings guidance for FY23. No dividend will be paid.
