Dang Dang - chin. Amazon

BEIJING, May 16, 2013  /PRNewswire/ -- E-Commerce China Dangdang Inc. ("Dangdang" or the  "Company") (NYSE: DANG), a leading business-to-consumer e-commerce  company in China, today announced its unaudited financial results for the first quarter ended March 31, 2013.

First Quarter 2013 Highlights

• Gross Margin  in the first quarter of 2013 was 17.2%, the highest level since the  second quarter of 2011, compared to 14.2% in the first quarter of 2012  and 13.4% in the fourth quarter of 2012.
• Net Loss for the first quarter of 2013 was RMB72.7 million ($11.7 million), representing 5.5% of total revenues, as compared with a net loss of RMB99.5 million in the first quarter of 2012 representing 9.2% of total revenues and a net loss of RMB122.1 million representing 7.6% of revenues in the fourth quarter of 2012.
• Gross Merchants Value ("GMV") of the marketplace in the first quarter of 2013 were RMB584.1million ($94.0 million), a 193% increase from the corresponding period in 2012.

"We  are pleased to report another quarter of solid financial and  operational results with better than expected sales, highest gross  margin since the second quarter of 2011, and better operating  efficiency," said Ms. Peggy Yu Yu,  Dangdang's Executive Chairwoman. "Books and media sales grew by 24% in  this quarter, which allows us to maintain dominant market share in  online media sector. Dangdang's marketplace program once again  demonstrated outstanding growth momentum, as marketplace GMV grew at  193% year-over-year in the first quarter. Sales from general  merchandise, which include both self-procurement and marketplace,  exceeded sales from books and media for the second consecutive quarter."

"We are confident that Dangdang's transition from online  bookstore to an integrated online shopping mall is well under way. Our  strategy of placing more emphasis on third party marketplace continues  in 2013. Going forward, we will undertake more business initiatives to  drive marketplace growth, bringing in more merchants and providing more  fulfilment support to them, and to ensure that Dangdang customers enjoy  rich selections, competitive pricing and seamless shopping experience,"  Ms. Yu continued.

"We are pleased with the strengthening financial  results in the first quarter, making it a robust start of the fiscal  year. As we continued to grow sales and drive operational efficiencies,  our gross margin increased to 17.2%, an improvement of 300 basispoints  over the same period last year. Our net loss narrowed to RMB72.7 million, or negative 5.5% of total net revenues, representing improving margin for the third quarter in row," said Mr. Jun Zou,  Dangdang's Chief Financial Officer. "Likewise, cash flow from  operations increased by 51% year-over-year, mainly due to better working  capital management."

First Quarter 2013 Results

Dangdang's total net revenues in the first quarter of 2013 were RMB1,333.8 million ($214.7 million), a 23% increase from the corresponding period in 2012.

Media product revenue for the first quarter of 2013 was RMB863.9 million ($139.1 million), representing a 24% increase from the corresponding period in 2012. General merchandise revenue for the first quarter of 2013 was RMB411.7 million ($66.3 million),  a 12% increase from the corresponding period in 2012, representing 31%  of total net revenues, as compared to 34% in the corresponding period in  2012. Other revenue including revenue from third-party merchants for the first quarter of 2013 was RMB58.1 million ($9.4 million), representing a 194% increase from the corresponding period in 2012.

Dangdang had approximately 7.4 million active customers including approximately 2.4 million new customers in the first quarter of 2013, representing a 21% and 24% increase from the corresponding period in 2012. Total orders for the first quarter 2013 were approximately 14.8 million, a 21% increase from the corresponding period in 2012.

Cost of revenues was RMB1,104.9 million ($177.9 million),  representing 82.8% of total revenues, as compared to 85.8% in the  corresponding period in 2012. The decreased cost of revenues as a  percentage of total revenues was primarily due to the execution on the  strategic category mapping to move certain categories to the marketplace  and economies-of-scale in some of Dangdang's self-procurement  categories. Gross margin in the first quarter of 2013 was 17.2%,  as compared to 14.2% in the corresponding period in 2012 and 13.4% in  the fourth quarter of 2012. The year-over-year increase was primarily  due to the increase of other revenue, representing the sustained scaling  of the marketplace, as well as improved self-procurement margin due to  economies of scale. The quarter-over-quarter margin improvement was  primarily due to increased margin of self-procurement business as a  result of better category selection and commercial terms with suppliers.

