The Kogan.com Ltd (ASX: KGN) share price is under the spotlight after releasing its FY25 half-year result update.
Kogan sells a wide variety of products on its website, including furniture and electronics, as well as services like mobile, insurance and credit cards.
HY25 update
The company said it saw a strong first-half performance with accelerated growth during the peak retail sales period which includes Black Friday, Cyber Monday, Christmas and Boxing Day sales in November and December.
Kogan revealed that gross sales grew by 10.3% to $492.5 million, while gross profit rose by 18.3% to $106 million thanks to a 2.8 percentage point increase of the gross profit margin to 38.9%.
The online retailer revealed adjusted EBITDA rose 17.5% to $25.3 million and adjusted EBIT jumped 21.2% to $19 million. The Kogan share price is normally heavily influenced by how much profit it’s making.
What happened?
The ASX retailer share noted it took a strategic decision to invest incremental profit into marketing and ‘promotional activity’ from November, helping it achieve that accelerated revenue growth.
In 2024, the business said it undertook a digital transformation for Mighty Ape which went live in October. This saw the launch of the Mighty Ape marketplace and enhancements to the Primate loyalty program. However, Kogan said “implementation and technology challenges temporarily adversely impacted Mighty Ape’s sales and profitability during the peak period.”
The online business said those issues have been largely resolved and the new unified platform is expected to deliver “significant long-term benefits.”
What to make of this for the Kogan share price reaction
Today’s reaction will all be about what investors were expecting Kogan to report versus what numbers it actually revealed.
But, in the longer-term, things are looking better for the company. Wesfarmers Ltd (ASX: WES) recently announced it was going to close Catch, one of Kogan’s main online competitors.
The fact that Kogan report very good sales growth and even faster profit growth because of higher profit margins. That’s a good sign for future net profit growth, in my opinion.
I’m not sure if it’s a great buy in the short-term, but if sales and margins keep growing I think the Kogan share price can rise in the longer-term.
However, there is plenty of competition online, so it won’t be easy for Kogan, whatever happens. There are other ASX growth shares I’d rather buy first though.
