Mecox Lane Limited ("Mecox Lane" or the "Company") (Nasdaq:MCOX), a
multi-brand and multi-channel retailer of health, beauty and
lifestyle products in China, today announced its unaudited
financial results for the fourth quarter and full year ended
December 31, 2014.
Mecox Lane completed the spin-off of its apparel and accessories
business on September 18, 2014. Following the spin-off, financial
results related to the apparel and accessories business were
reclassified as discontinued operations for the fiscal year ended
December 31, 2014 and the comparative figures for fiscal year ended
December 31, 2013. The assets and liabilities of the discontinued
operations are classified as assets/liabilities held for sale on
the Company's balance sheet. The following results reflect the
Company's continuing operations.
Fourth Quarter 2014
Highlights
- Net revenues increased 19.5% year over year to $14.9 million,
compared to $12.5 million in the fourth quarter of 2013
- Gross profit1 was $8.9 million, compared to $7.8 million in the
fourth quarter of 2013
- Gross margin was 59.6%, compared to 62.5% in the fourth quarter
of 2013
- Net income was $1.8 million, compared to a net loss of $11.2
million in the fourth quarter of 2013
Full Year 2014 Highlights
- Net revenues increased 16.4% to $49.6 million, compared to
$42.6 million for the full year 2013
- Gross profit was $32.3 million, compared to $26.7 million for
the full year 2013
- Gross margin was 65.1%, compared to 62.7% for the full year
2013
- Net loss was $16.4 million, compared to a net loss of $26.6
million for the full year 2013
"Our fourth quarter featured strong sales that were driven by a
number of year-end promotions in support of our proprietary and
third-party health and beauty products as we followed through on
our strategy of focusing on the top-performing lines of our
business," said Mecox Lane's director and chief executive officer,
Ms. Ingrid Wang. "The fourth quarter also included the sale of
Mecox Lane's entire equity stake in the Giosis Mecoxlane joint
venture, a move that reflects our broader changes in establishing
our brand as a health, beauty and lifestyle products business. With
our new management team having taken over in May of last year, 2014
was a period of transition as we set a foundation for growth
through 2015. As we move forward, we will focus on building our
brand, developing new products, and growing our multi-channel sales
platform, including overall improvements to our customer
relationship management and precision marketing."
Fourth Quarter 2014
Results
The Company presents its financial results on a year-over-year
basis between the fourth quarter of 2014 and the fourth quarter of
2013, as in the following paragraphs.
Total Net Revenues
Total net revenues were $14.9 million in the fourth quarter of
2014, representing a 19.5% increase from $12.5 million in the
fourth quarter of 2013. The increase was mainly due to the strong
results of the Company's "Double 11" and "Double 12" sales
promotions along with other year-end sales and marketing efforts,
particularly those in support of the Company's range of SONOKO
brand products, sales of which increased approximately 50% year
over year.
Cost of Goods Sold2
Cost of goods sold was $6.0 million in the fourth quarter of
2014, representing an increase of 28.7% from $4.7 million in the
fourth quarter of 2013.
Gross Profit and Gross Margin
Gross profit was $8.9 million in the fourth quarter of 2014,
representing a 13.9% increase from $7.8 million in the fourth
quarter of 2013. Gross margin was 59.6% in the fourth quarter of
2014, compared to 62.5% in the fourth quarter of 2013. The decrease
in gross margin was mainly due to an increase in the sales of
SONOKO-brand products, which have a lower margin compared to the
Company's proprietary products.
Operating Expenses
Total operating expenses were $8.0 million in the fourth quarter
of 2014, representing a 9.4% increase from $7.3 million in the
fourth quarter of 2013.
Selling, general and administrative expenses (SG&A) were
$7.9 million in the fourth quarter of 2014, representing a 13.9%
increase from $7.0 million in the fourth quarter of 2013, primarily
dueto an increase in sales and performance bonuses. The increase in
bonuses was partially offset by a decrease in asset impairments,
which was $1.2 million and nil in the fourth quarters of 2013 and
2014, respectively. The increase in SG&A and depreciation and
amortization was offset by government subsidies amounting to $0.7
million in the fourth quarter of 2014.
