Online retailer Kogan seems to have used some old-fashioned bricks and mortar retailing skills to slash the size of its stocks of unsold goods.
Kogan told the market on Wednesday in its latest update that it had overcome its overstocked issues from the closing months of the 2020-21 financial year after it had overestimated demand and stocked up on too many TVs, phones and other consumer products.
The overstocked position saw a sharp selloff in the already weak share price as investors wondered if Kogan had fallen victim to its success and hype as an e-tailer.
Kogan said on Wednesday it had resolved its previous inventory pressures, closing a number of “inefficient” overflow warehouses, cutting down on its inventory levels and warehousing costs.
That’s a standard retailing 101 approach to righting a listing business.
Kogan said the size of its inventories (in warehouses and in transit) are down by around $30 million to $194 million at the end of the quarter from $228 million at the end of June.
Gross sales rose 21% to $330 million but the gross profit fell 1.7% to $52.5 million which was up 31% from the June quarter.
The number of active customers jumped to 3.35 million, a rise of nearly 31%
“When it comes to delighting our customers, we set a very high standard for ourselves, and I am proud of the way the Kogan team has continued to deliver on our mission of making the most in-demand products and services more affordable and accessible,” CEO Ruslan Kogan said effusively in the update.
“While overcoming many challenges, the Kogan team has continued to deliver strong growth while investing in the future of the business and incubating new ways to deliver more value to our customers over the long term.”
The shares jumped 8% in early trading to a high of $11.85.
