Online retailer Kogan has been slapped with a strong protest vote against the company’s executive pay following a tumultuous year for the business that has seen its share price decline 60 per cent since January.
At its annual general meeting held on Thursday, the company was smacked with a large 41.7 per cent vote against its remuneration report, constituting a ‘second strike’ and bringing about a vote to spill the company’s board. This was not passed, however, with just 3 per cent of shareholders voting in favour.
CEO and founder Ruslan Kogan has set up an in-house delivery system for his retailer.Credit:
This marks the second year the company has received a strike at its AGM, with 43 per cent of shareholders voting against last year’s remuneration report following a controversial decision to issue executives Ruslan Kogan and David Shafer with $112 million in share options.
It caps off a torrid year for the business, which has seen its share price slide to around $8 from highs of $25 last October following significant inventory and warehousing issues, which drove a steep fall in profits over the 2021 financial year.
Mr Kogan and chairman Greg Ridder pushed the company’s prospects for future growth at the meeting, with the business taking the rare step of giving its shareholders long-term forecasts, something it has historically been reluctant to do.
The chief executive told investors the business is aiming to hit $3 billion in gross sales by 2026, which would involve a threefold increase on its current gross sales. The company is also hoping to lock in a million subscribers to its Kogan First subscription service by then as well.
“Our business is now of substantial scale,” he told The Age and The Sydney Morning Herald. “We have looked at our historical growth rates, we have looked at what we’re targeting, and it is part of the maturity of the business and part of us being in a business where we’re making significant investments for growth.”
Mr Kogan is hoping a newly unveiled in-house last-mile delivery service will aid the retailer in achieving its ambitious goal. Kogan has been quietly operating the service since June across Melbourne, Sydney and Brisbane, which allows products to be delivered same or next-day.
It will also allow the retailer to circumvent the need to use Australia Post or other delivery services, which have been struggling to keep up with consumer demand in recent months, though Mr Kogan said this was not a driving factor behind the new service.
“Supply chains and logistics have had many distractions over the last year and a half, and ultimately, we are responsible for delighting our customers,” he said.
Businesses are grappling with surging freight costs due to pandemic-inspired supply chain disruptions.Credit:The New York Times
“It’s never about blame allocation. It’s never about what went wrong. Ultimately, somebody clicks a button on our site, and they want an item delivered.”
Kogan has dispatched nearly 60,000 parcels using the service since it began, with the chief executive saying the company was planning to roll it out to other capital cities soon.
For the first quarter of the new financial year, the company’s gross sales grew 19 per cent, however gross earnings fell 17 per cent to $58 million, a drop Kogan blamed on the heightened sales and profits experienced in the year-ago period.
RBC Capital Markets analyst Chami Ratnapala said the company’s sales were tracking well, but flagged concerns around higher costs to fuel more investments into projects such as Kogan First.
“We expect these costs to increase in line with the ongoing investments and the competition in acquiring customers,” they said.
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