Fulfillment expenses which include warehousing and shipping expenses, were RMB184.6 million ($29.7 million),  representing 13.8% of total revenues, compared to 16.2% in the  corresponding period in 2012 and 12.0% in the fourth quarter of 2012.  The year-over-year decrease was primarily due to consistent operating  leverage and improved warehousing management systems.

Marketing expenses were RMB43.2 million ($7.0million),  representing 3.2% of total revenues, compared to 2.7% in the  corresponding period in 2012. The increase was primarily due to  increased spending in navigation website and other targeted marketing  campaigns related to our membership program.

Technology and content expenses were RMB49.3 million ($7.9 million),  representing 3.7% of total revenues, compared to 3.0% in  thecorresponding period in 2012. The increase was primarily due to  increased engineering headcount and investment in IT facilities.

General and administrative expenses were RMB32.4 million ($5.2 million),  representing 2.4% of total revenues, compared to 2.5% in the  corresponding period in 2012. General and administrative expenses  remained in line with the expansion of the business year-over-year.

Share-based compensation expenses, which were allocated to related expense line items, were RMB2.6 million ($0.4 million) in the first quarter of 2013, compared to RMB2.8 million in the corresponding period in 2012,representing a 7% decrease.

Dangdang recorded an operating loss of RMB80.4 million ($12.9 million) in the first quarter of 2013, as compared with an operating loss of RMB107.2 million in the corresponding period in 2012, primarily due to increase of gross margin and consistent operating leverage.

Operating loss excluding share-based compensation expenses (non-GAAP) was RMB77.8 million ($12.5 million), as compared with an operating loss excluding share-based compensation expenses (non-GAAP) of RMB104.4 million in the corresponding period in 2012.

Net loss was RMB72.7 million ($11.7 million), as compared with a loss of RMB99.5 million and RMB 122.1 million  in the first and fourth quarters of 2012 respectively, primarily due to  our efforts to increase gross profit and operating leverage.

Net margin was negative 5.5%, as compared with a negative net margin of 9.2% in the corresponding period in 2012.

Net loss excluding share-based compensation expenses (non-GAAP) was RMB70.1 million ($11.3 million), as compared with a net loss excluding share-based compensation expenses (non-GAAP) of RMB96.7 million in the corresponding period in 2012.

As of March 31, 2013, Dangdang had cash and cash equivalents, restricted cash, and short-term time deposits of RMB1,584.7 million ($255.1 million), as compared to RMB1,634.6 million as of December 31, 2012.

Capital expenditures for the first quarter of 2013 were RMB24.3 million ($3.9 million), including RMB11.8 million spending on the construction of Tianjin warehouse.

Adjusted EBITDA loss (non-GAAP) in the first quarter of 2013 was RMB65.1 million ($10.5 million), as compared with an adjusted EBITDA loss of RMB94.8 million in the corresponding period in 2012.

Outlook for Second Quarter 2013

Dangdang expects total net revenue in the second quarter of 2013 to be around RMB1.6 billion  representing year-over-year growth of around 23%. We also expect GMV  from our marketplace to grow at a rate of 175% year-over-year in the  second quarter of 2013. This forecast reflects Dangdang's current and  preliminary view, which is subject to change.

Filing of Annual Report on Form 20-F

On April 10, 2013, the Company filed its annual report on Form 20-F for the fiscal year ended December 31, 2012  that includes its audited financial statements with the Securities and  Exchange Commission. The annual report is available on the Company's  investor relations website at http://ir.dangdang.com. Holders of the  Company's securities may request a hard copy of the Company's annual  report free of charge.

Conference Call Information

Dangdang's management will host an earnings conference call at 8:00 AM on May 16, 2013 U.S. Eastern Time (or 8:00 PM on May 16, 2013 Beijing/Hong Kong time).

Dial-in details for the earnings conference call are as follows:

Please  dial-in 10 minutes before the call is scheduled to begin and provide  the passcode to join the call. The passcode is "Dangdang earnings call."

A replay of the conference call may be accessed by phone at the following number until May 23, 2013:

Additionally, a live and archived webcast of this conference call will be available at http://ir.dangdang.com/ until November 30, 2013.