Mecox Lane Limited Announces Third Quarter 2013 Results

Mecox Lane Limited Announces Third Quarter 2013 Results

             Gross Profit Margin Up 7.9% Year over Year to 44.3%
                 Company Announces Upcoming Departure of CFO

SHANGHAI, China, Nov. 19, 2013 (GLOBE NEWSWIRE) -- Mecox Lane Limited ("Mecox
Lane" or the "Company") (Nasdaq:MCOX), a multi-brand and multi-channel
retailer of apparel and accessories in China, today announced its unaudited
financial results for the third quarter ended September 30, 2013. The Company
also announced the upcoming departure, for personal reasons, of Mr. Paul Bang
Zhang, Mecox Lane's chief financial officer (CFO). The Company's vice
president of finance, Mr. Michael Gui Sheng Liu, will serve as acting CFO.

Third Quarter 2013  Highlights

  *Net revenues decreased 40.5% year over year to $21.4 million, compared to
    $36.0 million in the third quarter of 2012
  *Gross profit^1 decreased 27.6% year over year to $9.5 million, compared to
    $13.1 million in the third quarter of 2012
  *Gross margin was 44.3% in the third quarter of 2013, compared to 36.4% in
    the third quarter of 2012
  *Net loss was $5.0 million, compared to net loss of $6.1 million in the
    third quarter of 2012

"We are moving forward in transitioning from an e-commerce focus to being a
brand-oriented company that sells across multiple retail channels, both online
and offline. In the third quarter, that overarching strategy included the
opening of new, directly-operated physical stores that feature our latest
private-label, fast-fashion products," said Mr. Alfred Gu, Mecox Lane's board
director and chief executive officer. "At the same time, we've remained
prudent in our overall spending and careful in the management of our costs,
which helped to narrow our net loss."

"Regarding our CFO transition, I want to thank Paul Zhang for his leadership,
dedication, and many important contributions to Mecox Lane since he joined the
Company in 2009. We wish Paul all the best in his future endeavors, and are
happy that he will stay on through the end of December to assist in the
transition of his responsibilities to Michael," said Mr. Gu.

Mr. Liu will serve as acting CFO from the effective date of Mr. Paul Zhang's
resignation until the Company identifies a permanent replacement. "Mr. Liu
joined Mecox Lane in 2009, and has been a key member of our financial team
since before our initial public offering in 2010. Prior to joining the
Company, Mr. Liu worked in the finance department of McDonald's and Really
Sports in China for seven years," added Mr. Gu.

Third Quarter 2013 Results

Due to the seasonal nature of its business, the Company presents its financial
results on a year-over-year basis for the third quarter of 2013 and the third
quarter of 2012 as follows.

Total Net Revenues

Total net revenues were $21.4 million in the third quarter of 2013,
representing a decrease of 40.5% from $36.0 million in the third quarter of
2012. The decrease was primarily due to the decrease in net revenues from the
Company's e-commerce channel, as well as the decrease in net revenues from the
Company's physical stores.

E-commerce Channel^2

Net revenues from the Company's e-commerce channel were $5.1 million in the
third quarter of 2013, representing a decrease of 70.2% from $17.2 million in
the third quarter of 2012. The decrease was primarily attributed to the
decrease in the Company's sales on M18.com in the period after the website was
re-launched as a brand-neutral open platform operated by the management of
Giosis Mecoxlane, partially offset by the increase in the Company's sales on
independent e-commerce platforms, such as TMall.com and VIPshop.

Call Center

Net revenues from the call center were $10.8 million in the third quarter of
2013, representing a decrease of 1.6% from $11.0 million in the third quarter
of 2012. The decrease was primarily attributed to a decline in orders placed
through the call center as a result of a gradual reduction and discontinuation
of the Company's catalog circulation at the beginning of this year.

Directly Operated Stores & Franchised Stores

Net revenues from directly operated stores were $3.4 million in the third
quarter of 2013, representing a decrease of 12.3% from $3.8 million in the
third quarter of 2012. The decrease was primarily due to the decline in the
number of directly operated stores from an average of 85 stores in the third
quarter of 2012 to an average of 58 stores in the third quarter of 2013,
partially offset by an increase in average store sales.

Net revenues from franchised stores were $2.1 million in the third quarter of
2013, representing a decrease of 47.2% from $4.0 million in the third quarter
of 2012. The decrease in net revenues was primarily due to the decline in
average store sales and the decline in the number of franchised stores from an
average of 265 stores in the third quarter of 2012 to an average of 217 stores
in the third quarter of 2013.

Cost of Goods Sold^3

Cost of goods sold was $11.9 million in the third quarter of 2013,
representing a decrease of 47.9% from $22.9 million in the third quarter of
2012. The decrease was in line with the overall decrease in revenues.

