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Dangdang +8.4% premarket; EPS beat overshadows revenue miss

  • 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
Comments (1)
  • Even if Dangdang breaks even, so what? U can't always rely ur EPS growth on cutting expense.
    14 Nov 2013, 09:23 PM Reply Like
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