Income from Operations
Income from operations was $0.9 million in the fourth quarter of
2014, compared to income from operations of $0.5 million in the
fourth quarter of 2013.
Loss from Equity in an Affiliate
Loss from equity in an affiliate, specifically Giosis Mecoxlane,
was $0.7 million in the fourth quarter of 2014, compared to a loss
of $2.0 million in the fourth quarter of 2013.
On December 19, 2014, the Company entered into a share purchase
agreement with Oak Investment Partners XII, LP, pursuant to which
the Company sold its entire equity interest in its joint venture,
Giosis Mecoxlane Ltd., for consideration of US$2.0 million. A net
gain of $1.3 million was recognized from the disposal and the deal
was completed on December 22.
Income (loss) from Continuing Operations
Income from continuing operations was $1.8 million in the fourth
quarter of 2014, compared to a loss from continuing operations of
$1.1 million in the fourth quarter of 2013.
Net Income and Net Income per
ADS
Net income was $1.8 million in the fourth quarter of 2014,
compared to a net loss of $11.2 million in the fourth quarter of
2013. Non-GAAP net income3 was $1.8 million in the fourth quarter
of 2014, compared to non-GAAP net loss of $10.2 million in the
fourth quarter of 2013.
Basic and diluted income from the Company's discontinued
operations per American depositary share ("ADS") attributable to
Mecox Lane shareholders was nil in the fourth quarter of 2014.
Basic and diluted income from the Company's continuing operations
per ADS attributable to Mecox Lane shareholders was $0.14 in the
fourth quarter of 2014, compared to net losses of $0.82 and $0.08
per ADS in the fourth quarter of 2013, respectively. One ADS
represents 35 ordinary shares.
Cash and Short-term Investments
As of December 31, 2014, Mecox Lane had cash and cash
equivalents totaling $18.2 million, compared to $14.3 million as of
December 31, 2013. Short-term investments on December 31, 2014 were
$0.7 million, compared to nil as of December 31, 2013, all of which
were structured term bank deposits.
Full Year 2014 Results
Total Net Revenues
Total net revenues for the full year 2014 were $49.6 million,
representing a 16.4% increase from $42.6 million for the full year
2013. The increase was mainly due to the Company's launch of a
number of proprietary healthcare products. At the same time, sales
of SONOKO-brand products increased approximately 75%. The Company
saw a significant overall increase in its sales of premium skin
care products in 2014, which were driven by a number of sales and
marketing promotions.
Cost of Goods Sold2
Cost of goods sold was $17.3 million for the full year 2014,
representing a 9.0% increase from $15.9 million for the full year
2013.
Gross Profit and Gross Margin
Gross profit for the full year 2014 was $32.3 million,
representing an increase of 20.8% from $26.7 million for the full
year 2013. Gross margin was 65.1% for the full year 2014, compared
to 62.7% for the full year 2013. The improvement in gross margin
was mainly due to an overall increase in sales of Mecox Lane's
proprietary products, which generally yield higher margins compared
to those of the Company's third-party products.
Operating Expenses
Total operating expenses were $25.4 million for the full year
2014, representing a 46.2% increase from $17.4 million for the full
year 2013.
Selling, general and administrative expenses were $24.9 million
for the full year 2014, representing a 10.8% increase from $22.5
million for the full year 2013, primarily due an increase in sales
and performance bonuses, which were in line with the increase in
the Company's sales. The increase in bonuses was partially offset
by a decrease in asset impairments, which amounted to $1.2 million
in 2013 and nil in 2014.
Other operating income was $1.1 million for the full year 2014,
down from $6.2 million for the full year 2013. A one-time gain of
$6.0 million was recorded in 2013 for a contribution of intangible
assets to the Giosis Mecoxlane joint venture.
Income from Operations
Income from operations for the full year 2014 was $6.9 million,
compared to income from operations of $9.3 million for the full
year 2013.
Loss from Equity in an Affiliate
Loss from equity in an affiliate, Giosis Mecoxlane, was $4.9
million for the full year 2014, compared to a loss of $5.5 million
for the full year 2013.
