After regaining compliance with NASDAQ share price requirements, Newegg Commerce announced financial results through the third quarter including a net loss of $44 million for the nine months versus a net loss of $27.4 million for the period a year earlier.
After regaining compliance with NASDAQ share price requirements, Newegg Commerce announced financial results through the third quarter, including a net loss of $44 million for the nine months versus a net loss of $27.4 million for the period a year earlier.
Net sales slid by 16% to $1.04 billion for the nine months ended September 30, 2023, while gross merchandise volume decreased by 20.2% to $1.27 billion. Loss from operations was $53.4 million versus $41.5 million in the year-prior period.
On December 12, 2023, Newegg announced it had received a notification letter from the Listing Qualifications Department of the Nasdaq Capital Market stating the company had regained compliance with the minimum bid price requirement under the Nasdaq Listing Rule. Compliance required a closing bid price at or greater than the $1 per ordinary share minimum for the ten consecutive business days, which occurred from November 28, 2023, to December 11, 2023. Newegg’s stock price was $1.32 early in the afternoon of January 2.
Hangzhou Liaison Interactive Information Technology Co., a publicly traded company based in China, is a majority owner of Newegg Commerce.
In announcing the financial results, Newegg CEO Anthony Chow said, “While we continued to experience lower-than-expected results in the third quarter due to challenging macroeconomic conditions and declining consumer demand, I am excited to share the launch of several new initiatives underway, including the development of new sales channels through walmart.com and TikTok Shop, our renewed focus on systems and finished good categories, and the expansion of our U.S. marketplace efforts. I am also proud of our continued progress in streamlining operations, an example of which includes our implementation of Geek+ autonomous robots to enhance warehouse operational efficiency. Further, we are beginning to see some positive momentum for Black Friday, Cyber Monday and holiday shopping during the fourth quarter, which we hope to carry into the new year. Finally, I am pleased to have announced our inaugural $10 million share repurchase program last month, which we intend to use opportunistically to enhance shareholder value.”
Chow added Newegg remains “optimistic about the future of the business. We continue to innovate in important areas, such as social media and social sharing. As a key partner of TikTok Shop, we have substantially enhanced our social media presence and reach within the key Gen Z demographic. We also launched an innovative social sharing sales channel, Group Buy, in November. Group Buy is our daily deal offer that requires a minimum number of customers to register online each day in order to unlock an attractive deal. Group Buy is designed to encourage customers to share daily deals through social media in order to generate group excitement and attract additional traffic to our site. We believe these types of forward-looking initiatives continue to set Newegg apart in the e-commerce market.”
Newegg Chief Accounting Officer Christina Ching noted, “We have started to see some moderation in the rate of decline in our business in the second half as a result of momentum from our Black Friday and Cyber Monday sales period. Our team has moved swiftly to realize SG&A savings in response to declining demand this year, and I am pleased with our progress thus far in achieving substantial year-over-year savings. As a result of various one-time reduction expenses, we expect to see the full benefit of these initiatives in 2024. Separately, our full-year projections were negatively impacted by a combination of external factors, including one-time product shortages and delayed product launch cycles. We remain keenly focused on maintaining healthy inventory turnover and a strong cash position. Our current average inventory turnover is 40 days, and we have reduced total inventory levels from $156 million as of December 31, 2022, to $142 million as of September 30, 2023. Furthermore, as of September 30, 2023, we had $54 million in cash on hand and no outstanding balance under our revolving credit facility.”
