Kogan.com’s Second Chapter: The Recovery After the Retail Crisis
Kogan.com faced a major financial crisis after the pandemic shopping boom ended, leaving the company with massive inventory levels, slowing sales, and consecutive multi-million dollar losses. After reporting heavy operating losses in FY22 and FY23, the Australian e-commerce retailer began restructuring operations by reducing inventory, controlling costs, and expanding higher-margin platform businesses such as subscriptions, marketplace sales, and advertising services. By FY24 and FY25, Kogan returned to profitability, improved margins, increased active customers, and stabilized its finances. The company’s turnaround became one of Australia’s most closely watched e-commerce recovery stories.
As the COVID-19 pandemic began to ease, e-commerce companies around the world retained their sales. Meanwhile, one of Australia’s largest retailers Kogan fell deep into the financial crisis after accelerating its stockpile due to online increase in demand during COVID. It made two losses in succession as it suffered falling customer numbers and slowing sales as customers adapted their behaviour after restrictions were lifted.
Kogan was a poster child for the rapid relapse of COVID-driven growth by FY23. Unsold goods stuffed warehouses, margins continued under pressure, and investor confidence was beginning to sink sharply. Yet after a sharp drop, the company finally managed to stabilise its activities, make turnarounds and recover financial performance through stock reductions, cost controls and repositioning higher-margin platform businesses.
Financial Pressure Again Post-Pandemic
Meanwhile, one of Australia’s largest retailers Kogan fell deep into the financial crisis after accelerating its stockpile due to online increase in demand during COVID. It made two losses in succession as it suffered falling customer numbers and slowing sales as customers adapted their behaviour after restrictions were lifted.
Kogan ended up having to write off a massive amount of stock bought at the height of the pandemic shopping boom. Toward the end of FY21, inventory climbed to AUD $227.9 million for the company as compared to previous years. Having such high levels of inventory led to significant warehousing, logistics and discounting costs while the demand was starting to slow down.
The damage to the finances was rapid. For FY22, Kogan reported an operating loss of AUD $38.1 million, followed by another operating loss of AUD $36.4 million in FY23. Gross sales also fell sharply as online shopping grew post-pandemic.
The Inventory Reduction Plan
Reducing excess stock was a major priority for the company in its recovery phase. Big inventory lines cost retailers because products that hang around in a warehouse unsold incur storage costs and often quickly need to be cleared.
Kogan embarked on an aggressive stock clearance across electronics, furniture, home appliances and many other product categories. These discounts were coupled with promotional campaigns to sell products as quickly as possible to ease the pressure on warehouses.
Inventory levels dropped significantly to around AUD $68.2 million by the end of FY23. This was nearly 57% less than at the peak of the pandemic. Inventory levels fell, but warehousing costs were relatively low, and more operations became more efficient.
The cut also provided the company with more room to manoeuvre financially. Kogan was free to focus on improving margins and stabilising operations rather than having large amounts of capital tied up in unsaleable stock.
Cutting Costs Across Operations
In addition to its approaches for cutting inventory, Kogan has been very focused on controlling operational costs as well. With profitability damaged during the downturn by rising warehousing expenses, logistics costs and discounting pressure, it began to deliver efficiencies across the business.
The company sought to address operational inefficiencies born from what it calls an expansionary period during the pandemic. Warehousing systems, management processes related to stocks and supply chain operations were normalised back at levels matching actual consumer demand levels rather than those expected based on the historic pandemic growth performance.
Kogan was also more discerning in their inventory purchasing. It took the approach of tighter inventory controls and more disciplined buying decisions rather than simply aggressively buying large quantities of stock. The operational changes began translating into improved financial performance as the business cleared costs incurred during the pandemic boom years.
The Shift Toward Platform-Based Revenue
Kogan’s recovery plan included a shift to platform-based businesses away from traditional inventory-led sales. The company had focus areas in subscription services, marketplace sales, insurance products & advertising revenues, mobile plans & financial services. Such businesses are typically less inventory risk and have a higher margin than traditional retail.
