‘Cop them on the chin’: Kogan ready to move past inventory mistakes

Ruslan Kogan says his online marketplace Kogan.com is ready to move on from mistakes made on inventory levels in the thick of the pandemic as the company chases frugal shoppers amid a cost-of-living crunch.

Kogan has swung to a statutory loss of $35.5 million for 2022 and its adjusted earnings declined to $18.9 million as the company dealt with excess inventory levels and holding costs throughout the year. The adjusted loss figure is $2.9 million.

Ruslan Kogan said the online retailer is moving on after inventory issues.Credit:Louie Douvis

Kogan said the company had bet incorrectly that the trend of surging sales in the first year of the pandemic would continue, leading the company to expand its range and inventory footprints more than necessary.

“We made some wrong decisions, we’ll cop them on the chin, fix them and move forward,” he told The Sydney Morning Herald and The Age.

The platform returned to profitability in the last quarter of the year, and Kogan hopes cost of living pressures will now drive more shoppers to the site as they embark on detailed research on the best prices for purchases.

“Whereas they might have [previously] splashed on big brands, when things tighten up they will compare and research,” he said.

“The more customers that are being frugal, that’s when our business shines.”

The company told investors on Tuesday it was now focused on operational efficiency and has taken steps to reduce costs including reducing the range of underperforming product categories.

Inflation in delivery costs has led to a price increase for its loyalty program, Kogan First, which will increase from $59 to $79.

Kogan said the price increase was necessary for the sustainability of the program, but noted that the membership still works out to be worth it.

The pandemic has propelled Australia at least five years ahead of where e-commerce market share projections sat pre-pandemic.Credit:Peter Braig

“The program is so valuable to customers, they are getting so much free shipping,” he said.

Analysts pointed to the growth in Kogan First memberships, which are up 210 per cent year-on-year, as a key positive of the result.

The company’s operating cashflow was also stronger than last year, RBC Capital Markets analysts noted.

Kogan shares dropped at the open and were sitting 3.7 per cent lower to $3.66 just before 11.00am AEST.

The stock is down 58.2 per cent year-to-date.

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