Though Dangdang's (DANG) Q3 revenue was slightly below the guidance range it provided in its Q3 warning, the Chinese e-commerce firm posted Q3 EPS of -$0.06, beating a -$0.09 consensus. A key reason: Dangdang had a gross margin of 17.6%, up 50 bps Q/Q and 240 bps Y/Y.
As noted in the warning, Dangdang has been trying to cut its dependence on lower-margin goods (even if doing so hurts near-term sales), and is transitioning from being an online bookseller to a provider of a wide variety of products aimed at "mid- to high-end customers."
Also boosting EPS: fulfillment spend fell to 11.7% of revenue from 12% in Q2 and 14.4% a year ago, and tech/content spend fell to 2.9% of revenue from 3.1% in Q2 and 3.2% a year ago. Marketing spend was 3.8% of revenue, down from 5.1% in Q2 and up from 3.6% a year ago.
The company had 8.4M active customers in Q3, up from 7.6M in Q2 and up 21% Y/Y; Q2 growth was 28%. Total orders rose to 15.7M from Q2's 15M, and were up 13% Y/Y. That's a notable slowdown from Q2's 25% growth.
Dangdang is guiding for Q4 revenue of RMB1.938B ($318.3M), below a $321.4M consensus.
Peer LightInTheBox (LITB) is up 5% premarket. The company reports on the morning of Nov. 19.
Q3 results, PR