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Kogan share price: where next following lumpy FY21 result?

‘We view KGN to be a key beneficiary of the ongoing lockdowns, similar to other ex-commerce players.’

The Kogan (ASX: KGN) share price fell sharply on Tuesday, after the e-commerce electronics retailer released its FY21 results to the market. After opening at $12.51 per share, the stock tumbled hard during the first few hours of trade, dropping 8.95% to $11.96 per share by 11:11 AM.

Despite that strong reaction from the market, Kogan’s headline results were decisively robust, though a number of sharp adjustments, as well as a cancelled dividend, were likely responsible for the skittish response from the market.

Results in focus

On the top-line, Kogan saw its sales pass the $1 billion mark for the first time, with the company reporting gross sales of $1.179 billion, implying a year-on-year increase of 52.7%.

That translated into strong revenue growth, with FY21 revenue coming in at $780.7 million, up 56.8% year-on-year. On the bottom-line, gross profits rose 61% to $203.7 million, while gross margins edged higher for the full-year, hitting 26.1%.

Overall, the pandemic has seen more and more people flock to online retailers such as Kogan. This is well reflected in Kogan's growing active customer base, which gained 46.9% in 2021 to reach 3.2 million by the close of the financial year. Kogan’s Mighty Ape customers stand at 764 thousand.

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This, however, is where things get somewhat messier. A number of heavy adjustments meant Kogan reported significantly disparate statutory earnings to its underlying earnings. Underlying earnings, for reference, are used by businesses to provide a better picture of what a company’s operational performance would ‘normally’ look like.

So on the underlying front, Kogan reported adjusted earnings (EBITDA) of $61.8 million (+24.5% YoY); adjusted profits (NPAT) of $42.9 million (+43.2% YoY) and adjusted earnings per share (EPS) of 41 cents per share (+27.2% YoY).

The statutory results diverged significantly, with Kogan reporting statutory EBITDA of $22.5 million, NPAT of $3.5 million and EPS of 3 cents per share. Those last two metrics collapsed 86.8% and 88.3%, respectively.

Management attributed that performance to a number of chunky one-offs, including excess inventory related costs, people costs related to the Mighty Ape acquisition, and 'logistics detention charges'. The Kogan Board also said it wouldn’t be declaring a Final Dividend as a means of conserving 'cash for business investment and growth purposes.'


Looking forward and to cut through any misinterpretations, management said that 'the first 18 days of August 2021 have shown a strong acceleration above July 2021 performance, with Gross Sales 24.5% above July, and Gross Profit 25.0% above July.'

Elsewhere, analysts from RBC, who have a $10.00 price target on Kogan said: ‘We view KGN to be a key beneficiary of the ongoing lockdowns, similar to other ex-commerce players.’

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