After being stuck with too much inventory in 2022, Kogan noted that a number of initiatives were started in the second half to help bring the business back to profitability this year. His final loss in 2022 reached $36.2 million, compared to a profit of $3.8 million in 2021.
Earnings were also affected by non-cash stock-based compensation payments and a $17 million provision for additional pay from the Mighty Ape business.
There was now a focus on in-demand products based on customer buying behavior, and inventory in the Kogan.com warehouse was reduced, helping to reduce storage costs.
Kogan Delivery Services has been discontinued as a result of rising transportation and delivery partner costs, and Mr. Kogan is redesigning its proprietary marketing algorithm, resulting in cost savings. A headcount reduction will help realign costs with current business conditions.
Kogan is the latest retailer to remove staff. US online furniture retailer Wayfair said on Friday it would cut about 870 jobs, or 5 percent of its global workforce, as it seeks to cut operating expenses as consumers are skipping big-ticket items. as furniture amid rising costs of living.
Kogan’s total inventory stood at $227.9 million as of June 30, compared to $160 million a year ago. Warehouse inventory is down by nearly $54 million over the last 12 months, but is still at $138 million, with the balance in transit. Kogan said the group would focus on reducing inventory levels this year.
The company sources furniture and housewares from more than 100 factories, mainly in Asia, and has more than 200,000 individual products in its range.
Jarden analysts said in a note ahead of full-year results that Kogan, along with other retailers including Mocka (owned by Adairs), Hype (owned by Accent) and Adore, were tracking lower web traffic.
They noted that “Australia’s online sales penetration has returned to the pre-COVID run rate, suggesting there is no structural acceleration of COVID.” The exception was food, which kept going, they said.
more to come