Major retailers Kogan and Premier Investments have revealed Australians are still keen to do their shopping online, but both companies have warned that pandemic-inspired supply chain struggles are continuing to seriously disrupt operations.
In a trading update on Thursday morning, online-only seller Kogan revealed a steep fall in its earnings for the first half of fiscal 2022 after a swathe of higher marketing costs, supply chain delays, and millions in executive compensation weakened the business’ bottom line.
Ruslan Kogan’s online group is winning extra customers but grappling with supply chain disruptions which are affecting all players in the retail sector. Credit:
Gross profit at the business fell 4.4 per cent to $112.4 million as the company was forced to spend more on advertising and faced higher costs shipping and stocking items as COVID-induced supply chain disruptions wore on the business.
Retailers across the globe have wrestled with unprecedented levels of supply chain disruption during the pandemic, which has caused the repeated closure of numerous major ports, sharply increased consumer demand, and led to shortages in key items such as microchips.
Kogan’s adjusted earnings fell even further, down 58 per cent to $21.7 million, which Kogan attributed to “significant equity-based compensation expenses” following the business’ annual general meeting in 2020, where founders Ruslan Kogan and David Schafer were awarded $110 million in a controversial incentives grant.
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Shares in Kogan plummeted 15 per cent to $5.99 after the market opened, with analysts labelling the result as a miss on expectations and raising concerns about the company’s lower margins and higher costs spreading into the rest of the financial year.
However, overall sales at the retailer grew over the period, up 9 per cent to $698 million, as shoppers continued to take their retail therapy online through lockdowns and the highly infectious Omicron wave. Kogan’s total active users also grew by 10 per cent to crack 4 million for the first time.
It was a similar story at Smiggle, Jay Jays and Peter Alexander owner Premier, which told investors in its update it had recorded a 27 per cent spike in online sales to $195 million, making up a quarter of Premier’s total sales for the half.
