Kogan: sales lift but profits halve with covid to blame

Kogan (ASX: KGN) tried to hide a sharp decline in earnings, with just five words in today's business update saying “Adjusted EBITDA was $21.7 million”.

Sifting back to its first half FY21 results, the company delivered $51.7m in adjusted EBTIDA.

Why not just tell us that earnings declined -58%?

In a business update titled “Gross Sales and Revenue exceeded FY21’s record first half”, Kogan pushed the view that its top-line was growing strongly, with customers growing 10% year-on-year to $4m and sales growing 9% to $698m.

The encouraging top-line figures failed to trickle down to the bottom line, with gross profit down 4.4% to $112.4m. 

Continuing supply chain interruptions, increased logistics costs and higher marketing expenses weighed on profitability.

This has been a recurring narrative, with the latest business updates from Adairs (ASX: ADH) and Redbubble (ASX: RBL) flagging the same challenges.

Another update, another dip

Kogan shares have a strong track record of falling off a cliff after a business update (% on day of announcement).

• 25 November: Annual General Meeting (-4.3%)

• 20 October: Business Update (+6.7%)

• 24 August: FY21 results (-15.5%)

• 21 July: Business Update (-1.5%)

• 21 May: Business Update (-14.6%)

• 23 April: Business Update (-14.3%)

• 26 February: 1H21 results (-10.4%)

• 29 January: Business update (-8.5%)

Kogan price chart with events

Kogan shares plunged -17.5% this morning, trading -4.5% lower at noon.