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AFTER HOURS- Mecox Lane Down 35 Percent (MCOX)

Shares of Mecox Lane (NASDAQ: MCOX) plunged 35 percent after hours Tuesday after reporting disappointing earnings.

Highlights from the release include:

  • Net revenues decreased 44.1% year over year to $21.8 million, compared to $39.0 million in the second quarter of 2012;
  • Gross profit1 decreased 39.6% year over year to $8.1 million, compared to $13.4 million in the second quarter of 2012;
  • Gross margin was 37.2% in the second quarter of 2013, compared to 34.4% in the second quarter of 2012;
  • Net loss was $6.2 million, compared to net loss of $4.9 million in the second quarter of 2012.

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The company said that due to the seasonal nature of its business, it presents earnings on a year over year basis.

“Mecox Lane’s Director and Chief Executive Officer Mr. Alfred Gu said, “We remained conservative in our overall execution in the second quarter while we explored the best ways of leveraging our new JV, Giosis Mecoxlane. At the same time, macroeconomic headwinds in China continued to be a challenge and the slowdown in China’s economy has negatively influenced the fast-changing and hyper-competitive industry of Chinese e-commerce and apparel and accessories.

In the second quarter, we decreased our inventory and overhead costs to preserve cash and increase operating efficiency. Despite much lower revenues compared to the same quarter last year, net loss from operations was relatively constant, reflecting the effectiveness of our cost-cutting initiatives. Although our e-commerce revenues continued to be negatively impacted by the transformation of M18.com to a non-exclusive, multi-channel platform, we saw increased sales on independent e-commerce platforms such as TMall.com in the second quarter and have refocused on our core strength of providing value-for-money, fast-fashion products to China’s consumers.

Looking forward, we will remain prudent with regard to our costs and cash expenditures and will continue to make efforts to position ourselves as a multi-brand and multi-channel fast fashion apparel company.”

[stock-tools exchange="NASDAQ" symbol="MCOX" image_height="230" image_width="350"]

Disclosure: At the time of this writing, the author had no position in the company mentioned.

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