Gross Profit and Gross Margin

Gross profit was $9.5 million in the third quarter of 2013, representing a
decrease of 27.6% from $13.1 million in the third quarter of 2012. Gross
margin was 44.3% in the third quarter of 2013, compared to 36.4% in the third
quarter of 2012. The increase in gross margin was mainly due to improved
management of inventory turnover across the Company's e-commerce channels,
along with an increase in the weighting of the call center in total net
revenues, which generated a higher margin than that of other segments. The
increase in gross margin was partially offset by an inventory write-down of
$0.7 million recorded in the third quarter for the Company's physical stores
as the Company tested new store models, along with new brands and products.

Operating Expenses

Total operating expenses were $13.3 million in the third quarter of 2013,
representing a decrease of 31.9% from $19.6 million in the third quarter of
2012, primarily due to the decrease of selling, general and administrative
expenses in the period.

Selling, general and administrative expenses were $11.9 million in the third
quarter of 2013, representing a decrease of 36.7% from $18.8 million in the
third quarter of 2012, primarily due to a decrease in headcount and related
labor costs, and a shift to Giosis Mecoxlane, the Company's joint venture, of
advertising costs and IT expenses associated with the operation of M18.com. 

Loss from Operations

Loss from operations was $3.9 million in the third quarter of 2013, compared
to loss from operations of $6.5 million in the third quarter of 2012.

Loss from Equity in an Affiliate

Loss from equity in an affiliate, specifically Giosis Mecoxlane, was $1.4
million in the third quarter of 2013, compared to nil in the third quarter of
2012.

Net Loss and Loss per ADS

Net loss was $5.0 million in the third quarter of 2013, compared to net loss
of $6.1 million in the third quarter of 2012. Non-GAAP net loss^4 was $3.9
million in the third quarter of 2013, compared to non-GAAP net loss of $5.8
million in the third quarter of 2012. Basic and diluted loss per American
depositary share ("ADS") attributable to Mecox Lane shareholders was $0.41 in
the third quarter of 2013. One ADS represents thirty-five ordinary shares.

Cash and Short-term Investments

As of September 30, 2013, Mecox Lane had cash and cash equivalents totaling
$6.4 million, compared to $13.3 million as of December 31, 2012. Short-term
investments on September 30, 2013 were $12.8 million, compared to $20.7
million as of December 31, 2012, all of which were structured term bank
deposits.

Short-term Borrowing

As of September 30, 2013, Mecox Lane had short-term borrowing totaling $1.6
million, compared to nil as of December 31, 2012.

Conference Call Information

Mecox Lane management will hold an earnings conference call at 8 p.m. U.S.
Eastern Time on November 18 (9 a.m. Shanghai/Hong Kong Time on November 19) to
discuss results and highlights from the quarter, as well as to answer
questions. A brief presentation to accompany the earnings call will be
available on the Company's website, http://ir.mecoxlane.com/events.cfm, at
6:30 p.m. U.S. Eastern Time on November 18 (7:30 a.m. Shanghai/Hong Kong Time
on November 19).

The dial-in numbers and passcode for the conference call are as follows:

U.S. Toll Free: +1-855-500-8701
International:  +65-6723-9385
Hong Kong:      +852-3051-2745
Passcode:       96745281

Additionally, an archived webcast of this call will be available on the
Investor Relations section of Mecox Lane's website at http://ir.mecoxlane.com.

About Mecox Lane Limited

Mecox Lane Limited (Nasdaq:MCOX) is a multi-brand and multi-channel retailer
of apparel and accessories in China.The Company offers a wide selection of
affordable fashion products through e-commerce channels including the M18.com
website, which is operated by the Company's joint venture, Giosis Mecoxlane
Limited, and other independent e-commerce platforms, as well as through the
Company's physical store network and call center. Product offerings include
apparel and accessories, beauty and healthcare products and other items under
Mecox Lane's own proprietary brands, and select domestic and international
third-party brands.For more information on Mecox Lane, please visit
http://ir.mecoxlane.com.

