Online retail giant Kogan has said the business faced significant difficulties keeping up with demand during the bumper Black Friday and Christmas sales period, with the business’ half-yearly revenue almost doubling.
Kogan, which is listed with a market capitalisation of over $2 billion, told investors it experienced seven of its biggest-ever trading days throughout the last six months, spurred on by the retailer’s recent acquisition of New Zealand e-commerce site Mighty Ape.
Sales across the two businesses rose over 96 per cent for the six months to the end of December, and their combined gross profit jumped over 120 per cent. Collectively, the two have over 3.8 million active customers.
Gross sales for the Black Friday week topped $50 million, and sales for the Friday itself were over $15 million, the highest-ever single day of sales at the retailer.
However, these figures came with a caveat by the retailer, which admitted it experienced “significant challenges” keeping up with the heightened level of demand.
“The company tackled some significant challenges caused by extreme growth and is progressively integrating the newly acquired Mighty Ape team and operations, all while assisting the community by making significant donations to assist with the COVID-19 response,” the business said.
Kogan has been one of the premier beneficiaries of the COVID-19 pandemic, as the pure-play online business has seen sales skyrocket thanks to online shopping habits of locked-down.
But the rapidly growing business for the first time reported a series of supply chain and warehousing interruptions towards the end of the year, flagging $1.9 million in charges for not unloading freight within the required timeframe.
Company founder and chief executive Ruslan Kogan said he was proud to have delivered a record half-year result despite the growing pains experienced by the business.
I am so proud of how our team is navigating extreme growth within our core business, and responding to the fast-changing economic, health and supply-chain environment,” he said.
“The Black Friday week saw some of the most extraordinary trading we have ever seen – with 7 out of our top 10 days ever occurring during the Black Friday period. Keeping up with the extreme demand is an engineering, supply chain, and logistical challenge that our team loves working on and solving”.
Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 140 per cent for the period, but was weighed down by a number of significant items, including a $1.5 million write-down of the value of Kogan’s personal protective equipment (PPE) stores due to a reduction in COVID-19 cases throughout Australia.
Kogan also booked $1.1 million for donations of PPE to charities, and a $1.9 million freight demurrage charge, which the business expected would be resolved by early 2021.
“Significant” expenses were also flagged in relation to the controversial compensation package granted to Mr Kogan and chief financial officer David Shafer last year, with the two granted options worth some $120 million.
Kogan shares rose slightly before falling 3.7 per cent to $18.92 in early trade.
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Source: Thanks smh.com