Online retailer Kogan.com has set the scene for another upgrade to 2017 earnings forecasts after trading beat management expectations in the December-half.
Kogan.com founder Ruslan Kogan said on Monday that trading in the second quarter had exceeded forecasts made in November, when the company upgraded its full-year earnings guidance from $6.9 million in the prospectus to between $8 million and $9 million before interest, tax, depreciation and amortisation.
Earnings in the six months ending December had exceeded the original full-year prospectus forecast, buoyed by strong sales and cashflows and improved margins.
Despite the stronger than expected pre-Christmas trade, Mr Kogan stopped short of issuing his second earnings upgrade in three months, saying the results were yet to be audited.
"While the Company's earnings performance to date is exceeding expectations of guidance which was revised upwards at the Company's AGM, the Board is mindful that a half-yearly review is being undertaken by the auditor," Mr Kogan said.
"The Board is closely monitoring ongoing trading performance and will consider if a further update to the Company's outlook is required at the conclusion of the auditor's half yearly review".
Kogan.com shares rose 5 per cent or 7.5¢ to $1.56 in early trade on Monday. However, the stock is still trading below the $1.80 issue price.
The company finished the December quarter with cash of $26.5 million compared with $31.7 million at the end of the September quarter.
Inventories rose from $28.3 million at the end of September to $41.8 million at the end of December, with stock in warehouses almost doubling to $32.3 million.
The increase in inventories is consistent with Kogan.com's strategy to use proceeds from its July IPO to invest in inventory - particularly private label goods - to boost sales.
Mr Kogan said inventory levels were "healthy," with most of the stock received in the second quarter.
"The release of capital constraints has allowed the company to operate with desired inventory levels of brand new in-demand private label stock. More importantly, Christmas trading demonstrated strong demand for new products and this has continued post Christmas," he said.
"With a healthy cash balance and the Company's best ever level of quality inventory, we believe Kogan.com is well placed to continue the strong momentum generated in the first half."
Analysts believe pre-Christmas demand for consumer electronics was strong and prices for big-ticket items such as TVs and laptops have stabilised following the collapse of Dick Smith Holdings, which was discounting aggressively before it collapsed a year ago.
Kogan.com's decision to snap up Dick Smith's online business for the bargain basement price of $2.6 million helped the e-tailer beat prospectus forecasts in 2016 and has no doubt delivered another boost over the last six months.
