LightInTheBox Holding Co., Ltd. (LITB) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the First Quarter 2022 Earnings Conference Call for LightInTheBox Holding Co., Ltd. Today's conference is being recorded. At this time, I would like to turn the call over to Mr. Rene Vanguestaine for opening remarks and introductions. Please go ahead, sir.

Thank you, Sarah. Hello, everyone, and welcome to LightInTheBox First Quarter 2022 Earnings Conference Call. The company's earnings results were released earlier today and are available on the company's IR website as well as through PR Newswire. On the call from LightInTheBox are Mr. Jian He, CEO; Ms. Yuan Jun Ye, Chief Financial Officer; and Ms. Wenyu Liu, Chief Growth Officer. Mr. He will give an overview of the company's strategy and recent developments, followed by Ms. Ye, who will go over the financial results. They will all be available for the Q&A session that will follow. Before we proceed, I would like to remind you of our safe harbor statement. Please note that the discussion today may contain certain 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 our current expectations. To understand the factors that could cause results to materially differ from those in the forward-looking statements, please refer to our Form 20-F filed with the Securities and Exchange Commission. We do not assume any obligation to update any forward-looking statements, except as required under applicable law. At this point, I'd like to turn the call over to Mr. He. Mr. He, please go ahead.

Thanks, Rene, and thank you, everyone, for joining us today. After the festival season at the end of calendar year and into the new year, the first quarter is traditionally a slower time for the e-commerce industry. We had a very challenging first quarter of 2022 due to the continuous spread of Omicron variant in China. Manufacturing and logistics were delayed as multiple suppliers could not resume daily operations. Sale restrictions were imposed in certain regions. But thanks to our effective-response mechanism, resilient business model and strong implementation capabilities, we were able to take great actions to minimize the impact of our supply chain. Total revenues for the first quarter were $93.8 million compared with $112 million in the same quarter of 2021. Orders were $15.7 million value [indiscernible] at the end of March 2022 that were received by customers during Q2. Apparel has already become our most popular categories and is a primary one that we have continuously invested in and allocated more resource to. During the first quarter, revenues from apparel increased by 13.7% year-over-year to $67.2 million, representing 71.7% of total revenue, up from 52.8% in the same quarter of 2021. Our gross margin benefited from the change in product mix, improving to 50.7% compared with 46.6% a year ago. We believe the apparel sales will make up the majority of total revenues for the full year of 2022. The current challenges we are facing have actually provided us with offset opportunities. Lastly, in response to economic trends, supply chain restructuring and better coordination of all our capabilities has helped us withstand macroeconomic uncertainties and external pressures. As a result, our organization has become more flexible and stronger. Secondly, regardless of continuing global uncertainties, we have proved the effectiveness of our long-term growth strategies, which has generated higher [ efficiency ] and solidified our long-term partnerships with the suppliers. This strength has given us the ability to constantly improve our product mix and to offer more value for money and quality products on our shopping platforms in response to customer feedback. Although the first quarter of 2022 has brought us unprecedented challenges, we believe it's important to have a long-term mindset and adhere to our proven strategies. While maintaining flat facility and navigating our uncharged unexpected circumstance or adding short-term dynamics to strive to continuously improve our overall operational efficiency and better serve our global customers. I'd like to turn the call over to Yuan Jun Ye. Yuan Jun, please go ahead.

Thank you, Mr. He, and thank you, everyone, for joining the call. I will now review our financial results for the first quarter. Please be reminded that all numbers quoted are in the U.S. dollars. In the first quarter, our total revenue was $93.8 million, down 16.3% year-over-year from $112 million due to the pandemic prevention measures impacting the supply chain. Despite the drop in total revenue, our product mix became more optimized as we focus on higher-margin apparel categories. Apparel had a solid increase, up 13.7% to $67.2 million from $59.1 million in the same quarter of last year, representing 71.7% of total revenue, up from 52.8% a year ago. Benefiting from our growth in apparels, gross margin increased to 50.7% from 46.6% year-over-year. To echo what Mr. He just said, in the face of top challenges and economic uncertainties, our core values have not changed. We have become stronger as a company, while remaining committed to serve our customers with the best value for money products and a great shopping experience on our platform. Total operating expenses were $53.9 million compared with $50.9 million during the same quarter of 2021. Included in operating expenses, selling and marketing expenses increased 10% to $39 million as a result of the negative impact from the pandemic. Our R&D expenses in the first quarter remained stable compared to last year at $4.6 million. As we have stated before, continuous improvement to our customers' shopping experience is core to the success of our business. Regardless of the uncertainties or challenges ahead, after more than 10 years of experience in the cross-border e-commerce sector, we believe we are well positioned to quickly respond to any dynamic situation. We remain confident that we will soon resume course to a healthy growth trajectory. This concludes our prepared remarks. At this point, we are ready to take some questions. Operator?

[Operator Instructions] There are no questions coming through at this time. So I would like to hand the conference back to Rene Vanguestaine for closing remarks.

Thank you, Sarah. This concludes our first quarter 2022 earnings conference call. Thank you for your participation and ongoing support to LightInTheBox. We look forward to providing you with updates of our business in the coming weeks and months ahead. Have a good day.

Thank you.

Thank you. This does conclude the conference for today. Thank you for participating, and you may now disconnect.