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A Chinese e-retailer that sells heavily in Europe gets hit by the strong U.S. dollar

December 22, 2015 07:00 PM
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Stiff online competition and an unfavorable shift in currency exchange rates hit online retailer LightInTheBox Holding Co. Ltd. hard in the third quarter.

The Beijing-based e-retailer sells Chinese products online mostly to consumers outside of China, booking sales in U.S. dollars. The fall of the euro and Latin American currencies against the dollar trimmed the dollar value of sales in those markets. But currency fluctuations were only part of the story.

LightInTheBox reported third quarter sales of $70.2 million, a decrease of 29.0% from $99.0 million in the same quarter of 2014. Excluding the impact of currency exchange rates, LightInTheBox’s sales would have totaled $80.2 million, CEO Alan Guo told analysts. The company also noted that its sales exceeded its projection of revenue of between $67 million and $70 million.

The fall of the euro hurt the e-retailer’s dollar sales from Europe, which represented 57.6% of sales for the quarter ended Sept. 30. LightInTheBox’s Europe sales in Q3 decreased by 31.5% to $40.5 million. The dollar’s value has increased more than 10% in 2015 versus the euro.

In contrast, sales from North America during the third quarter decreased only 1.6% to $20.1 million, representing 28.6% of sales. Revenue from other regions decreased by 50.2% to $9.6 million, accounting for about 13.8% of its sales.

"We continued our focus on improving operational efficiency and strengthening our supply chain during the quarter. We made major progress in upgrading our supplier network, which we believe will lead to long-term benefits,” Guo says. “We continued to invest in and innovate our mobile offerings with the launch of a new mobile app that assists Chinese tourists shopping abroad. We are also very pleased to see our cross-border logistics platform getting good traction."

The e-retailer says its revenue from providing logistics services to other Chinese retailers selling overseas via the web grew 25.6% in Q3 over the previous quarter. The e-retailer also said sales from consumers purchasing on mobile devices increased from 32.9% of sales in the second quarter to 34.6% in Q3, according to a transcript of the company’s conference call with analysts from Seeking Alpha.

LightInTheBox also faces intensified competition, including from AliExpress, the Alibaba Group unit that sells Chinese goods to consumers internationally. AliExpress has increased its sales dramatically in Europe and Latin America in recent years and tripled its web sales year over year on Nov. 11, the big Chinese online sales event known as Singles’ Day.

Chinese manufacturer Zhejiang Aokang Shoes Co. Ltd. acquired an undisclosed equity stake in LightInTheBox in July.

For the third quarter ended Sept. 30, LightInTheBox also reported:

  • A net loss of $8.6 million, including $2 million in compensation expenses, compared with a loss of $6.3 million in the same quarter of 2014.

For the first three quarters ended Sept. 30, LightInTheBox reported:

  • Net revenue was $236.2 million, down 12.6% from $270.3 million year over year.
  • A net loss of $35.6 million, compared with a loss of $21.2 million.
 

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