All of the warm fuzzies that Chinese e-tailers garnered last week were squandered yesterday when LightIntheBox (LITB +3.29%) posted disappointing quarterly results.
The Chinese exporter of fancy dresses, housewares, and consumer gadgetry plunged 23% on the news, and it took Vipshop (VIPS +0.31%) and Dangdang (DANG +0.00%) along for the ride down. Yesterday, Vipshop and Dangdang tumbled 6% and 2%, respectively, even though both companies had posted blowout quarterly results last week. They also cater to entirely different markets than LightIntheBox, which primarily serves European customers.
LightInTheBox's numbers may not seem so bad at first glance. Revenue climbed 33% to $68.1 million, and it posted a small loss in this seasonally sleepy period. It sees growth decelerating to a 16% to 19% year-over-year clip for the current quarter. Is that really so bad? Yes. Analysts were holding out for a small profit this time. They also expected 28% top-line growth for the new quarter. This is actually the second quarter in a row that LightIntheBox offered up weak guidance, and that's a problem because the sputtering e-tailer has only posted two quarters since going public earlier this year.
LightInTheBox is blaming the weakness on its apparel side. It's trying to branch out from wedding gowns and cocktail dresses to more casual fashion fare in response, but the end result is that it is now receiving smaller orders than it used to. After all, its number of customers climbed 75% and orders soared 80%, but revenue climbed just 33% during the quarter. In other words, folks are spending less on LightInTheBox, though that's largely because its big-ticket gowns and special-occasion dresses have fallen out of favor.
It's a bad end to a seven-trading-day span wherein all three Chinese e-tailers offered up fresh financials.
Vipshop had set the right tone with a 146% surge in revenue in its latest quarter to kick things off last week. Dangdang followed with a narrower loss than Wall Street expected in its latest quarter. All three stocks posted double-digit percentage gains last week on the well-received reports.
One can argue that LightInTheBox is growing at a faster rate than Dangdang, but it's hard to stick to that comparison after LightIntheBox has whiffed in its first two quarters as a public company. The trend would seem to indicate another disappointment three months from now, and the pressure is on for LightInTheBox to finally live up to expectations before it digs itself into too big a hole when it comes to investor confidence.
