Kogan’s profits are down over 40 per cent, but the excess inventory that has crippled the company of late is finally beginning to clear.

In a November trading update, ahead of the company’s AGM today, Kogan reported gross profits for the financial year-to-date (July-Oct 31) sat at 41.1 million, down 40.6 per cent on the same period in 2021.

The company explained that gross profit was been impacted by “the accelerated sell-through of excess inventory, with significant discounts being offered”, and that the vast majority of this sell-through will be completed by early calendar 2023.

Gross sales were $267.6 million, down 38.2 per cent year-on-year.

Adjusted EBITDA showed a half-million-dollar loss, down 10.4.4 per cent on the prior year.

Happily, for the company, they are finally in a positive net cash position, with $20.1 million in net cash, after having paid the third tranche of its Mighty Ape acquisition, of $14.2 million.

This, plus a happy 2023 outlook saw shares rocket by 10.5 per cent before noon.

Kogan pointed out that July through to October “reflects a period of subdued sales activity for the company, whilst cycling strong results in the prior year that was impacted by COVID-19 lockdown orders.”

The online retailer says the year-to-date result is not indicative of projected trading performance once the final sell-through of excess inventory is completed. Black Friday and Christmas are coming up, too, which Kogan points out are “typically the most important months of the year for the business.”

Kogan’s verticals, its mobile and credit card businesses, have also returned to growth following a slowdown during COVID-19.

Things are improving, according to CEO Ruslan Kogan.

“Once the final sell-through of inventory is completed, we plan to have the Kogan Group return to the historic growth trajectory and profitability that it has been able to deliver.

“We look to the second half of FY23 with confidence as the Kogan Group returns to being an agile, inventory-light business with strong operating margins.”

Kogan said trading in the 2023 financial year-to-date, covering July through October, reflected a period of subdued sales activity in e-commerce, while also cycling strong results in the prior COVID-19 year.