Online trader’s value slashed
ONLINE retail entrepreneur Ruslan Kogan has had close to $40 million wiped from his wealth after the e-commerce business which takes his name flagged its profits were under pressure.
Shares in Kogan.com plunged by one-third yesterday after it revealed its profit margins have come under pressure since the GST was applied to goods worth less than $1000.
The online retailer also revealed the consumer watchdog is investigating one of its promotions.
The sell-off handed Kogan its worst day since it listed in mid-2016.
Revenue from sales of global brands in the three months to September 30 was 27.4 per cent lower on the prior corresponding period, Kogan said yesterday.
It blamed foreign-owned competitors who undercut Australian rivals by avoiding GST and a strong US dollar for hitting margins.
Kogan said it initially benefited from the July 1 change that abolished the $1000 GST threshold on imported goods as some competitors exited the market.
“(But) more recently, widespread avoidance of GST has become apparent,” the company said in a statement. “At this stage, the company is unable to determine whether the recent widespread avoidance of GST will be temporary.”
Kogan also announced that the Australian Competition and Consumer Commission had this month asked for “certain information” relating to the marketing and pricing of a promotion run in June. It did not name the promotion.
“The company is in the process of compiling all information the ACCC has requested and will co-operate with the ACCC in its enquiry,” it said.
Kogan said the number of active customers on its site increased 41.6 per cent to 1.45 million customers at September 30, up from 1 million at the same time last year.
Shares in Kogan plunged 33 per cent yesterday to $3.11 in a sell off which stripped $143 million from its market value.
Mr Kogan, who owns 26 per cent of the company’s shares, is looking at paper loss of $37.5 million.
WITH AAP