Income from Continuing Operations
Income from continuing operations was $3.4 million for the full
year 2014, compared to income from continuing operations of $5.5
million for the full year 2013.
Net Loss and Loss per ADS
Net loss was $16.4 million for the full year 2014, compared to a
net loss of $26.6 million for the full year 2013. Non-GAAP net loss
was $15.4 million for the full year 2014, compared to non-GAAP net
loss of $22.4 million for the full year 2013. Basic and diluted
loss from discontinued operations per ADS attributable to Mecox
Lane shareholders was $1.53. Basic and diluted income from
continuing operations per ADS attributable to Mecox Lane
shareholders was $0.27 for the full year 2014, compared to a net
loss of $2.69 and net income of $0.46 per ADS for the full year
2013, respectively.
Held-for-Sale Assets
In July 2014, the Company terminated a plan to sell its
logistics center. As a result, $34.7 million and $5.7 million were
reclassified from held-for-sale assets to property and equipment
and prepaid land-use rights, respectively.
Conference Call Information
Mecox Lane management will hold an earnings conference call at
8:00 p.m. U.S. Eastern Time on March 9, 2015 (8:00 a.m.
Shanghai/Hong Kong Time on March 10, 2015) to discuss results and
highlights from the quarter and the full year, as well as to answer
questions. A brief presentation to accompany the earnings call will
be available on the Company's website,
http://ir.mecoxlane.com/events.cfm, at 7:00 p.m. U.S. Eastern Time
on March 9, 2015 (7:00 a.m. Shanghai/Hong Kong Time on March 10,
2015).
The dial-in numbers and passcode for the conference call are as
follows:
| U.S. (toll-free): |
1-855-500-8701 |
| Mainland China: |
400-1200654 |
| International: |
65-67239385 |
| Hong Kong: |
852-30186776 |
| Passcode: |
93300639 |
Additionally, an archived webcast of this call will be available
on the Investor Relations section of Mecox Lane's website at
http://ir.mecoxlane.com.
About Mecox Lane Limited
Mecox Lane Limited (Nasdaq:MCOX) is a multi-brand and
multi-channel retailer in China. Since the Company's founding in
1996 and its listing on the Nasdaq Global Select Market in 2010,
Mecox Lane has focused on the evolving fashion and lifestyle needs
of China's young women through multiple retail channels. As part of
a strategy shift under new management, and in response to current
market trends, the Company focuses on providing its broad base of
urban and upwardly mobile customers with health and beauty products
that are in step with their increasingly wellness-focused
lifestyles. For more information on Mecox Lane, please visit
http://ir.mecoxlane.com.
Safe Harbor: Forward Looking Statements
This press release contains forward-looking statements made
under the "safe harbor" provisions of Section 21E of the Securities
Exchange Act of 1934, as amended. These forward-looking statements
can be identified by terminology such as "may," "will," "expects,"
"anticipates," "future," "intends," "plans," "believes," "aims,"
"estimates," "confident," "likely to" and similar statements. Among
other things, the quotations from management in this press release,
as well as the Company's strategic and operational plans, contain
forward-looking statements. Forward-looking statements involve
inherent risks and uncertainties. A number of factors could cause
actual results to differ materially from those contained in any
forward-looking statement, including but not limited to the
following: the Company's business strategies and initiatives as
well as its business plans; the Company's future business
development, results of operations and financial condition; changes
in the Company's revenues and cost or expense items; the Company's
expectations with respect to increased revenue growth and its
ability to sustain profitability; the Company's products under
development or planning; the Company's ability to attract customers
and further enhance its brand recognition; trends and competition
in the industry in which the Company operates; the failure of the
markets to grow at the projected rates; the rapidly changing nature
of the industry in which the Company operates; and significant
uncertainties of any projections or estimates relating to the
growth prospects or future condition of the market. If any one or
more of the assumptions underlying the market data turns out to be
incorrect, actual results may differ from the projections based on
these assumptions. You should not place undue reliance on these
forward-looking statements. Further information regarding these and
other risks is included in the Company's annual report on Form 20-F
as well as in its other filings with the Securities and Exchange
Commission. All information provided in this press release is
current as of the date of the press release, and the Company
undertakes no duty to update such information, except as required
under applicable law.
