LightInTheBox Holding Co Ltd

SWB:L4XA

Earnings Call Analysis

LightInTheBox Reports Robust Growth in 2023

LightInTheBox ended 2023 with strong performance, despite a challenging environment, achieving a 25% revenue increase to $629 million, largely driven by its apparel category. Profits improved, with EBITDA loss narrowed by 34% to $6.3 million. In Q4, however, revenues dipped 13% to $136 million, attributed to weakened seasonal demand. Gross margin increased to 56%, with operating expenses dropping to $80 million. The net loss of $4.3 million marks a significant reduction from $48.3 million the prior year. Looking ahead to Q1 2024, the company anticipates revenues between $70 million and $80 million.

Full Year Revenue Growth Amidst Challenging Times

LightInTheBox, a global online retail company, witnessed significant growth in their full-year 2023 revenue, amounting to 25% year-over-year to reach $629 million. This growth came despite enduring a challenging operating environment and fierce market competition. The company’s primary revenue generator, apparel, contributed substantially, accounting for over 80% of total revenues, reflecting the firm's strategic focus on their core category.

Enhanced Profitability and Reduced Losses

In 2023, the company's efforts in technology and data analytics considerably sharpened their understanding of consumer behavior, leading to more aligned products and marketing strategies. These initiatives translated into enhanced profitability for LightInTheBox, with a notable narrowing of their adjusted EBITDA loss by 34% from the previous year, down to $6.3 million.

Strategic Focus for 2024

Looking ahead, LightInTheBox aims to adapt to the evolving landscape by prioritizing customer experience and refining localized operations, particularly in key markets like the United States. By bolstering brand awareness and attracting organic customer traffic, the company seeks to improve marketing efficiency and competitive edge. The long-term commitment to sustainable development and shareholder value remains steadfast.

Fourth Quarter Headwinds and Improved Margins

The fourth quarter saw a decrease in total revenues by 13% year-over-year to $136 million, with apparel revenues dipping by 12%. Nevertheless, the company's gross margin improved to 56% from 54% a year ago, attributed to a higher proportion of apparel sales. Operational efficiency efforts led to a 10% reduction in total operating expenses to $80 million.

Turnaround in Net Loss

The net loss experienced a dramatic reduction, with the fourth quarter of 2023 posting a $4.3 million loss compared to a substantial $48.3 million loss in the same quarter the previous year. This improvement was largely due to the absence of a one-time impairment charge that affected 2022’s figures.

Annual Financial Summary and Cost Control

Throughout 2023, LightInTheBox managed to control costs effectively, with fulfillment expenses and G&A expenses each accounting for roughly 5% of total revenues, marking a decline in percentage terms from last year. Marketing expenses, however, were a primary driver behind the total operating expenses of $370 million, up from $289 million in 2022. The full 2023 year wrapped up with a net loss of $9.6 million, showcasing a significant recovery from a $56.6 million net loss in 2022.

First Quarter 2024 Revenue Guidance

For the first quarter of 2024, LightInTheBox provides guidance for net revenues to be in the range of $70 million to $80 million, considering current information and seasonal business patterns.

Earnings Call Transcript 2023-Q4

[Operator]

Hello, ladies and gentlemen. Thank you for standing by for LightInTheBox' Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded.

I will now turn the conference call over to your host, Ms. Jenny Cai. Please go ahead, Jenny.

[Jenny Cai]

Thank you, operator. Hello, everyone, and welcome to LightInTheBox' Fourth Quarter and Full Year 2023 Earnings Conference Call. The company's earnings results were released via Newswire services earlier today and are available on the company's IR website at ir.lightinthebox.com.

On the call from LightInTheBox today are Mr. Jian He, Chairman and CEO; Ms. Yuan Jun Ye, Chief Financial Officer; and Ms. Wenyu Liu, Chief Growth Officer. Mr. He will provide an overview of the company's strategies and recent developments followed by Ms. Ye, who will go over its financial results. Following our prepared remarks, we'll open the call to questions.

