3, Feb 2022
Kogan suffers from supply chain woes
Online retailer Kogan.com’s shares dived on Thursday after its supply chain issues and higher costs shredded its profits.
The company’s underlying profit dropped 58 per cent in the half year ended December 31, due to the disruptions caused by the pandemic.
Its shares fell almost 11 per cent to $6.26 in late trade.
The supply chain issues are affecting almost all industries and are pushing up the prices of goods entering Australia.
Kogan said that the disruptions were affecting all retailers and despite this sales had reached a record.
The company’s interim profit before interest and tax fell to $21.7 million from $51.8 million a year ago.
First-half gross sales rose by almost 10 per cent to almost $700 million, while its profit fell 4.4 per cent.
RBC Capital Markets said that the company’s sales growth slowed in November and December. It cited higher marketing costs and a drop in profit as factors that affected the results.
It had high inventory levels earlier this year as it tried to manage its supply chain. This, however, proved ineffective as it affected how efficiently the company was running.
During the peak of the pandemic, demand for online purchases jumped in Melbourne and Sydney, but this caused delays in the delivery of orders to customers.
Last year, the company established an in-house delivery service to try and address the delays caused by Australia Post’s logjams.
The delivery service is called Last-mile and launched in November last year to address the delays caused by Australia Post’s logjams.
Kogan said that its new delivery service has already delivered more than 100,000 orders.
This service is the first time that Kogan.com has opted to deliver orders without Australia Post’s help.
In December, the company sold its domain name to Canada’s Bitbuy for about US1.5 million. It also agreed to provide marketing and advertising support to the group in Australia.
The company also sold the bitbuy.com domain name to First Ledger, which operates a cryptocurrency trading platform in Canada.