Jumei doubles sales, but still in the red

Jumei International, the Chinese online retailer of beauty products, has reported a sales increases of 99.9 per cent – but it still posted a quarterly operating loss.

In the quarter to September 30, net revenue reached RMB1.9 billion (US$305.5 million). Total net GMV increased by 35.6 per cent to RMB2.3 billion (US$358.7 million), driven primarily by a 30.8 per cent rise in the number of active customers and a significant 89.5 per cent boost in total orders.

But gross profit as a percentage of net revenues decreased to 26.2 per cent (from 38 per cent)in the same period of 2014, primarily due to the company’s shift in strategy from beauty product marketplace sales to merchandise sales that started in September 2014, and inventory optimisation activities for Jumei Global.

The net loss attributable to Jumei’s ordinary shareholders was RMB86.9 million (US$13.7 million), compared with net income attributable to Jumei’s ordinary shareholders of RMB120.0 million in the same period of 2014.

Leo Chen, founder and CEO of Jumei, appeared upbeat about the results however.

“Our third quarter net revenue growth continues to be strong… driven by Jumei Global and rapidly shifting consumption patterns in China as consumers upgrade their tastes, preferences and expectations for products. We continue to strengthen our position as a leading import cross-border eCommerce platform in China and are pleased to see both active customers and number of orders grow rapidly while maintaining a high repeat purchase rate,” he said.

“We continue to add world renowned brands such as Shiseido and KOS to our Jumei Global platform. This is the first time these Japanese beauty groups have directly authorised a cross border eCommerce company in China to carry their merchandise. This means that going forward, new products by both brands will be launched simultaneously in Japan and on Jumei Global in addition to those already on offer in Jumei’s domestic platform. Chinese consumers will now be able to access international beauty trends at the same time they take place in the brand’s home markets.”

In the fourth quarter of 2015, the company says it expects total net revenues to be between RMB1.83 billion and RMB1.93 billion, representing a year-over-year growth rate of 80 to 90 per cent.