About Non-GAAP Financial Measures
To supplement Mecox Lane's consolidated financial results
presented in accordance with United States Generally Accepted
Accounting Principles ("GAAP"), Mecox Lane uses in this press
release non-GAAP net income (loss), which excludes share-based
compensation expenses. The presentation of the non-GAAP financial
measure is not intended to be considered in isolation or as a
substitute for the financial information prepared and presented in
accordance with GAAP.
Mecox Lane believes that the non-GAAP financial measure
facilitates investors' and management's comparisons to Mecox Lane's
historical performance and assists management's financial and
operational decision making. A limitation of using the non-GAAP
financial measure is that share-based compensation expenses are
recurring expenses that will continue to exist in Mecox Lane's
business for the foreseeable future. Management compensates for
these limitations by providing specific information regarding the
GAAP amounts excluded from the non-GAAP measure. The accompanying
table has more details on the reconciliation between the non-GAAP
financial measure and its most directly comparable GAAP financial
measure.
1 Gross profit excludes the impact of depreciation and
amortization expenses.
2 Cost of goods sold excludes depreciation and amortization
expenses.
3 Non-GAAP net loss and non-GAAP net income exclude share-based
compensation expenses. The non-GAAP measures and related
reconciliations to GAAP measures are described in the accompanying
sections of "About Non-GAAP Financial Measures" and the
accompanying table of "Mecox Lane Limited – Consolidated Statement
of Operations Information – Reconciliations of Non-GAAP Financial
Measures to Comparable GAAP Measures" at the end of this press
release.
| Mecox Lane
Limited |
| Unaudited Consolidated
Balance Sheet |
| |
|
|
| |
December 31, |
December 31, |
| |
2013 |
2014 |
| |
$ |
$ |
| Current assets: |
|
|
| Cash and cash equivalents |
14,261,249 |
18,180,733 |
| Short-term investments |
-- |
653,700 |
| Accounts receivable, net of allowances of
$49,286 and $18,143 as of December 31, 2013 and December 31, 2014,
respectively |
944,447 |
1,206,780 |
| Amount due from related parties |
224,479 |
-- |
| Other receivables |
2,366,047 |
1,588,285 |
| Advances to suppliers and prepaid
expenses |
754,039 |
806,758 |
| Merchandise inventories |
4,048,609 |
3,075,386 |
| Held-for-sale assets |
69,365,235 |
-- |
| Total current assets |
91,964,105 |
25,511,642 |
| Property and equipment, net |
4,025,765 |
37,249,769 |
| Prepaid land use right |
-- |
5,656,453 |
| Intangible assets, net |
872,529 |
473,419 |
| Investment in an affiliate |
5,546,358 |
-- |
| Other non-current assets |
240,906 |
257,547 |
| TOTAL ASSETS |
102,649,663 |
69,148,830 |
| |
|
|
| LIABILITIES AND EQUITY |
|
|
| Current liabilities: |
|
|
| Secured short term borrowing |
1,640,180 |
-- |
| Accounts payable (including accounts payable
of the consolidated VIEs without recourse to Mecox Lane Limited of
$91,666 and nil as of December 31, 2013 and December 31, 2014,
respectively) |
13,001,974 |
6,242,761 |
| Advances from customers |
2,531,312 |
2,790,812 |
| Amount due to related parties |
635,770 |
-- |
| Accrued expenses |
3,236,435 |
3,441,317 |
| Other current liabilities |
4,172,225 |
2,570,288 |
| Income tax payable |
1,752,631 |
1,751,744 |
| Held-for-sale liability |
7,490,383 |
-- |
| Total current liabilities |
34,460,910 |
16,796,922 |
| |
