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Kogan Sell Down Leads To 15% Slump

As tipped by ChannelNews, Kogan executives have moved quickly to sell their shares as soon as they came out of escrow (August) and weeks out from Amazon launching in Australia.

The move by CEO Ruslan Kogan and CFO David Shafer resulted in Kogan shares plunging 15% to $3.88 late yesterday.

The two netted $23M from the sell down of the 2.35M shares.

According to the market Kogan sold 3 million shares at $4.25 each, in a trade executed by Canaccord Genuity.

It’s believed that Macquarie a parcel of Shafer’s shares on Monday afternoon. Those 2.35 million shares also crossed at $4.25 each on Tuesday morning.

It’s understood Kogan’s decision to join Shafer in selling shares comes after he was approached by the offshore investor.

The selling came only hours after Kogan.com presented a bullish quarterly update to the market.

Kogan.com is increasing inventory levels and boosting spending on marketing to ensure it that the Company can compete up against Amazon who are tipped to open their doors in November 2017.

According to a quarterly trading update, Kogan.com’s inventories rose $12.8 million, or more than 30 per cent, since the end of June in anticipation of strong seasonal sales. Marketing and advertising costs rose to $3.9 million in the three months ending September 30 compared with $2.8 million in the June quarter.

The increased investment took a toll on operating cashflows and cash holdings, which fell to $25.8 million at the end of September compared with $32 million at the end of June 2017.

Revenues rose 35.9 per cent (compared with the previous September quarter), earnings before interest tax depreciation and amortisation grew 37.7 per cent and gross margins rose to 18.2 per cent from 17.9 per cent in the year-ago period.

“Earnings would have been higher had we not made a long-term investment in our brand,” founder and chief executive Ruslan Kogan told The Australian Financial Review.

“We were able to achieve the earnings growth we achieved whilst also increasing our marketing activity.”

While the outlook for most discretionary retailers this Christmas is subdued, Mr Kogan is forecasting strong sales growth.

“We’re on a very different trajectory to other retailers … every single business in the portfolio is growing strongly,” he said.

The number of active customers rose 278,000, passing the one million mark for the first time in August, boosted by the launch of new verticals including Kogan Insurance in August and Kogan Mobile in 2015.

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