Jumei International Holding Ltd (ADR) (NYSE:JMEI), China’s leading online retailer of beauty products, today reported its unaudited financial results for the third quarter ended September 30, 2015. The Company will host a conference call to discuss the results at8:00 AM U.S. Eastern Standard Time on November 20, 2015 (9:00 PM China time on the same day).

Third Quarter 2015 Highlights                                                                                            

  • Net revenues increased by 99.9% year-over-year to RMB1.9 billion (US[1]$305.5 million).
  • Total net GMV [2] increased by 35.6% year-over-year to RMB2.3 billion (US$358.7 million), driven primarily by a 30.8% year-over-year increase in the number of active customers [3] and a significant 89.5% year-over-year increase in total orders [4].
  • Gross profit as a percentage of net revenues decreased to 26.2% from 38.0% in the same period of 2014. Gross profit as a percentage of total net GMV increased slightly to 22.3% from 21.9% in the same period of 2014. The increase was primarily due to the Company’s shift in strategy from beauty product marketplace sales to merchandise sales that started in September 2014, and inventory optimization activities for Jumei Global.
  • 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. Net margin attributable to Jumei’s ordinary shareholders was negative 4.5%, compared with positive 12.4% in the same period of 2014.
  • Non-GAAP net loss attributable to Jumei’s ordinary shareholders[5] was RMB77.4 million (US$12.2 million), compared with non-GAAP net income attributable to Jumei’s ordinary shareholders [6] of RMB129.3 million in the same period of 2014. Non-GAAP net margin attributable to Jumei’s ordinary shareholders [6] was negative 4.0%, compared with positive 13.3% in the same period of 2014.

Mr. Leo Chen, founder and CEO of Jumei, commented, “Our third quarter net revenue growth continues to be strong, increasing almost 100% year-over-year. This very strong growth was 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 Chinaand are pleased to see both active customers and number of orders grow rapidly while maintaining a high repeat purchase rate. Our customer purchase frequency continue to grow significantly, increasing 45% from the same period last year, due primarily to our diverse global product offerings and expansion into other women’s categories such as baby and maternity and health and wellness.”

“We continue to add world renowned brands such as Shiseido and KOSÉ to our Jumei Global platform. This is the first time these Japanese beauty groups have directly authorized a cross border e-commerce 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.”

“Our operating cash flow improved significantly in the third quarter to RMB345.6 million (US$54.4 million) as we optimized Jumei Global inventories. We saw margin pressure in the third quarter as a result, but expect to return to profitability in the fourth quarter.”

Unaudited Third Quarter 2015 Financial Results

Total net revenues were RMB1.9 billion (US$305.5 million), an increase of 99.9% from RMB971.2 million in the third quarter of 2014. The increase was primarily attributable to increases in the number of active customers and total orders, which in turn resulted primarily from the high volumes generated by Jumei Global as well as the shift from beauty product marketplace sales to merchandise sales. The number of active customers increased by 30.8% to approximately 6.8 million from approximately 5.2 million in the same period of 2014. The number of total orders increased by 89.5% to approximately 19.9 million from 10.5 million in the same period of 2014.

Gross profit was RMB508.2 million (US$80.0 million), an increase of 37.8% from RMB368.9 million in the third quarter of 2014. Gross profit as a percentage of net revenues decreased to 26.2% from 38.0% in the same period of 2014. The decrease was primarily due to the shift from beauty product marketplace sales to merchandise sales. Gross profit as a percentage of net GMV increased slightly to 22.3% from 21.9% in the same period of 2014. Gross profit from merchandise sales as a percentage of net GMV of merchandise sales decreased to 24.1% from 29.4% in the same period of 2014. The decrease was primarily due to inventory optimization activities for Jumei Global.

Total operating expenses were RMB573.3 million (US$90.2 million), an increase of 117.9% from RMB263.1 million in the third quarter of 2014. Operating expenses as a percentage of total net GMV increased to 25.1% from 15.7% in the same period of 2014.

  • Fulfillment expenses were RMB290.7 million (US$45.7 million), an increase of 185.3% from RMB101.9 million in the same period of 2014. Fulfillment expenses as a percentage of total net GMV increased to 12.8% from 6.1% in the same period of 2014. The increase was primarily due to higher percentage of volumes from Jumei Global.
  • Marketing expenses were RMB197.9 million (US$31.1million), an increase of 101.1% from RMB98.4 millionin the same period of 2014. The increase was primarily a result of the higher number of marketing campaigns and brand promotion activities that Jumei launched during the quarter, and reflected the Company’s efforts to grow its customer base and increase awareness of Jumei Global. Marketing expenses as a percentage of total net GMV was 8.7%, compared with 5.9% in the same period of 2014.
  • Technology and content expenses were RMB43.9 million (US$6.9million), an increase of 18.0% fromRMB37.2 million in the same period of 2014. Technology and content expenses as a percentage of total net GMV decreased slightly to 1.9% from 2.2% in the same period of 2014.
  • General and administrative expenses were RMB40.8 million (US$6.4 million), an increase of 60.0% fromRMB25.5 million in the same period of 2014. General and administrative expenses as a percentage of total net GMV increased to 1.8% from 1.5% in the same period of 2014. The increase was mainly due to an increase in general and administrative staff headcount to support business expansion and growth.

