(Bloomberg) — Coupang Inc., the South Korean e-commerce giant backed by SoftBank Group Corp., narrowed its losses after ramping up cost cuts to weather a slowdown in online retail. The company’s US shares jumped about 20% in extended trading.
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The first-quarter operating loss narrowed to $205.7 million, compared with $267.3 million a year earlier. Revenue rose 22% to $5.12 billion in the period, while the number of active clients increased 13%, the company said Wednesday in a statement.
Global e-commerce is decelerating as consumers emerge from Covid-19 lockdowns or tighten their belts while the macroeconomic outlook remains uncertain. Amazon.com Inc. gave a gloomy forecast for sales last month and said it was monitoring whether rising inflation may affect shoppers’ appetites.
In South Korea, the product e-commerce segment grew 8% compared to a year ago, while Coupang’s growth rate was nearly four times that, at 30%, Bom Kim, Chief Executive Officer said during an earnings call.
“There continues to be lots of unpredictable variables related to the reopening in the short term, but the long term trajectory is very clear to us,” said Kim. “In any scenario, we will continue to grow significantly faster than the e-commerce segment and continue to gain share across all of our categories.”
Kim said that the company is benefiting from economies of scale with improvements in automation and supply chain logistics as its size gets bigger. Coupang expects steady improvement in profitability over time, Kim added.
Coupang’s sales remained relatively resilient during the first quarter as record Covid cases spurred consumers in its home country to stock up, but the company’s focus has shifted to cost savings by increasing membership fees and halting some refunds of used products.
Its shares have still plunged 67% this year, hit by the broader tech sell-off. SoftBank’s own Vision Fund sold 50 million of the Korean company’s shares in March for $20.87 each, compared with its $35 IPO price.
“Coupang’s shares slid excessively as e-commerce platform companies are facing deratings globally,” said Park Sang-jun, an analyst at Kiwoom Securities. “The Korean e-commerce market growth has also fallen to single-digit percent growth as social distancing measures lifted. Coupang faces sluggish demand but it may outperform the market with its dominance in commodity goods sales.”
(Updates with CEO comments from fourth paragraph)
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