Mogu Reports Weak Revenue, Doubled Losses

The Chinese fashion retailer said revenue declined 15% year-over-year to $27.7 million and net loss has doubled to $45.7 million.

Anthony Russo
    Nov 29, 2019 11:00 AM  PT
Mogu Reports Weak Revenue, Doubled Losses
author: Anthony Russo   

The stock in Mogu Inc. (NYSE: MOGU) was trading flat on Friday by midday, at $2.03 per American depositary share, after the company posted weak revenue and losses that nearly doubled for the second fiscal quarter.

The Hangzhou-based online fashion company said in a statement today that in the three months through September its revenue was $27.7 million, down 15% year-over-year. Mogu attributed the decline to low marketing services revenues, which was $8.8 million, a decrease of 31% from the same period last year, the report said.

Net loss in the quarter widened to $45.7 million, or 42 cents per ADS, compared with $26.3 million a year ago, according Mogu.

In China, there has been a slowdown in the fashion industry recently, including Forever 21, the teenage clothing retailer, saying it would close down its stores in the nation earlier this year, according to the China Daily. Chinese consumers feel fashion has followed a trend of low quality and inexpensive design, leading to the decline, according to the report.

"A constant stream of new breeds of business models are being created every day. This trend has picked up in recent years, something which we are acutely aware of. It has been a challenging journey, but like this new breed of business models, we have evolved with the times, overcoming many challenges in the past 9 years while remaining fully committed to this mission," Qi Chen, the chairman and chief executive officer of MOGU, said in a statement today.

He also said Mogu's KOL business model will be "key" to constructing a comprehensive fashion and lifestyle destination for its users.

Chen added, "We believe this unique model is more in line with the future direction of the industry and is more suitable than the traditional storefront and online merchandise-based marketplace models. Our KOLs play a central role in here with their exceptional abilities to understand, influence and serve users while at the same time significantly improving overall industry efficiency by better consolidating the existing fashion supply chain in China."

The company, which targets "young people" according to its website, said its Live Video Broadcast Business (LVB) had nearly 2,000 new registered hosts in the period.  As of September LVP hours per day exceeded 3,400, Mogu said in its statement.

Chen said, "We are confident that, through the continuous innovation and execution of our differentiated strategies, the next-generation KOL-centered platform we are developing will sustainably drive long-term user expansion and growth."