|
|
| Equity: |
|
|
| Ordinary shares ($0.0001 par value;
10,000,000,000 shares authorized, 439,876,279 and 455,223,849
shares issued, and outstanding as of December 31, 2013 and December
31, 2014) |
43,988 |
45,523 |
| Additional paid-in capital |
168,833,542 |
169,817,779 |
| Accumulated deficit |
(109,433,074) |
(125,124,090) |
| Accumulated other comprehensive income |
7,700,798 |
7,228,441 |
| Statutory reserve |
943,499 |
284,255 |
| Total Mecox Lane Limited equity |
68,088,753 |
52,251,908 |
| Noncontrolling interests |
100,000 |
100,000 |
| Total equity |
68,188,753 |
52,351,908 |
| TOTAL LIABILITIES AND EQUITY |
102,649,663 |
69,148,830 |
| |
| |
| Mecox Lane
Limited |
| Unaudited Consolidated
Statements of Comprehensive Income (Loss) |
| |
|
|
|
|
| |
Three-months Ended December 31 |
Year
Ended December 31 |
| |
2013 |
2014 |
2013 |
2014 |
| |
$ |
$ |
$ |
$ |
| Net revenues |
12,493,674 |
14,924,616 |
42,623,591 |
49,609,483 |
| Cost of goods sold (excluding depreciation
and amortization) |
4,683,061 |
6,028,711 |
15,896,128 |
17,334,312 |
| Operating expenses: |
|
|
|
|
| Selling, general and
administrative expenses |
6,966,699 |
7,934,548 |
22,459,178 |
24,880,448 |
| Depreciation and
amortization |
314,336 |
744,459 |
1,102,493 |
1,618,791 |
| Other operating income,
net |
2 |
(716,241) |
(6,182,764) |
(1,088,346) |
| Total operating expenses |
7,281,037 |
7,962,766 |
17,378,907 |
25,410,893 |
| Income from operations |
529,576 |
933,139 |
9,348,556 |
6,864,278 |
| Interest expense |
(85,148) |
-- |
(341,773) |
(15,988) |
| Interest income |
211,564 |
79,531 |
977,104 |
273,984 |
| Other income (loss), net |
285,904 |
183,363 |
1,039,084 |
(133,818) |
| Income before income taxes, equity in an
affiliate and noncontrolling interests |
941,896 |
1,196,033 |
11,022,971 |
6,988,456 |
| Income tax expense |
-- |
-- |
-- |
-- |
| Income before equity in an affiliate and
noncontrolling interests |
941,896 |
1,196,033 |
11,022,971 |
6,988,456 |
| Loss from equity in an affiliate |
(1,997,269) |
(710,993) |
(5,491,484) |
(4,876,523) |
| Gain on disposal of the equity interest of an
affiliate |
-- |
1,330,165 |
-- |
1,330,165 |
| Income from continuing operations |
(1,055,373) |
1,815,205 |
5,531,487 |
3,442,098 |
| Loss on discontinued operations, net of tax
nil |
(10,168,727) |
-- |
(32,141,778) |
(19,792,358) |
| Net loss |
(11,224,100) |
1,815,205 |
(26,610,291) |
(16,350,260) |
| Accretion of noncontrolling interest |
19,528 |
-- |
102,958 |
3,836 |
| Net loss attributable to noncontrolling
interests |
(19,528) |
-- |
(102,958) |
(3,836) |
| Net loss attributable to Mecox Lane Limited
shareholders |
(11,224,100) |
1,815,205 |
(26,610,291) |
(16,350,260) |
| |
|
|
|
|
| Net income per share attributable to Mecox
Lane-Basic |
|
|
|
|
| Income from continuing
operations |
(0.00) |
0.00 |
0.01 |
0.01 |
| Loss on discontinued
operations |
(0.02) |
0.00 |
(0.08) |
(0.04) |
| Net income per share attributable to Mecox
Lane-Diluted |
|
|
|
|
| Income (loss) from continuing
operations |
(0.00) |
0.00 |
0.01 |
0.01 |
| Loss on discontinued
operations |
(0.02) |
0.00 |
(0.08) |
(0.04) |
| Net income per ADS attributable to Mecox
Lane-Basic |
|
|
|
|
| Income (loss) from continuing
operations |
(0.08) |
0.14 |
0.46 |
0.27 |
| Loss on discontinued
operations |
(0.82) |
0.00 |
(2.69) |
(1.53) |
| Net income per ADS attributable to Mecox
Lane-Diluted |
|
|
|
|
| Income (loss) from continuing
operations |
(0.08) |
0.14 |
0.46 |
0.27 |