Before we proceed, please note that today's discussion may contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from the company's current expectations. To understand the factors that could cause results to materially differ from those in forward-looking statements, please refer to the company's Form 20-F filed with the Securities and Exchange Commission.

The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Please also note that LightInTheBox earnings press release and this conference call include discussion of unaudited GAAP financial measures as well as unaudited non-GAAP financial measures. Please refer to the company's earnings press release, which contains a reconciliation of the unaudited non-GAAP measures to the unaudited GAAP measures.

Now I'd like to turn the call over to LightInTheBox' Chairman and CEO, Mr. He. Please go ahead.

[Jian He, executive]

Good morning, and good evening, everyone. Thank you for joining our fourth quarter and full year 2023 earnings conference call today.

In 2023, as we strategically focused on high-quality development, we delivered hard-won results and the challenging micro environment and increasingly competitive landscape. Notably, our full year revenue reached $629 million, up 25% year-over-year. Apparel remains our strategic core category and drive our sales, accounting for over 80% of total revenues. Thanks to our continuous efforts and the investment in our technologies and data analysis capabilities.

We gained a great understanding of evolving consumption patterns, enabling us to better align our products, services and the marketing strategies with the consumer preference and the demands. More encouraging, we are able to improve our profitability, is our 4-year adjusted EBITDA loss, narrowing by 34% year-over-year to $6.3 million.

Heading into 2024, we are seeing an evolving operating environment and the increasing sales industry compensation. To navigate this market dynamics, we place a greater emphasize on enhancing customer experience in the holding our localized operations in key markets such as the United States to bring high-quality [ long-term ] offering to more customer worldwide.

Meanwhile, we will continue strengthening our brand awareness and visibility to attract organic traffic from potential customers, increase marketing efficiency and improve the brand overall competitiveness. As always, we are committed to pursue healthy, sustainable development and delivering value for our shareholders in the long run.

With that, I now hand the call over to Yuan Jun to go through our financial results.

[Yuan Jun Ye, executive]

Thank you, Mr. He. Good morning and good evening, everyone. Before we start the detailed discussion of our financials, please note that unless otherwise stated, all the financials we present today are in U.S. dollar terms. Now let me start with our financial highlights for the quarter.

In the fourth quarter, our total revenues decreased by 13% year-over-year to $136 million. Revenues from apparel decreased by 12% year-over-year to $109 million, representing 80% of our total revenues compared with 79% in the same quarter of 2022. Gross margin was 56% in the fourth quarter compared with 54% a year ago due to an increase in apparel sales as a percentage of revenue. Our total operating expenses decreased by 10% year-over-year to $80 million compared with $89 million in the same period of last year. The decrease was mainly due to our ongoing efforts to enhance our operational efficiency. Net loss was $4.3 million compared with $48.3 million in the same quarter of 2022. The difference was primarily due to a onetime impairment charge in the fourth quarter of 2022.

Now let me walk you through our 2023 full year financials. Total revenues reached $629 million, an increase of 25% year-over-year from $504 million in 2022. Revenues from apparel increased by 30% to $580 million in 2023 compared with $400 million in 2022 and represented 82% of total revenues in 2023 compared with 79% in 2022. Total operating expenses were $370 million compared with $289 million in 2022, primarily due to expenditures on marketing expenses. Fulfillment expenses and G&A expenses were 5.5% and 5.4% of total revenues, respectively, both representing percentage decreases from the same period last year. Net loss was $9.6 million compared with $56.6 million in 2022.

Moving to the guidance for the first quarter of 2024. Based on information currently available and business seasonality, we expect net revenues to be between $70 million and $80 million.

This concludes our prepared remarks. We'll be happy to take some questions now. Operator, please continue.

[Operator]

[Operator Instructions] We are showing no questions. I'd like to turn the call back over to the company for closing remarks.

[Jenny Cai]

Thank you once again for joining us today. If you have further questions, please feel free to contact LightInTheBox Investor Relations through the contact information provided on our website or Piacente Financial Communications. Have a great day.

[Operator]

That does conclude our conference for today. Thank you for participating. You may now disconnect.