Safe Harbor: Forward Looking Statements

This press release contains forward-looking statements made under the "safe
harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements can be identified by terminology
such as "may," "will," "expects," "anticipates," "future," "intends," "plans,"
"believes," "aims," "estimates," "confident," "likely to" and similar
statements. Among other things, the quotations from management in this press
release, as well as the Company's strategic and operational plans, contain
forward-looking statements. Forward-looking statements involve inherent risks
and uncertainties. A number of factors could cause actual results to differ
materially from those contained in any forward-looking statement, including
but not limited to the following: the Company's business strategies and
initiatives as well as its business plans; the Company's future business
development, results of operations and financial condition; changes in the
Company's revenues and certain cost or expense items; the Company's
expectations with respect to increased revenue growth and its ability to
sustain profitability; the Company's products under development or planning;
the Company's ability to attract customers and further enhance its brand
recognition; trends and competition in the e-commerce and apparel and
accessories industry; the e-commerce and apparel and accessories industry in
China may not grow at the rates projected by market data, or at all; the
failure of the markets to grow at the projected rates may have a material
adverse effect on the Company's business and the market price of its ADSs; in
addition, the rapidly changing nature of the e-commerce and apparel and
accessories industry in China subjects any projections or estimates relating
to the growth prospects or future condition of the Company's market to
significant uncertainties. If any one or more of the assumptions underlying
the market data turns out to be incorrect, actual results may differ from the
projections based on these assumptions. You should not place undue reliance on
these forward-looking statements.Further information regarding these and
other risks is included in the Company's annual report on Form 20-F as well as
in its other filings with the Securities and Exchange Commission. All
information provided in this press release is current as of the date of the
press release, and the Company undertakes no duty to update such information,
except as required under applicable law.

About Non-GAAP Financial Measures

To supplement Mecox Lane's consolidated financial results presented in
accordance with United States Generally Accepted Accounting Principles
("GAAP"), Mecox Lane uses in this press release non-GAAP net income (loss),
which excludes share-based compensation expenses. The presentation of the
non-GAAP financial measure is not intended to be considered in isolation or as
a substitute for the financial information prepared and presented in
accordance with GAAP.

Mecox Lane believes that the non-GAAP financial measure facilitates investors'
and management's comparisons to Mecox Lane's historical performance and
assists management's financial and operational decision making. A limitation
of using the non-GAAP financial measure is that share-based compensation
expenses are recurring expenses that will continue to exist in Mecox Lane's
business for the foreseeable future. Management compensates for these
limitations by providing specific information regarding the GAAP amounts
excluded from the non-GAAP measure. The accompanying table has more details on
the reconciliation between the non-GAAP financial measure and its most
directly comparable GAAP financial measure.

^1Gross profit excludes the impact of depreciation and amortization expenses.

^2Since January 2013, one of the Company's reportable segments, i.e. Internet
platform segment, has been renamed as E-commerce channel to reflect the fact
that the M18.com website has been operated by Giosis Mecoxlane and re-launched
as a brand-neutral and open marketplace platform to attract a number of
independent sellers and brands while the Company's branded merchandise has
also been offered on other third-party e-commerce websites in China.

^3Cost of goods sold excludes depreciation and amortization expenses.

^4Non-GAAP net loss and non-GAAP net income exclude share-based compensation
expenses.The non-GAAP measures and related reconciliations to GAAP measures
are described in the accompanying sections of "About Non-GAAP Financial
Measures" and the accompanying table of "Mecox Lane Limited – Consolidated
Statement of Operations Information – Reconciliations of Non-GAAP Financial
Measures to Comparable GAAP Measures" at the end of this press release.

Mecox Lane Limited
Unaudited Consolidated Balance Sheet

                                                 December 31, September 30,
                                                 2012          2013
                                                 $             $
ASSETS                                                        
Current assets:                                               
Cash and cash equivalents                         13,291,063   6,371,594
Short-term investments                            20,682,480   12,768,417
Accounts receivable, net of allowances of $55,660
and $55,660 as of December 31, 2012 and September 1,452,864    1,826,640
30, 2013, respectively
Amount due from a related party                   --          286,711
Other receivables                                 5,149,844    3,479,632
Advances to suppliers and prepaid expenses        6,297,463    1,310,955
Merchandise inventories                           27,349,540   23,430,162
Total current assets                             74,223,254   49,474,111
Property and equipment, net                       46,528,057   44,997,991
Prepaid land use right                            6,125,104    6,165,119
Intangible assets, net                            1,263,644    1,021,759
Investment in an affiliate                        --          7,505,785
Other non-current assets                          249,903      926,579
TOTAL ASSETS                                      128,389,962  110,091,344
                                                              
LIABILITIES AND EQUITY                                         
Current liabilities:                                          
Short term borrowing                              --          1,626,550
Accounts payable (including accounts payable of
the consolidated VIEs without recourse to Mecox
Lane Limited of $3,101,935 and $3,920,057 as of   19,063,827   14,865,578
December 31, 2012 and September 30, 2013,
respectively)
Advances from customers (including advances from
customers of the consolidated VIEs without
recourse to Mecox Lane Limited of $1,345,714 and  4,570,595    3,791,544
$980,010 as of December 31, 2012 and September
30, 2013, respectively)
Amount due to a related party                     547,478      645,570
Accrued expenses (including accrued expenses of
the consolidated VIEs without recourse to Mecox
Lane Limited of $281,152 and $341,287 as of       5,153,056    3,570,103
December 31, 2012 and September 30, 2013,
respectively)
Other current liabilities (including other
current liabilities of the consolidated VIEs
without recourse to Mecox Lane Limited of         7,358,589    5,788,282
$1,955,777 and $1,704,019 as of December 31, 2012
and September 30, 2013, respectively)
Income tax payable (including income tax payable
of the consolidated VIEs without recourse to
Mecox Lane Limited of $34,718 and $33,266 as of   1,779,978    1,783,856
December 31, 2012 and September 30, 2013,
respectively)
Total current liabilities                        38,473,523   32,071,483
                                                              
