Internet clothes and shoes store Lamoda chocked up losses last year, according to the IPO prospectus of business incubator Rocket Internet. In spite of the fact that its revenue more than doubled, its net loss was 1.7 billion rubles (approximately $53.4 million). These figures had not been disclosed previously.
According to the prospectus, Lamoda had 5.15 billion rubles (approximately $162 million) in revenue in 2013, 249% higher than in the previous year (1.476 billion rubles – approximately $46 million), and its EBITDA indicator was negative: -1.92 billion rubles (approximately $60 million).
Marketing expenses decreased from 60% of net revenue to 25%. But the company continued to invest in logistic and IT infrastructure in 2013, leading to “growth in capital expenditures,” the prospectus says. As a result, the net loss of Lamoda in 2013 reached 1.7 billion rubles, versus 1.37 billion rubles (approximately $43.0 million) a year earlier.
One of the main challenges of the e-commerce market in Russia is delivery, Rocket Internet states. The country is enormous, the national post office is unreliable and relatively expensive and international carriers delivery only to the large cities and sometimes only to the European part of Russia, Rocket Internet notes. That is the reason for investment in Lamoda Express, its own delivery service, which was among the causes for the growth of Lamoda’s losses last year.
“A significant negative effect on Lamoda and its [financial] results” can also come from the sanctions against Russia and the reaction of the Russian government to them, Rocket Internet warns potential investors. The world economy remains “fragile,” in part because of the political situation in Russia and Ukraine, the company notes.
According to a research study by East-West Digital News, the Russian online retail market amounted to more than $16 billion last year, up nearly 30% from 2012. This figure does not include the cross-border segment, which reached an estimated $3 billion, almost doubling every year.
Source: Kommersant
