May 20, 2024

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A Coupang delivery truck drives through a rural area. (Coupang)

New York-listed e-commerce giant Coupang reported Wednesday that its sales soared to a record high of $7.1 billion in the first quarter of this year, but operating profits were almost cut in half largely due to the losses from Farfetch, the luxury shopping platform it acquired last year.

According to its earnings report earlier in the day, its revenue reached $7.1 billion in the January-March period, up 23 percent from a year ago.

Its operating profits were $40 million, which compared to $167.7 million during the same period last year. This is the first time the company’s operating profits have decreased since it turned a profit in the third quarter of 2022.

The decrease is largely attributed to the inclusion of losses from Farfetch. Excluding Farfetch, net income attributed to Coupang stockholders stood at $98 million, as reported by Coupang.

Regarding Coupang's acquisition of Farfetch, Coupang's CFO Gaurav Anand expressed confidence in its future performance. "We anticipate that Farfetch will achieve close to positive adjusted EBITDA on a run-rate basis by the end of 2024," the CFO said.

Despite the challenges, Coupang announced plans for substantial investments to bolster more of its market share in Korea.

The company said it plans to boost the procurement and sales of products from Korean manufacturers, aiming to increase from $13 billion in 2023 to more than $16 billion this year. The initiative aims to reinforce support for Korean SMEs while also expanding investments in logistics.

"We are providing access to a wide Korean selection and helping over 21,000 Korean suppliers export their products to the Taiwan market over the last year. It's in the early days in Taiwan, but we're as excited as ever about its potential," Kim Bom, founder and CEO of Coupang, said during an earnings conference call earlier in the day. " While we're further along in Korea, it's important to note that we're still just a single-digit share of a massive and highly fragmented $560 billion commerce opportunity."

In the meantime, the number of Coupang's active customers increased by 16 percent from the previous year to $21.5 million. Sales per active customer in the product commerce sector also saw a 3 percent increase.

Kim added that he is aware of the aggression of Chinese e-commerce companies AliExpress and Temu, which would further complicate the firm's profitability.

"New China commerce entrances reminds us that barriers to entry are low and consumers can switch shopping options faster in retail than in almost any other industry. We have to win their vote each and every time by offering them the best selection, price and service, and we strive relentlessly to make that value proposition better every day," Kim remarked.

Coupang plans to invest over 3 trillion won by 2026 to operate eight new distribution centers and expand Rocket Delivery to 50 million people across the country by 2027.

By Kim Hae-yeon (hykim@heraldcorp.com)