| Loss on discontinued
operations |
(0.82) |
0.00 |
(2.69) |
(1.53) |
| Weighted average ordinary shares used in per
share calculation |
|
|
|
|
| Basic |
435,073,645 |
455,217,056 |
418,347,060 |
452,758,464 |
| Diluted |
438,865,556 |
455,223,849 |
422,251,663 |
452,758,464 |
| Weighted average ADS used in per share
calculation (1) |
|
|
|
|
| Basic |
12,430,675 |
13,006,201 |
11,952,773 |
12,935,956 |
| Diluted |
12,539,015 |
13,006,395 |
12,064,333 |
12,935,956 |
| |
|
|
|
|
| (1) ADS amounts adjusted for a
change in the ratio of the Company's American Depositary Shares
("ADSs") to ordinary shares ("Shares") from 1:7 to 1:35 ("Ratio
Change"), effective as of February 1, 2013. |
| |
|
|
|
|
| Other comprehensive income (loss), net of tax
of nil |
|
|
|
|
| Change in cumulative foreign currency
translation adjustment |
324,259 |
-- |
1,408,045 |
-- |
| Other comprehensive income (loss), net of
tax |
324,259 |
-- |
1,408,045 |
-- |
| |
|
|
|
|
| Comprehensive loss attributable to Mecox Lane
Limited shareholders |
(10,899,841) |
1,815,205 |
(25,202,246) |
(16,350,260) |
| |
|
|
|
|
| Reconciliations of Non-GAAP Financial
Measures to Comparable GAAP Measures |
|
|
|
|
| Non-GAAP net loss (1) |
(10,155,367) |
1,815,205 |
(22,434,535) |
(15,364,489) |
| |
|
|
|
|
| Note (1) We define non-GAAP net
income (loss), a non-GAAP financial measure, as net income (loss)
excluding share-based compensation expenses. We review non-GAAP net
income (loss) together with net income (loss) to obtain a better
understanding of our operating performance. We also believe it is
useful supplemental information for investors and analysts to
assess our operating performance without the effect of non-cash
sharebased compensation expenses, which have been and will continue
to be significant recurring expenses in our business. However, the
use of non-GAAP net income (loss) has material limitations as an
analytical tool. One of the limitations of using non-GAAP net
income (loss) is that it does not include all items that impact our
net income (loss) for the period. In addition, because non-GAAP net
income (loss) is not calculated in the same manner by all
companies, it may not be comparable to other similar titled
measures used by other companies. In light of the foregoing
limitations, you should not consider non-GAAP net income (loss) in
isolation from or as an alternative to net income (loss) prepared
in accordance with U.S. GAAP. |
| |
|
|
|
|
| The following table sets forth
the reconciliation of non-GAAP net income (loss), a non-GAAP
financial measure, from net income (loss), our most directly
comparable financial measure presented in accordance with U.S.
GAAP, for the periods indicated. |
| |
|
|
|
|
| |
Three-month Periods Ended December 31 |
Year
Ended December 31 |
| |
2013 |
2014 |
2013 |
2014 |
| |
$ |
$ |
$ |
$ |
| Net loss |
(11,224,100) |
1,815,205 |
(26,610,291) |
(16,350,260) |
| Add back: Share-based compensation
expenses |
1,068,733 |
-- |
4,175,756 |
985,771 |
| Non-GAAP net loss |
(10,155,367) |
1,815,205 |
(22,434,535) |
(15,364,489) |
CONTACT: For investor and media inquiries please contact:
In China:
Christina Hou
Mecox Lane Limited
Tel: +86-21-3108-1111 Ext. 8161
Email: ir@mecoxlane.com
Nicholas Manganaro
Ogilvy Financial, Beijing
Tel: +86-10-8520-6139
Email: mcox@ogilvy.com
In the U.S.:
Ogilvy Financial
Tel: +1-646-867-1888
Email: mcox@ogilvy.com
Grafico Azioni Mecox Lane Limited ADS (MM) (NASDAQ:MCOX)
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