Dynamic Business Logo
Home Button
Bookmark Button

Kogan doubles its earnings

Kogan has doubled its earnings for a third year in a row.

Online retailer Kogan has credited the surge of its annual profit to its expanded product range and a successful marketing strategy.

The group, which listed on the ASX in 2016, reported full-year profit of $14.1 million – almost four times what it made a year ago – and a 42.4 per cent jump in revenue to $412.3 million.

Founder and CEO Ruslan Kogan said the strong results reflects the benefits of a wider range of products, which now includes consumer electronics, general merchandise, food, insurance and travel deals.

“We’ve got over 80,000 products across (covering) nearly every single category,” Kogan told AAP on Friday.

“We get people coming onto the website to buy a vacuum cleaner and they end up buying a vacuum cleaner and an LED TV and then a rug for their bedroom.”

Kogan’s exclusive brands continued to be its main profit driver, contributing 44.2 per cent of the gross profit, while partner brands now contribute 20.5 per cent.

Partner brands were initially reluctant to sell their wares online,  Kogan said.

“(Brands) have had their bricks and mortar channels as the most significant part of their business and they didn’t want to disrupt anything,” he said.

Kogan’s number of active customers rose to 1.389 million during the 2017/18 financial year, up 45.3 per cent on the previous year.

The company spent $19.9 million on marketing, including partnering with Google to appear on customer’s searches.

“When people are searching ‘buy LED TV’ or ‘best value vacuum cleaner,’ you’ve got a pretty good idea of the mind space of that person and the advertising both adds value to their browsing experience and has very good metrics,” Kogan said.

Kogan has also increased its offerings through five new vertical brands including mobile plans, internet and insurance.

Kogan Mobile was a particularly strong performer, increasing gross profit 233.3 per cent to $12 million.

Contributions from the internet and insurance verticals were far more modest.

“Many of them are a few months old and they’re not significant contributors yet, but if we can achieve in them what we’ve achieved in Kogan Mobile they will be huge contributors to the business,” Kogan said.

The group has declared a fully-franked final dividend of 6.1 cents per share, 60 per cent higher on the 3.8 cents it paid a year earlier.

Kogan defended the board’s decision not to provide guidance for the 2018/19, and will instead provide a performance update at its AGM in November.

“We didn’t provide guidance last year either and we doubled earnings and grew revenue by 40 per cent,” Kogan said.

By 1340 AEST, Kogan shares were down 17 cents, or 2.6 per cent, at $6.33, giving up all their earlier gains.

With AAP.
Kogan doubles its earnings

What do you think?

    Be the first to comment

Add a new comment

Gali Blacher

Gali Blacher

Gali Blacher, editor, Dynamic Business

View all posts