Mecoxlane e-commerce revenue dropped by 60% in the first quarter

Mecoxlane released a quarterly report yesterday showing that net operating income for the first quarter was $21 million, a 43.5% drop from the first quarter 2012 net operating income of $37.1 million, and net after including non-recurring gains of $6 million. The loss was $4.2 million, which was the same as the same period of last year.

For the decline in performance, Mecoxlane said that the decline in revenue in the first quarter of 2013 was mainly due to the decline in net operating revenues of e-commerce channels, call centers, self-operated and franchise stores.

Mecoxlane had a net operating income of US$5.7 million in the first quarter, down 66.8% year-on-year. As for the major drop in e-commerce channel revenue, Mr. McCourt’s director and chief executive, Gu Beichun, stated that with the joint venture company established with Giosis in January this year, the ownership and operation of M18.COM has been transferred to the joint venture company. This change affected the number of users on the site and the revenue from e-commerce channels.

In addition to the failure of the e-commerce business, the McCormlin self-operated store is not in a good position. The financial report shows that the net sales revenue of McCormlin's self-operated stores decreased by 37.3% year-on-year, mainly because the number of self-operated stores decreased from an average of 115 in the first quarter of 2012 to an average of 65 in the first quarter of 2013. The increase offset the decline in some sales.

Mecoxlane's current profit model is a three-wheel drive type, that is, relying on online shopping, mail order and physical stores to sell clothing. With the rise of e-commerce, the proportion of its mail-order and store business is significantly reduced, and online shopping has become the largest proportion of the business. Due to rising rental costs, labor, utility bills, etc., Mecoxlane has been adhering to the principle of consistent low prices for all offline products and online products, resulting in huge pressure on its stores and having to close some of its stores.