Luxury e-tailer Reebonz’s net loss narrows in H1, to step up focus on marketplace biz

Luxury brands Gucci and Prada displayed on a model. Photo: John Tuesday/Unsplash

US Nasdaq-listed luxury items e-tailer Reebonz Holding Limited (Reebonz) has reported a 29.8 per cent decline in total revenues at $31.1 million during the first half of 2019 ending June 30 compared to the corresponding period last year as lower marketing spend resulted in a decline in the number of buyers.

Net loss for the period, however, improved to $8.90 million in 1H 2019 compared to the net loss in the previous year (1H FY2018) of $21.60 million due to one-time exclusion of convertible preference shares during 1H FY2019.

Reebonz filed its latest half-yearly financial earnings on September 23, 2019.

Reebonz’s gross profits during 1H FY2019 declined by 32.20 per cent YoY to $7.80 million from $11.50 million in 1H FY2018, while gross profit margins, which are expressed as a percentage of total revenues, saw a 100 basis points (bps) decline YoY in 1H 2019 at 24.90 per cent from 25.90 per cent in the previous half.

The YoY growth decline in gross profits and gross profit margins were due to the old inventory clearance undertaken by the company to recover cash and for increased staff provisioning.

Operating loss widened to $7.60 million in 1H FY 2019 compared to $5.40 million in 1H FY 2018, mainly due to the decline in revenue and higher general and administrative (G&A) expenses.

Gross Merchandise Value (GMV), one of the key indicators of the overall health of an e-commerce business, stood lower at $97.60 million in 1H FY 2019, compared to $126.90 million in 1H FY 2018 due to the continuous scale back in marketing and inventory spend.

Reebonz seeks to grow marketplace business

While marketing and inventory spend has been scaled back, Reebonz CFO Nupur Sadiwala observed, during the 1H FY2019 earnings conference call, that the company is now seeking to strategically focus on increasing contributions from its marketplace platforms while driving sales from repeat buyers and product innovation as opposed to investing in unsustainable marketing.

Moreover, the YoY increase in GMV contributions from marketplaces has been attributed to the addition of quality merchants to its B2C marketplaces due to declining sales volumes.

The various efforts made to revamp the marketplace platforms have so far produced some positive results, according to the CFO. She noted that the marketplace take rates, which measures total marketplace revenues as a percentage of GMV grew to 63 per cent in 1H FY2019 as compared to 51.0 per cent in 1H FY 2018.

Reebonz co-founder and CEO Samuel Lim said, in a statement, “We continue to invest in our ‘Sell Back’ innovation, which has the potential to deliver growth and profitability at scale. We are in the early days of executing the strategy, but we are excited to see clear proof of concept from the early data.”

“As we look forward, we expect to turn the corner on growth later in the second half of the year or early next year, once we are able to see the results of the capital deployed. We believe that sustainability is key as we look to build our business for the long term,” he added.

Sadiwala said, in a statement, “We have been operating under tight resources for the past few years, and have viewed building a sustainable business as a key component of our strategy. We will consider raising capital to invest in areas such as inventory and marketing in new and existing markets, in order to fulfill our mission of making luxury accessible to everyone.”

While the luxury goods e-tailer will focus on expanding into Southeast Asia and the APAC business, the firm is looking to step up investing in Indonesia and Malaysia. Singapore, Hong Kong, South Korea, and Taiwan are other regions that are expected to play a big part in Reebonz’s expansion strategy.

The stock price of Reebonz saw a steep drop of approximately 38.76 per cent, or $1.00 to end the market session at $1.58 on September 23, 2019 following the release of the 1H FY2019 earnings results. The market capitalisation last stood at $9.05 million, according to data provided by Yahoo! Finance.

 

 

 

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.