Kogan FIRST – Kogan.com membership subscription program was one of the key growth drivers. It provided benefits like free shipping and other special offers for subscribers. Kogan FIRST had grown to over half a million subscribers by FY24.
In the recovery stage, marketplace sales also became even more important. Marketplace models, rather than owning all inventory directly, allow third-party sellers to advertise the products on-site, thereby limiting the inventory risks borne by the company proper. That move towards platform-based revenue enabled Kogan to enhance margin while reducing the operating risk associated with inventory ownership.
Improving Financial Results
The revenues of the company began to reflect its recovery efforts. Sourcing its own brand range paid off, with Kogan bringing returns on profitability and margins back to more normal levels as recorded in FY24 following two tough financial years.
It ended the period with gross profit of AUD $168.4 million and an adjusted EBITA margin returning to positive at AUD $28.3 million. Inventory also stayed way below pandemic highs, which helped the health of its balance sheet. The firm had also increased cash levels and reduced financial pressure since the previous crisis. Inventory reduction and cost management were helping to improve liquidity and ease operational pressure. While total revenue had yet to recover to pre-pandemic highs, it existed at a stabilised and less risky level than when the inventory crisis originally hit.
| Recovery Metric | Kogan.com Recovery Figures |
| Peak Inventory During Crisis | AUD $227.9 million |
| Inventory by FY23 | Reduced to AUD $68.2 million |
| FY22 Operating Result | AUD $38.1 million loss |
| FY23 Operating Result | AUD $36.4 million loss |
| FY24 Adjusted EBIT | AUD $28.3 million profit |
| FY24 Gross Profit | AUD $168.4 million |
| Kogan FIRST Subscribers | More than 500,000 |
| FY25 Gross Sales | AUD $930.9 million |
| FY25 Revenue | AUD $488.1 million |
| FY25 Active Customers | More than 3.5 million |
Customer Growth Started Returning
The once-thriving e-commerce sector after having been hit with a sharp slowing in consumer demand post-pandemic, Kogan had lost more than one million active customers. Still, the company began to build on the lost customer growth with promotional campaigns, subscription programs and marketplace expansion later.
Kogan saw active customers return to above 3.5 million as of FY25. Gross sales reached AUD $930.9 million, 15.1% higher than the previous year. Group revenue in the period grew 6.2% to AUD $488.1 million. The findings supported the perception that while the boom in online shopping had cooled since pandemic fervours, shoppers were still turning to e-commerce for price-sensitive spending.
Kogan’s wider service ecosystem, which included mobile plans, insurance products and membership subscriptions, was also an asset that led to customer engagement beyond traditional retail shopping.
Investor Confidence Slowly Improved
Sentiment among investors was heavily undermined during the inventory crisis, with Kogan posting losses and slumping sales. During FY22 and FY23, the shares were weak as investors wondered if it could bounce back from the pandemic over indulgence.
Nonetheless, a stronger performance further down the line helped to ease some anxiety in markets. Investors finally began to get the picture that the company was stabilising around a more sustainable base with better stock levels, returning profitability and better operational controls.
The market also welcomed Kogan’s move to pivot further towards platform-based revenue streams, as it continues to operate businesses with a lower operational risk profile than heavy-hitter inventory-based retailers. Although trends never came back to the wild stage of the pandemic boom, recovery measures from investors added much-needed stability and helped reduce fears over long-term financial strain.
Post-Crisis A Different Business
This industry is very different from the business that rapidly scaled during the pandemic years, which essentially created an inventory crisis. Kogan then moved away from an asset-heavy reliance on large inventory positions and focused instead on gaining efficiency, margins and operational discipline.
The company was forced to rework parts of its business model post-crisis, limiting harmful exposure to risks involved with high levels of inventory. It made a simple plan that platform businesses, subscription revenue and marketplace services were to be much more prominent parts of the long-term strategy for the enterprise.
The post-COVID collapse brought significant amounts of financial damage during FY22 and FY23, and the business has since stabilised by way of inventory reduction, cost management initiatives and restructuring the beverage operation. After the end of the COVID boom years, a recovery plan put in place by the company is now one of Australia’s biggest e-commerce turnaround stories.
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