Australian online marketplace Kogan has slashed its inventory by more than half and returned its net cash to black compared to this time last year.
Kogan said the reduction reflects the significant right-sizing of inventory levels to match prevailing levels of demand. This includes rationalising inventory categories, renegotiating supplier contracts and recalibrating marketing spend.
As at March 31, 2023, Kogan’s inventory sat at $78.3 million (comprising $68.2 million in-warehouse and $10.1 million in-transit), down from $193.9 million (comprising $169.5 million in-warehouse and $24.4 million in-transit) as at March 31, 2022.
The etailer also accrued a net cash (after loans and borrrowings) of nearly $49.1 million, compared to -$(6.3) million in March 2022.
The reduction in cash since December 31, 2022 was offset by a corresponding reduction in Trade Payables, according to Kogan. As of today, all debt within Kogan.com has been repaid, while a small advance remains drawn within Mighty Ape.
Founder and CEO Ruslan Kogan welcomed the positive results despite subdued sales activity in the third quarter of FY23.
“After a series of challenging periods, I’m proud that Kogan.com has returned to sustained underlying profitability, reflecting the efforts of our brilliant team and the agile and robust business we have built,” Kogan said.
“The journey to get here has been one of the toughest in our 17-year history, but also one of our most rewarding.
“It goes without saying – we are a far stronger Company today than ever.”
Meanwhile, Kogan’s gross sales of $188.7 million declined 28% year-on-year, which it said reflected soft market conditions caused by interest rate rises and inflationary pressure.
Its gross profit of $34.3 million was impacted by soft topline performance mentioned above.
Kogan’s gross margin increased 6.5pp to 31.6% over the quarter, reportedly driven by the conclusion of significant discounting to sell-through aged inventory at the start of Q3 FY23 and an increased proportional contribution from the Marketplace, Verticals and Kogan First commission streams.
Its variable and marketing costs as a percentage of gross sales reduced to 8.1% from 10% in Q3 FY22.
It’s earnings before interest, tax, depreciation and amortisation (EBITDA) was $4.4 million, up from -$(4.0) million in the prior corresponding period.
Kogan ended the period with 2,296,000 active customers, with its NZ etailer Mighty Ape reporting an active customer base opf 760,000
Kogan First subscribers grew by 24.3% to over 407,000 as at March 31, 2023.
“In these current tough economic conditions, we are a proven and loved shopping destination that helps millions of shoppers save on products and essential services,” Kogan said.
“We are dedicated to helping our customers live life to the fullest.”