China's Mecox Lane shares tank on Q3 margin fall

Tue Nov 30, 2010 10:42am EST

* Gross margin down to 39.7 pct from 43.7 pct

* Shares fall as much as 47 percent

Nov 30 (Reuters) - Chinese online retailer Mecox Lane Ltd's (MCOX.O) shares lost almost half their value on Tuesday despite posting a bigger quarterly profit a day earlier, as margins fell on increased costs.

The stock fell as much as 47 percent to hit a life-low of $7.09 in morning trade on Nasdaq.

Mecox Lane sells clothing and accessories to young urban women. Its website, M18.com, sells proprietary brands like Euromoda and Rampage and third-party brands like Adidas.

For the third quarter, Mecox Lane, which had a successful IPO last month [ID:nN26123944], saw net income rise four-fold to $0.8 million from last year.

However, gross margin was 39.7 percent, down from 43.7 percent in the third quarter last year.

Revenue rose 36 percent to $55.3 million. [ID:nGNW7815a]

Selling, general and administrative expenses rose 20.4 percent, while operating expenses rose 19.8 percent. The company, which had about 2.1 million active customers as of June 30, said the rise was mostly a fall-out of rise in marketing, advertising and compensation and benefit expenses. (Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Maju Samuel)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.