Yesterday, ASX-listed Kogan, which bought the Silverdale-based Mighty Ape for A$122 million ($133m) in 2020, reported a full-year net loss of A$39.5m after writing down its Kiwi acquisition by A$46.3m.
The impairment was blamed on a disastrous website upgrade, but also New Zealand’s lingering retail slowdown.
The grief began in October last year with an upgrade that “replatformed” Mighty Ape on to its parent company’s systems.
Serious glitches, from pre-sales to click-and-collect, over the peak shopping season saw the online retailer’s Christmas quarter revenue come in A$20m below the prior year – causing an inventory bulge that’s still being worked through.
An ongoing “range review and inventory optimisation is going quite well. We expect to clear through the majority of that challenge over the next three or four months and then return to strong performance”, McEwan told the Herald this morning.
“Our marketing strategies with parties like Google and Meta are now back on track. That was a big driver of degradation and performance at the time of the website change back in November last year.”
“Performance marketing” is used to drive eyeballs to Mighty Ape.
“There were some technical challenges with the signals that are used to interact with those sorts of ad platforms. It took us a while to figure out what was behind that,” McEwan says.
“We had a lot of good minds at it, both ourselves and Google here and Google offshore. It took a while to figure out what the challenge was but we’re back on track now and performing really quite well.”
Seven staff depart
He adds: “Coming on board after this sort of challenge is not for the faint-hearted. You have to make some pretty tough decisions.”
One was to let seven staff go, of around 200. The process was mainly by attrition.
“We streamlined the team a little bit to drive some efficiency off the back of some of the challenges,” McEwan says.
Today, he says: “Really happy with the team and how they’re rebuilding and making things happen.”
Kiwi retailers will be courted for Mighty Ape Marketplace
McEwan says a key feature added with the upgrade was a new Marketplace section, where third-party retailers can sell products on Mighty Ape.
He’s only now about to embark on a drive to lure local retailers to Mighty Ape Marketplace, now that what he calls “the house fire in the corner” is close to extinguished. (Marketplace has been active for months, but is so far primarily populated by Australian and overseas retailers.)
McEwan won’t reveal Mighty Ape’s clip of the ticket on Marketplace sales but says it’s “small”. His site will deliver eyeballs, help with performance marketing and can assist with a branding page.
‘Like buying at the top of the housing market’
He circles back to Kogan’s A$46.3m write-down of Mighty Ape.
“Mighty Ape was purchased by Kogan at the height of Covid, at a time when the performance of e-commerce companies was very, very high,” McEwan says.
“You could liken it to buying at the top of the housing market.”
Back in 2020, locked-down consumers went into an online buying frenzy.
But today: “Conditions in retail in New Zealand are very challenging right now with the cost-of-living crisis, high inflation and a recession. So that generally means most retailers, including ourselves, are not performing as highly as they were during that period. So this write-down is a prudent and good reflection of the valuation of Mighty Ape as it currently stands.”
When does Mario see a return to a ‘super’ economy?
When does he see things picking up?
“That’s a great question. I wish I could crystal ball gaze that with confidence,” McEwan says.
“My feeling is the New Zealand economy is slowly turning. I think it will be a long haul out. My expectation is that performance for most retailers will start to turn around in six to eight months as the economy starts to pick up.”
Kogan reports
The Melbourne-based Kogan yesterday reported that its wider group achieved growth, but Mighty Ape suffered what the company called “severely impacted performance”, following its October 2024 website upgrade gone wrong.
Problems continued in May as an incident saw hundreds of Mighty Ape users logged into each other’s accounts.
A Kogan investor presentation posted to the ASX yesterday said “major issues” with Mighty Ape’s site stability “are resolved, with minor bugs continuing to be addressed”.
Problems with wishlists, click and collect, pre-sale functionality and marketing efficiency had been resolved as of late May.
Issues with inventory levels, due to a “missed peak sales season” were denoted as “in progress”, with a warning they would impact margins in the first half of FY2026.
The disastrous glitches resulted in Mighty Ape swinging from its usual Christmas-quarter profit spike to third- and fourth-quarter ebitda losses.
Holiday season revenue plunged 22.1% to A$30m.
The write-down was first announced in an August 18 ASX filing.
Kogan said the “one-off, non-cash impairment” was based on “longer-than-anticipated recovery from the platform challenges following the October website upgrade … compounded by the recent challenging retail environment in New Zealand, marked by weak consumer confidence”.
The bad news was expected and founder and chief executive Ruslan Kogan said the underlying numbers were positive.
Kogan shares were up 1.24% to A$4.08 in early trading. The stock is down 15.9% for the year.
Excluding the Mighty Ape impairment, the firm made an adjusted net profit of A$14.9m versus its year-ago A$21m net loss.
“We delivered growth across all major revenue streams, expanded the Kogan community, and strengthened our balance sheet through disciplined execution,” Ruslan Kogan said.
“While Mighty Ape faced challenges during the year, including the impact of its platform migration and tough trading conditions in New Zealand, we have taken the prudent step of resetting the business. With these foundations now in place, we are confident Mighty Ape is on the path to recovery and long-term success.”
Within the Kogan Group, the Australian site Kogan.com’s gross sales increased from A$661.2m in FY2024 to A$793.9m in FY2025, while Mighty Ape’s gross revenue fell from A$147.7m to A$137.0m over the same period.
Kogan.com adjusted ebitda (earnings before interest, tax, depreciation and amortisation) increased from A$32.6m to A$36.9m while Mighty Ape’s adjusted operating earnings swung from a A$7.4m profit to a A$0.1m loss.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
