NZ’s Mighty Ape a bright spot as Kogan’s overall profit plunges

Mighty Ape was a rare bright spot for ASX-listed online retailer Kogan as it delivered its full-year result today.

Kogan’s shares were down 13 per cent to A$11.45 in midday trading, wiping some A$200 million from its market cap.

The e-tailer and maker of house-brand TVs, mobile phones and other hardware withheld its final dividend after net profit plunged 87 per cent to A$3.5m.

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Total revenue rose 57 per cent to A$780m for the 12 months to June 30, 2021, but demurrage charges due to Covid-19-related warehousing and supply chain interruptions weighed heavily on Kogan’s bottom line.

One-off expenses totalling A$60.1m also included A$15.6m in equity-based compensation expenses to cover the cost of options awarded to co-founders Ruslan Kogan and David Shafer.

Auckland-based Mighty Ape, bought by Kogan in December 2020 for A$122.4m ($128.3m), was a rare bright spot in the giant e-talier’s results.

And its solid performance appeared to put Mighty Ape’s former owners, including founder and major shareholder Simon Barton, on track to meet earn-out targets, with Kogan setting aside A$12.8m in provisions to cover the likely final payments for Mighty Ape’s former owners.

An investor presentation said Kogan was paying for Mighty Ape in four tranches. The third and fourth payments are contingent on Barton staying on as chief executive of Mighty Ape until at least the delivery of FY2023 results.

Mighty Ape, which had revenue of A$120m and gross profit of A$37.8m for the 12 months to September 2020, had turnover of A$80m and a gross profit of A$19.7m for its first seven months under its new ownership. Mighty Ape’s adjusted profit was A3.7m – meaning it played a key role in helping Kogan squeak into the black overall.

Kogan said Mighty Ape now had 764,000 active customers, a 10 per cent increase since the acquisition.

There had been an expansion of warehousing facilities in Auckland and Christchurch, allowing for same-day delivery in Auckland, Hamilton, Wellington and Christchurch (Mighty Ape also lets customers pick up goods directly from its warehouses for immediate access to purchases).

Buying Mighty Ape was Kogan’s third major foray into New Zealand after it bought Dick Smith NZ’s intellectual property (including its website addresses – which now divert to Kogan.com – and email database) after the chain’s collapse, and its 2019 launch of the cut-price Kogan Mobile in NZ, in a wholesale deal with Vodafone NZ.

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