Online business Kogan has seen its earnings drop by “more than 42 per cent” after sales slowed in the third quarter compared to previously high demand, the business announced on Friday.
And due to slower demand, presumably as Australians got back in the swing of shopping with their feet, Kogan’s stored inventory levels spiked causing high storage expenses and a one-off $3.9 million demiurge fee – that is, failing to offload goods from a ship for freighter in the allotted time.
Founder and chief executive Ruslan Kogan said, despite the hiccup, he was proud of how his team has responded to a dynamic business and social environment.
“We have maintained a strategy throughout the pandemic to be there for our customers during a period they need us most,” Kogan said.
“We have continued to invest in some of the most important consumer goods – delivering essential items quickly to homes around Australia and New Zealand [and] while short term trading conditions can fluctuate, we remain focused and committed to our long term vision.”
When taking its investment in Mighty Ape into account, earnings only fell 24 per cent.
During the quarter, group gross sales grew by more than 47 per cent, revenue grew by 65 per cent, and gross profit grew by 54 per cent.
Kogan said it expects to increase promotional activity in order to move through the increased levels of inventory, presumably in the lead up to the end of financial year sales season.
However, the business has been fined in previous years for falsely representing its tax-time promotions, where it rose prices before allowing customers to reduce prices by “up to ten per cent” with a TAX TIME code.
The business was fined $350,000 for the breach.