It has been a great start to the week for shareholders of Kogan.com Ltd (ASX: KGN). In morning trade the retailer's shares have jumped almost 5.5% to $1.57 following the release of a positive trading update.
At its AGM in November management revised its full year EBITDA guidance from $6.9 million to between $8 million and $9 million. But thanks to strong trading in the last quarter this guidance looks likely to be revised upwards in the near future.
In the first two quarters of FY 2017 alone the company has exceeded its previous EBITDA guidance $6.9 million. I believe this has put in on course to deliver a stunning full year result.
Another positive has been its inventory management. Although inventory levels have increased from $28.3 million to $41.8 million, 90% of this inventory arrived in the last quarter.
Management believes this not only demonstrates a strong turnover of inventory, but means that the inventory it has on hand is of a higher level of quality. This includes brand new in-demand private label stock like its ultra-thin Atlas laptop.
In light of this CEO Ruslan Kogan believes Kogan is positioned to continue the strong momentum generated in the first half.
I'm a big fan of Kogan and think that it is a great alternative to JB Hi-Fi Limited (ASX: JBH) and Harvey Norman Holdings Limited (ASX: HVN).
But I'm not ready to make an investment. The much-speculated launch of Amazon in Australia is something which I find concerning. If Amazon were to launch here then I can't help but feel that a retailer like Kogan could suffer a significant loss of market share.
Though that's not the opinion of Kogan itself. At its AGM the company revealed that it believes Amazon's arrival would be a good thing, accelerating the rise of online shopping. Hopefully that is the case, but for now I'm going to err on the side of caution with this one.
