Online retail giant Kogan has posted a record $1.042 billion in gross sales for the financial year, defying a wider sector downturn while facing a sharp 16.41 per cent plunge in its share price. According to company results released to the market, total group revenue rose 5 per cent to $510.7 million, while statutory net profit after tax landed at $11.2 million. Founder Ruslan Kogan told news.com.au that the billion-dollar milestone proves the business model successfully delivers customer value during a bruising cost-of-living crisis.
Retail Slump Hits ASX as Consumer Spending Slows
The broader Australian retail sector is enduring a brutal reporting season driven by high interest rates and cost-of-living pressures. According to GlobalX investment strategist Justin Lin, recent financial reports from major retailers demonstrate that everyday shoppers are cutting back on discretionary spending. Last week, electronics giant JB Hi-Fi saw its share price drop 12.31 per cent after posting results that missed market expectations. Mr Lin noted that JB Hi-Fi’s performance sent a negative cross-read across the entire retail sector, signalling that high mortgage payments and inflation are severely dampening consumer demand. Alongside Kogan and JB Hi-Fi, shares in Harvey Norman, Wesfarmers — which operates Bunnings, Kmart, Target, Officeworks and Priceline — and Myer also fell following their earnings updates.
Subscription Revenue Drives Kogan’s Low-Margin Model
Central to Kogan’s financial strategy is its Kogan First loyalty program, which charges members $129 a year for free delivery and exclusive discounts. According to company reporting, combined loyalty subscription revenue climbed 14.3 per cent to $61.4 million, backed by more than half a million active subscribers. Mr Kogan explained that these subscription fees essentially generate the company’s profits, allowing the core retail operations to run at cost price. “If you look at our profitability, our profitability is basically the subscriptions of our loyalty program, which then means that the rest of the business is run at cost price for our customers,” Mr Kogan said. This structure enables the company to leverage its inventory buying power to negotiate competitive deals with global suppliers.
Category Performance: Televisions and Flat-Pack Furniture
Within Kogan’s operational divisions, house-brand lines under Kogan Products drove strong results, with revenue climbing 18 per cent to $304.6 million. Mr Kogan stated that the company captures over 10 per cent of the Australian television market, bolstered by major sporting events such as the World Cup and footy finals. Meanwhile, the furniture category emerged as an unexpected breakout performer. Traditionally difficult for e-commerce operators due to bulky shipping requirements, furniture sales surged thanks to products designed to expand out of compact boxes. “When you open the box and you unzip the box, your sofa all of a sudden expands,” Mr Kogan said, noting that logistics innovations have made bulky items much easier to deliver nationwide.
Did you know? Kogan’s New Zealand subsidiary, Mighty Ape, endured a tougher period, posting a statutory net loss of $5.1 million.
Frequently Asked Questions
How much did Kogan make in sales?
According to the company’s full-year financial results, Kogan surpassed $1 billion in gross sales, reaching $1.042 billion.
Why did Kogan’s share price fall despite record sales?
Although gross sales surged by 12 per cent, investors focused on a combined net profit after tax of $11.2 million and a total group revenue increase of just 5 per cent, alongside widespread market anxiety over a broader retail slump.
What is the Kogan First loyalty program?
Kogan First is a subscription service charging members $129 annually in exchange for free delivery and exclusive product discounts, driving over half a million active subscribers.
How are other Australian retailers performing?
According to market analysts, major Australian retailers including JB Hi-Fi, Harvey Norman, Wesfarmers, and Myer have experienced falling share prices as high interest rates and cost-of-living pressures cause consumers to spend less.
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