So far, 2021 has not been kind to this online retailer with the Kogan.com Ltd (ASX: KGN) share price losing almost half its value year to date.
Shares in Kogan started the year at around $19, before hitting a 2021 high of $21.67 in late January. Since then, the Kogan share price has tanked by more than 44% after dropping another 0.58% so far today.
At the time of writing, shares in Kogan are trading at $12.09.
Let’s take a look at what’s been happening for Kogan.
What’s with the Kogan share price?
Kogan emerged as a market darling during Australia’s COVID-19 lockdown last year. Cashed up consumers flocked to Australia’s largest online retailer as many people worked from home or avoided large public spaces. As a result, the Kogan share price bolted to all-time highs.
However, in 2021 many investors have lost interest in the online retailer.
The catalyst can be traced back to late January when the company released a business update for the first half of FY21.
Kogan reported a 96% increase in gross sales over the prior corresponding period. It also reported a 120% increase in gross profit and boasted a strong balance sheet with a cash balance of $78.9 million.
Investors were not impressed with the slower rate of growth, sending the Kogan share price 5% lower for the day. However, Kogan noted that the slower growth was mainly attributed to warehouse capacity issues which had been resolved in the short term.
How did Kogan perform for the first half of FY21?
The second catalyst that prompted investors to sell their Kogan shares was the company’s first-half report.
For the six months ended 31 December, the company reported a 97.4% increase in gross sales to $638.2 million and an 88.6% jump in revenue to $414 million. Despite record spending on marketing, Kogan also reported a 165% increase in net profit of $23.6 million.
The retailer also highlighted a 77% year-on-year increase in active customers to 3 million. In addition, it noted strong growth in its Kogan First loyalty program. It appears these numbers also failed to excite shareholders.
What is the outlook for Kogan?
For the second half of FY21, Kogan plans to further expand its exclusive brands. In addition, the company continues to enhance and develop Kogan Marketplace and its active customer base.
The company did not provide earnings guidance for the full year, rather opting to provide regular business updates.
Kogan also faces a few headwinds in the short term with rising bond yields. As bond yields rise, investors will be looking to have greater exposure to traditional value companies and sectors hit by the COVID-19 pandemic.
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Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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