SX-listed online retailer Kogan.com has acquired another distressed asset after acquiring failed furniture brand Brosa, a week after it was placed into voluntary administration.
Administrators KordaMentha have reached an agreement with Kogan.com (ASX: KGN) to buy Brosan’s assets for $1.5 million after more than 30 parties expressed interest within 48 hours of the business coming into their hands last Wednesday.
Richard Tucker of Cordamenta saidA wonderful result for the creditors” of Brosa and many customers, the new owners offered to provide him with furniture that was paid for.
“Kogan.com is a white knight for the business and especially for customers who are waiting for order delivery where the stock is held by Brosa,” he said.
Unfortunately, the managers were unable to fulfill these orders due to problems in the logistics network. Kogan.com is giving its customers the best results to get their products as much as possible and subject to trade arrangements.
Tucker said the priority now is to get workers paid as soon as possible, and Brosnan also asked. For customers to wait patiently while they complete stock reconciliation and finalize arrangements to finalize the sale. Customers will meet at the beginning of the new year, and Kogan.com intends to offer it to those who have already paid.
It’s not the first time Kogan has stepped in to take on a failing retailer. After Dick Smith Group collapsed in January 2016, two years after it listed on the ASX at a market capitalization of $520 million, then-private company Kogan.com bought the brand and database for just $2.6 million from its liquidation.
When fake designer furniture retailer Matt Blatt collapsed in March 2020, Kogan.com paid $4.4 million for the brand and goodwill, avoiding a trail of debts and unfulfilled orders from angry customers.
Kogan.com’s $1.5 million play for Brosa follows a similar pattern, with the business taking intellectual property, goodwill and stock, but no leases or other liabilities, pledging to provide logistical support for thousands of undelivered orders.
The purchase will be funded from Kogan.com’s cash reserves.
The brand will continue online.
In a statement to the ASX, Kogan.com COO and CFO David Shaffer said the acquisition would expand the company’s online furniture offering.
“We are delighted to be able to provide a lifeline to Brosa customers, save the Brosa brand and launch Brosa.com.au in such a short period of time,” he said.
“After years of investment in brand-building and marketing, Brosa is a popular online furniture brand in Australia, and we are delighted to be able to bring the brand into the Kogan Group.”
The losers in the deal were Brosa Venture Capital’s backers, Airtree and ASX-listed Bailador Technology Investments, which pumped more than $7 million into the business.
Before Bailador recently wrote it down to $0, its investment in Brosa was valued at $4.5 million in the middle of the year.
The Melbourne startup was founded in 2014 by Evan Lim and Richard Lee. It raised $2 million from AirTree Ventures in 2015, followed by a Series B round of $5 million in 2017 backed by AirTree, Cru Group and Bailador.
It remains to be seen whether the deal will start to change fortunes for Kogan.com in 2023.
Kogan.com’s stock price is down nearly 62% this year, at $3.27, after starting the year at $8.86.
The company It posted an after-tax net loss of $35.5 million in 2022, while revenue fell 8 percent to $718.5 million. Gross profit fell 9.3 percent to $184.4 million.
It made the same mistakes as last year when its profit fell by 87% in FY21.
CEO and founder Ruslan Kogan commented on the results in August: “E-commerce did not continue to grow as expected. This has caused us to hold excessive inventory, and the associated increase in price and marketing costs to sell the merchandise.
The 16-year-old retailer has pledged to become a leaner business with “just the right amount of inventory” and cutting operating costs.
