“Kogan is pleased to announce continued strong profitability” is, in hindsight, a strange opening for an ASX announcement that triggers a sell-off equal to one quarter of the company’s value.
But that’s exactly what Kogan (ASX:KGN) investors got on Wednesday as Kogan reported gross sales were down -6.2% vs. 3QFY23 and revenue down -2.4%.
Stranger still is that the company’s share price has shed -26% even as gross profit of $39M was nearly up +14% vs pcp as gross margins improved by 5.2pp to 36.8%.
If you’re looking for the perfect definition of a mixed result, it could be hard to find a better example.
The broad sell-off today is most likely a response to falling sales – if that keeps up, the company will make less profits regardless of margins. It could be some investors are seeing trouble ahead.
Though, compared to the ASX20, Kogan hasn’t been particularly liquid across the last month.
The 4w volume average for share turnover sits at 484.2K as of Wednesday 24 April – that could be amplifying things, given $14.7M worth of shares have moved hands today.
Kogan noted in its commentary on sales that inventories had significantly declined by -9.2% YoY – then reminding readers the company has “discussed at length [this issue] in recent announcements.”
Kogan says it’s making the shift to being a “more capital-light business.”
Clearly, that hasn’t been enough to persuade everyone.
KGN last traded at $5.24/sh.