LightInTheBox (LITB, Financial) is a global online retail company that delivers products directly to consumers around the world. The Company offers customers a convenient way to shop for a wide selection of products at attractive prices through www.lightinthebox.com, www.miniinthebox.com and LITB’s other websites, as well as mobile applications, which are available in 27 major languages and cover more than 80.0% of Internet users globally, according to Internet World Stats. It serves consumers globally without incurring the costs and complexities associated with establishing a traditional multinational retail infrastructure. The Company’s major markets are Europe and North America.
To acquire and retain customers across diverse geographic markets, LightInTheBox has developed proprietary technologies to manage and optimize its marketing operations. In addition, the Company has established a specialized social marketing team to engage online users and provide them with a user-friendly online shopping experience to facilitate purchasing decisions.
Fourth Quarter 2014 Results
Net Revenues
Net revenues stood at $112.1 million (increase of 42.4% y-o-y). Revenues in the apparel category increased 97.7% year-over-year to $41.7 million for the fourth quarter of 2014. Revenues from other general merchandise increased by 22.2% y-o-y to $70.4 million during the fourth quarter of 2014.
Area wise Revenues:
Revenues from Europe increased by 37.2% and were $70.5 million, representing 62.9% of total net revenues during the fourth quarter of 2014. Revenues from North America increased by 90.1% to $24.9 million, representing 22.2% of total net revenues during the quarter, while revenues from other countries increased by 17.2% to $16.7 million, representing 14.9% of total net revenues this quarter.
Number of orders
Total orders increased 53.9% year-over-year to 3.1 million during the fourth quarter of 2014.
GP
Gross profit for the fourth quarter of 2014 was $39.5 million (representing an increase of 28.4% from $30.8 million in the same period of 2013).
Gross Margin
Gross margin was 35.2% in the fourth quarter of 2014, compared with 39.1% in the same quarter of 2013.
Operating Expenses
Total operating expenses in the fourth quarter of 2014 were $48.1million, compared with $36.9 million in the same quarter of 2013.
Fulfilment Expenses: Fulfilment expenses in the fourth quarter of 2014 were $7.6 million, compared with $4.7 million in the same quarter of 2013, primarily reflecting the increase in sales volume and the establishment and development of the Company's overseas fulfilment centres in Warsaw, Poland and Nevada, United States. Fulfilment expenses per order were $2.47, slightly higher compared to $2.36 in the same quarter of 2013 and $2.38 from the third quarter of 2014.
Selling and marketing expenses: Selling and marketing expenses in the fourth quarter of 2014 were $28.8 million, compared with $24.7 million in the same quarter of 2013, as a result of the Company's efforts to grow its customer base and market share. As a percentage of total net revenues, selling and marketing expenses were 25.7%, an improvement from 25.9% in the previous quarter, and a significant decline from 31.4% in the same quarter of 2013. The improvement reflects the Company's commitment to optimize online marketing efforts and diversify traffic acquisition channels. Selling and marketing expenses per order improved to $9.4 from $12.4 in the same quarter 2013 and $10.2 in the third quarter of 2014.
General and administrative expenses: General and administrative (G&A) expenses in the fourth quarter of 2014 were $11.7million, compared with $7.5 million in the same quarter of 2013. The increase reflects growth in the Company's business operations and the Company's commitment to future growth. As a percentage of total net revenues, G&A expenses were 10.4%, compared with 9.6% in the same quarter of 2013. G&A expenses in the fourth quarter of 2014 included $4.2 million in technology investments which are important for future growth.
Loss from operations: Loss from operations was $8.6 million in the fourth quarter of 2014, compared with a loss from operations of $6.2 million in the same quarter of 2013.
Non-GAAP loss from operations: Non-GAAP loss from operations was $0.2 million in the fourth quarter of 2014, compared with non-GAAP loss from operations of $6.4 million in the fourth quarter of 2013.
Share Repurchases
On December 16, 2013, the Company announced a $20 million share repurchase program. On December 16, 2014, the Company extended its existing share repurchase program for an additional 12-month period through December 15, 2015. As of December 31, 2014, the Company had repurchased a total of $11.0 million of its ADSs.
Full Year 2014 Highlights
Net Revenues
Net revenues increased by 30.8% to $382.4 million for the full year 2014. The y-o-y increases in the net revenues were driven by the good performance of the apparel segment increasing both old and new customers of the company thereby increasing the mobile commerce significantly. Apparel revenues were 37.2% of total revenue (in comparison to 26.8% in the same quarter of 2013)
Number of Orders
The total number of customers who made purchases increased 45.7% year-over-year to 2.3 million. Revenues from repeat customers increased to 44.2% of total net revenues. Mobile revenue increased to 29.7% of total net revenues.
GP
For the full year 2014, gross profit was $145.3 million, representing an increase of 14.3% from $127.2 million in the prior year.
Gross Margin
Gross margin for the full year 2014 was 38.0%, compared with 43.5% in 2013. The full year decrease in gross margin was primarily attributable to the stronger US dollar over the past as well as shifts in product mix and pricing/sourcing strategy as the Company continues to expand its market share and grow its customer base.
Loss from operations: For the full year of 2014, loss from operations increased to $30.7million, compared with an operating loss of $5.0 million in the prior year.
Non-GAAP loss from operations
For the full year 2014, non-GAAP loss from operations in 2014 was $20.2 million, compared with a non-GAAP loss from operations of $1.2 million in 2013.
Business Projection
LITB estimates its net revenues to be between $89 million and $91 million, representing a year-over-year growth of approximately 9% to 12%.
Recent Launch
The company recently launched 'WeStore,' a global social network driven mobile commerce platform. This app is available in 18 languages and is an easy way to sell products through social networks. One, after downloading the app can instantly click and upload the pictures through Facebook and whatsapp.
To End
LITB posted solid quarter results and there is more upside to this company. The company is positioned well in the industry and is expected to create shareholder returns. I would recommend this company as a buy. Investors may consider adding this company to their portfolio.
