The Kogan.Com Ltd (ASX: KGN) share price fell 23% Monday morning after giving a business update to investors.
Kogan.Com is an online Australian retailer that sells a variety of electronics, household goods and services like internet plans & insurance.
Kogan’s Business Update:
In an ASX filing, Kogan.Com said changes to GST and other matters have changed the business outlook.
Revenue for the first quarter of its 2019 financial year (FY19) grew by 33% compared to the first quarter of FY18. However, ‘Exclusive Brands’ revenue grew by 15.7%, ‘Partner Brands’ revenue grew by 73% and ‘Global Brands’ revenue fell 27.4%.
The company blamed the fall of Global Brands revenue on changes in the GST law, as applied to low-cost e-commerce imports. It said a number of foreign websites that avoided paying GST had meant “widespread avoidance of GST has become apparent.”
Kogan.Com’s gross profit margin also decreased, with the company attributing the fall to the above GST issue and the Australian dollar. Kogan buys a lot of its products from overseas.
Kogan.Com admitted it received a notice from the ACCC requiring information about the marketing and pricing of a promotion which it ran in June 2018. Kogan.Com is complying with the inquiry.
There was also some positive news from Kogan’s announcement.
The company said its number of active customers increased by 41.6% to 1.45 million and Kogan Mobile users grew by 102.9% year-over-year.
Kogan Founder and CEO Ruslan Kogan said: “We continue to execute our long-term strategy to grow our eCommerce footprint and make the most in-demand products and services more affordable for all Australians.”
The Kogan.Com share price has fallen around 61% since its all-time high at the start of June 2018, according to Google Finance. Only two months ago the company unveiled profit growth of 110% in its FY18 result.
However, with Kogan’s management recently selling shares, investors were keen to know how the underlying Kogan business was tracking. Some market commentators have questioned how much of an effect Amazon’s Australian operations would have on the Aussie online retailer.
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