Loss from operations was RMB65.1 million (US$10.2 million), compared with income from operations ofRMB105.8 million in the same period of 2014.

Non-GAAP loss from operations, which excludes RMB9.5 million (US$1.5 million) in share-based compensation expenses, was RMB55.7 million (US$8.8 million), compared with non-GAAP income from operations of RMB115.1 million in the same period of 2014.

Net loss attributable to Jumei’s ordinary shareholders was RMB86.9 million (US$13.7 million), compared with net profit attributable to Jumei’s ordinary shareholders of RMB120.0 million in the same period of 2014. “Others, net” under Other income/(expenses) mainly consists of a non-cash and an unrealized intercompany exchange loss due to the sharp depreciation of the RMB against the USD. Net margin attributable to Jumei’s ordinary shareholders decreased to negative 4.5% from positive 12.4% in the same period of 2014. Net loss per basic and diluted ADS were RMB0.59 (US$0.09) and RMB0.59 (US$0.09), respectively, compared with net income per basic and diluted ADS RMB0.83 (US$0.13) and RMB0.80 (US$0.13), respectively, for the same period of 2014.

Non-GAAP net loss attributable to Jumei’s ordinary shareholders, which excludes share-based compensation expenses, was RMB77.4 million (US$12.2 million), compared with non-GAAP net income attributable to Jumei’s ordinary shareholders RMB129.3 million in the same period of 2014. Non-GAAP net margin attributable to Jumei’s ordinary shareholders decreased to negative 4.0% from positive 13.3% in the same period of 2014.

Non-GAAP net loss per basic and diluted ADS were RMB0.53 (US$0.08) and RMB0.53 (US$0.08), respectively, compared with non-GAAP net income per basic and diluted ADS RMB0.89 (US$0.15) and RMB0.86(US$0.14), respectively, in the same period of 2014.

Balance Sheet

As of September 30, 2015, the Company had cash and cash equivalents of RMB2.1 billion (US$332.2 million), and short-term investments of RMB441.0 million (US$69.4 million).

Business Outlook

For the fourth quarter of 2015, the Company expects total net revenues to be between RMB1.83 billion andRMB1.93 billion, representing a year-over-year growth rate of approximately 80% to 90%.

These forecasts reflect the Company’s current and preliminary view, which is subject to change.

Change in Reporting Currency to the Renminbi

Effective July 1, 2015, the Company changed its reporting currency from United States dollars (“USD”) to Chinese Renminbi (“RMB”). The change in reporting currency is to better reflect the Company’s performance and to improve investors’ ability to compare the Company’s financial results with other publicly traded companies in the industry. Prior to July 1, 2015, the Company reported its annual and quarterly consolidated balance sheets and consolidated statements of income and comprehensive income and shareholder’s equity and cash flows in USD. In this announcement, the unaudited financial results for the quarter ended September 30, 2015 are stated in RMB. The related financial statements prior to July 1, 2015 have been recast to reflect RMB as the reporting currency for comparison to the financial results for the quarter ended September 30, 2015(Original Source)

Shares of Jumei International Holding closed yesterday at $8.46. JMEI has a 1-year high of $28.17 and a 1-year low of $7.51. The stock’s 50-day moving average is $9.98 and its 200-day moving average is $16.05.

On the ratings front, Jumei has been the subject of a number of recent research reports. In a report issued on November 2, Goldman Sachs analyst Piyush Mubayi downgraded JMEI to Hold, with a price target of $12, which implies an upside of 41.8% from current levels. Separately, on August 21, Summit Research’s Henry Guo reiterated a Buy rating on the stock and has a price target of $25.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Piyush Mubayi and Henry Guo have a total average return of 5.0% and 3.0% respectively. Mubayi has a success rate of 57.9% and is ranked #1499 out of 3857 analysts, while Guo has a success rate of 45.1% and is ranked #1478.

Jumei International Holding Ltd is an online retailer of beauty products. The product category includes cosmetics, skin care, cosmetic applicators, fragrance and body care.