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Kogan Share Price Down 7% Despite Chief Christmas Cheer

Kogan.com share price dropped by 7% following the companies Annual General Meeting where chief executive Ruslan Kogan expressed his Christmas cheer heading into the holiday sales period despite the decline.

Mr Kogan shared his positive assessment of the online retailer’s sale outlooks, indicating strong momentum as they head into the Christmas period with a massive 1.662 million active customer base.

Despite the optimism, Kogan share prices fell by 7% to $7.09 a share.

Fortunately for Kogan gross sales were up 12% to $551.8 million, with EBITDA up 15.6% to $30.1 million, resulting in an NPAT of $17.2 million, up by 21.9% since last year.

Kogan currently holds a cash reserve of $27.5 million and an undrawn debt facility of $30 million.

Operating costs fell by 8.6% following last years increase of 2.6% due in part to the operation of Kogan’s new proprietary marketing platform.

However, logistics and inventory costs did see an increase following the launch of Kogan’s distribution centres, though the company says these costs have since reduced.

It comes as the Australian Retailers Association (ARA) predicts a stable but average Christmas period.

Australian’s are expected to spend $53 billion during the holiday period, though with bush fires plaguing the east coast, not everywhere is going to feel the Christmas cheer.

Retail growth is expected to hit 2.6%, though this is down on previous years, though ARA executive director, Russell Zimmerman said, ‘it’s better than we have seen in recent months’.

Kogan, however, will be looking at the ‘Other’ section which includes online, of which roughly $8 billion will be spent, and is poised to see the most substantial increase at 3.7%.

The company is looking to its Exclusive Brands Product Division as an opportunity for growth, which achieved revenue growth of 41.6%.

Alongside the success of its Kogan Marketplace which launched earlier this year, Kogan Mobile grew commission-based revenue by 9.8% year-on-year, showing just how widespread their business now is.

In fact, within their AGM presentation, Ruslan Kogan revealed a slide showing every business venture that the online retailer now encompasses.

In regards to its business portfolio, Kogan Retail represented the largest market, holding more than 1% of the $23.7 billion Australian retail market.

Kogan Mobile also managed to achieve greater than 1% market share with 20 million current users.

Gross sales for the Kogan Marketplace grew to $9 million on 19 Oct, which is likely to continue growing as the business works with eCommerce platforms such as Magento and Shopify to ‘accelerate the onboarding of Marketplace sellers’.

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