E-Commerce China Dangdang (DANG, Financial) posted strong financial results for the recent quarter. Its profitable product line and fast growing younger categories led to strong double digit growth in its top line. Also, its execution has helped it widen its profit margin. In addition, the Chinese business-to-consumer e-commerce company continues to transform its business, while investing in future growth that should drive its performance.
Impressive results
E-Commerce China Dangdang reported revenue of $316.1 million, an uptick of 31.3% as compared to $243.3 million in the same quarter a year earlier. The consensus was estimating revenue of $314.2 million for the quarter. Also, its net income for the quarter rose 55.6% to $4.7 million or earnings of $0.06 per share as against net loss of $10.4 million or earnings of $(0.80) per share in the corresponding quarter last year. Its earnings also topped the consensus $0.02 per share estimated for the quarter.
Looking ahead, the Chinese business-to-consumer e-commerce company expects revenue of approximately $324.16 million. This represents significant growth of around 30% on the third quarter 2013. Moreover, it expects its Gross Merchandise Value OR GMV from its marketplace to grow at a healthy rate of 80.0% over the third-quarter 2013. GMV had grown around 49.3% year-on-year basis during the second-quarter.
Expanding rapidly
E-Commerce China Dangdang has quite efficiently expanded its business from that of its online book store. It is experiencing solid demand from its new destination categories such as apparel, baby to maternity and to other emerging products online such as mobile, smart phones and tablets. The company is additionally focused on constructing integrated shopping mall with its destination categories that should assist the company in better execution and clearance of the sales in the second-half of the year. Moreover, the online retailer remains one of the best choices for thousands of quality merchants in extensive variety of products that should certainly enhance both its principle sales as well as third-party merchant sales.
Also, the Chinese business-to-consumer e-commerce company on the other side continues to increase its spending on the promotional activities such as marketing. It is especially creating market awareness for its other categories like apparel, baby and maternity. Also, it made its way into the ‘Mobile Dangdang’. It added customer friendly interactive features in order to better enrich customer experience online.
These added features are fetching new customers to its fleet. Also, it is seeing more customer now are transacting from their PC or other devices to Mobile Dangdang to purchase mobiles, smart phones and tablets for the first time. The mobile ordering grew around 17% in the reported quarter. Also, the company’s new customer grew 23% to 2.9 million in the reported quarter. Its active customer grew 12% to 8.5 billion. These increase in number highlights tremendous improvement in its product line, coupled with strong growth in other categories.
Furthermore, the company is building its warehouse in Tianjin and Changzhou that will certainly reduce its cost structure. It is also executing various other initiatives such as rolling out collaborative planning forecasting and replenishment process in all its warehouses. Moves such as these should effectively replenish its inventory at a faster pace than before, and fulfill more orders at local distribution centers.
Conclusion
E-Commerce China Dangdang is undeniable a good pick. The company has registered strong double digit growth in its revenue as well as in the earnings. It is taking various strategic initiatives that should propel its growth in the long-run. Moreover, the analysts have forecasted CAGR of 19.80%, greater than average industry CAGR of 16.09% for the next five years. This certainly indicates bright prospects for the company in the long-run. Also, its short term returns are mouth-watering the analysts anticipate CAGR of 172.40% this year and 152.40% for the next year respectively.
