Kogan’s bloated inventory and logistics costs severely impacted its profitability in FY21, with net profit plummeting 86.8 per cent to $3.5 million (compared to $26.8 million the year prior).
Without taking these impacts into consideration, adjusted NPAT rose 43.2 per cent to $42.9 million off the back of a record breaking sales effort – up 52.7 per cent to approximately $1.18 billion.
“It’s been a challenging year for so many people around the country, [and] I’m proud that our team remained focused through difficult Covid-19 impacted operating conditions and found ways to support our customers when they needed our help most,” said founder Ruslan Kogan.
At the release of its unaudited results, Kogan said the management team had misjudged the level of inventory and operational capacity it would need to grow through the second half, and purchased too much stock.
Kogan was forced to focus on promotional activity during the second half in order to clear out this excess inventory, which, combined with a higher cost of warehousing to store this inventory, led to the business’ second half and, ultimately it’s full year, being “impacted”.
However, with its inventory now approaching an appropriate level for the business and the market, Kogan expects an improved operations moving forward.
Into FY22, the business is expecting to drive growth in its Kogan First memberships (the business’ loyalty program, which grew to 120,000 members as of June 2021), exclusive brand sales (which grew 62 per cent in FY21), and Kogan Marketplace sales (which grew 91 per cent in FY21), as well as enjoy the benefits of a full integration of the Mighty Ape business, which was purchased in December 2020.
“Over the next year we’ll be rolling out new and exciting projects to further support our loyal Kogan Community with Kogan First Membership rewards, new and improved delivery solutions, and further enhancements to [our] online shopping experience,” Kogan said.
The business also said it will be looking into logistics projects that will “not require significant capital expenditure and can be supported by the company’s balance sheet”.