“A retail revolution”: Kogan talks up e-commerce as profits grow 55.9% amid COVID-19 rush
For Kogan and JB Hi-Fi, COVID-19 has been an unprecedented commercial opportunity, with floods of new customers driving up sales and profits.
E-commerce magnate Ruslan Kogan says a “retail revolution” is taking place amid the COVID-19 pandemic as record numbers of first-time customers flood his company’s online shopping platforms.
The entrepreneur’s eponymous retail business, Kogan.com, on Monday unveiled a $26.8 million net profit (after tax) for financial year 2020, up 55.9% on the back of the busiest six months in the company’s history.
As cooped-up Australians flock to the internet for everything from home office supplies to video game accessories, Kogan’s gross sales shot up 62.5% over the last six months, a step change Kogan believes will have long-lasting effects on the retail landscape.
“There is a retail revolution taking place as more and more shoppers learn about the benefits of e-commerce,” Kogan told investors on Monday morning.
“For us, this is a very exciting trend that shows that once customers learn about shopping online, they change their ongoing behaviour.
“Once someone discovers the benefits of online shopping, I struggle to see why they would ever go back to the old way of doing things.”
Kogan has been updating investors regularly about its financial performance over the pandemic, and Monday’s figures actually fell slightly short of analyst expectations, triggering a 4% decrease in the company’s share price when trading opened.
There are now more than 2.18 million active customers on Kogan’s websites, up more than a third on last year, helping draw eyes to the company’s internet and insurance services businesses, which are also growing strongly.
“After almost 15 years of preparation, the revolution occurring in retail represents a significant opportunity for Kogan.com,” Kogan said.
Kogan’s results reflect not just a significant increase in online shopping during the pandemic, but also a massive spike in spending on homewares, electronics and other appliances.
While the clothing, department stores and takeaway food services categories have experienced an unprecedented decline in sales over the last six months, homewares has shot upwards, increasing a whopping 28% year-on-year in May and by 23% in June.
Other major players are also cashing in.
Bricks-and-mortar retailer JB Hi-Fi unveiled a 31.4% increase in comparable sales over the June quarter on Monday, helping it lift full-year sales growth into double digits.
The retailer, which also owns The Good Guys chain, saw underlying net profit (after tax) increase 33.2% to $332.7 million as sales momentum eclipsed increased costs associated with coronavirus measures.
“Our customers have continued to turn to us for their technology and home appliance needs and our team members have responded and adapted in an amazing manner to make sure we can meet these needs safely and effectively,” JB Hi-Fi Group chief executive Richard Murray said in a statement on Monday.
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