- Shares in Ruslan Kogan’s online retailer have slumped by more than 30% in midday trade.
- It follows a trading update where Kogan said revenue from Global Brands had fallen by 27%.
- Kogan said foreign competitors had been avoiding GST since the introduction of new GST laws in July.
Online electronics retailer Kogan.com is having a horror day on the ASX, with shares in the company down more than 30% in midday trade.
The company released a trading update to the market this morning which showed revenue from “Global Brands” slumped by 27% from a year earlier.
Kogan attributed the decline to the federal government’s recent changes to GST laws. Since July 1 2018, GST has been applied on all overseas online purchases, rather than just transactions above $1,000.
“Initially, this saw some competitors exit the market and the company’s July Revenue grew 33% year-on-year,” Kogan said.
However, “more recently, widespread avoidance of GST has become apparent”. The company said it is “unable to determine whether the recent widespread avoidance of GST will be temporary”.
In addition to foreign competitor websites, Kogan said the recent weakness in the Australian dollar was putting pressure on margins.
“While growth in the Global Brands division presents a challenge to the business in the short term, we have built a resilient portfolio of businesses, with the core divisions of Exclusive Brands, Partner Brands and Kogan Mobile continuing to show healthy growth,” CEO Ruslan Kogan said.
The company also said it had received notice from the ACCC to provide documents and materials related to a June 2018 marketing campaign.
Kogan said it is “in the process of compiling all information the ACCC has requested and will cooperate with the ACCC in its enquiry”.
Variable expenses rose by 40% as the company expanded its warehouse capacity to boost distribution capabilities ahead of the busy Christmas period.
Elsewhere in the update, Kogan said it had achieved annual customer growth of 41.6% in the September quarter, and now has an active customer base of 1.45 million.
In 2017, Kogan.com was the best performing stock on the ASX, finishing the year with an annual gain of more than 300%.
In the wake of tdoay’s falls, Kogan shares are trading at a discount of around 46% to their 2017 closing price.
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