Kogan decision to lift prices has paid off with the online business racking up a significant margin gain despite full year gross sales falling 4.8% to $809M.
The business managed to lift gross margin from 27.9% to 36.6% during the past year, this led to heavy losses of $25.9M in 2023 being replaced with a small profit of $83,000 for FY24.
It also has reinstated the dividend, announcing a final dividend of 7.5c per share, payable on November 29.
CEO Ruslan Kogan said “FY24 was a milestone year for Kogan.com. Our business returned to a position of profitability and strength, having navigated through the previous two and a half years of turbulence”.
“We got through this by restructuring and improving our operations, focusing on growing the right areas of our business, rapidly growing platform-based sales, and most importantly, investing in our loyal customer base. This has helped put Kogan.com in its strongest position ever.”
Kogan reported a 25 per cent growth in its Kogan First loyalty program, hitting 1.9 million active customers by FY24 end.
Kogan.com shares jump 11 per cent to a four-week high of $4.85 on their latest results however Citi analysts are unsure how much of the strong update can be exploited to grow the business.
“The trading update was solid, with the company reporting revenue growth ahead and margin uplift above expectations,” says Citi analyst Adrian Lemme.
“However, precise inferences are difficult to draw given ongoing revenue mix shift towards platform-based revenue.”
He says the positive update provided by the company contrasts with poor activity indicators going into FY25 for both web traffic and app usage.
“We think there is uncertainty around how to extrapolate the $5.3 million in adjusted EBITDA for July,” Lemme says.
Marketing costs were reduced by one per cent with the strategic focus on the group’s two loyalty programs.
Platform performance – both loyalty programs – Kogan First and Mighty Ape Primate grew by more than 25% and 35%, respectively.
Overall, the Group had 2,609,000 Active Customers during the year, comprising 1,909,000 for Kogan.com and 700,000 for Mighty Ape.
Kogan.com Advertising Platform has scaled quickly to $2.9 million of advertising revenue since launching in August 2023 and is expected to become more meaningful
as it continues scaling management claim.
Products Division, covering Kogan.com’s exclusive brands and third-party brands saw revenue decline 15.6% to $223.8 million, reflecting the strategic decision to reduce inventory levels, with the Division carrying approximately 40% less inventory through FY24 compared to FY23.