                                                              
Ordinary shares ($0.0001 par value;
10,000,000,000 shares authorized, 408,727,673 and
426,748,566 shares issued, and 403,790,426 and    40,873       42,675
426,748,566 shares outstanding as of December 31,
2012 and September 30, 2013)
Additional paid-in capital                       165,934,265  167,766,122
Treasury Stock                                    (572,168)    --
Accumulated deficit                               (82,811,023) (98,197,214)
Accumulated other comprehensive income            6,292,753    7,376,539
Statutory reserve                                 931,739      931,739
Total Mecox Lane Limited equity                  89,816,439   77,919,861
Noncontrolling interests                          100,000      100,000
Total equity                                      89,916,439   78,019,861
TOTAL LIABILITIES AND EQUITY                      128,389,962  110,091,344


Mecox Lane Limited
Unaudited Consolidated Statements of Comprehensive Income (Loss)

                                      Three-month Ended September 30
                                      2012                   2013
                                      $                      $
                                                            
Net revenues:                                                
E-commerce channel                     17,156,559            5,112,306
Call center                            10,998,828            10,827,521
Directly operated stores               3,827,856             3,357,648
Franchised stores                      3,998,585             2,109,818
Total net revenues                     35,981,828            21,407,293
Cost of goods sold (excluding                                
depreciation and amortization)
E-commerce channel                     13,679,419            3,289,770
Call center                            4,326,696             4,586,637
Directly operated stores               2,271,703             2,308,633
Franchised stores                      2,620,502             1,745,829
Total cost of goods sold (excluding    22,898,320            11,930,869
depreciation and amortization)
Operating expenses:                                          
Selling, general and administrative    18,833,646            11,928,718
expenses
Depreciation and amortization          895,668               1,472,250
Other operating income, net            (120,385)             (54,449)
Total operating expenses               19,608,929            13,346,519
Loss from operations                   (6,525,421)           (3,870,095)
Interest expense                       --                   (59,966)
Interest income                        491,363               203,990
Other income (expense), net            (110,566)             172,002
Loss before income taxes, equity in
affiliates and noncontrolling          (6,144,624)           (3,554,069)
interests
Income tax expense                     --                   --
Loss before equity in affiliates and   (6,144,624)           (3,554,069)
noncontrolling interests
Loss from equity in an affiliate       --                   (1,422,957)
Net loss                               (6,144,624)           (4,977,026)
Accretion of noncontrolling interest   77,287                (3,275)
Net (loss)/income attributable to      (77,287)              3,275
noncontrolling interests
Net loss attributable to Mecox Lane    (6,144,624)           (4,977,026)
Limited shareholders
Loss per ordinary share:                                     
Basic                                  (0.02)                (0.01)
Diluted                                (0.02)                (0.01)
Loss per ADS (1)                                             
Basic                                  (0.53)                (0.41)
Diluted                                (0.53)                (0.41)
Weighted average ordinary shares used                        
in per share calculation
Basic                                  402,566,371           421,926,476
Diluted                                402,566,371           421,926,476
Weighted average ADS used in per share                       
calculation (1)
Basic                                  11,501,896            12,055,042
Diluted                                11,501,896            12,055,042
                                                            
(1) ADS amounts adjusted for a change in the ratio of the Company's American
Depositary Shares ("ADSs") to ordinary shares ("Shares") from 1:7 to 1:35
("Ratio Change"), effective as of February 1, 2013.

Other comprehensive income, net of tax                       
of nil
Change in cumulative foreign currency  (79,618)              230,387
translation adjustment
Other comprehensive income, net of tax (79,618)              230,387
                                                            
Comprehensive income attributable to   (6,224,242)           (4,746,639)
Mecox Lane Limited shareholders
                                                            
Reconciliations of Non-GAAP Financial Measures to Comparable  
GAAP Measures
Non-GAAP net income (loss) (1)         (5,780,215)           (3,908,293)
                                                            
Note (1) We define non-GAAP net income (loss), a non-GAAP financial measure,
as net income (loss) excluding share-based compensation expenses. We review
non-GAAP net income (loss) together with net income (loss) to obtain a better
understanding of our operating performance. We also believe it is useful
supplemental information for investors and analysts to assess our operating
performance without the effect of non-cash sharebased compensation expenses,
which have been and will continue to be significant recurring expenses in our
business. However, the use of non-GAAP net income (loss) has material
limitations as an analytical tool. One of the limitations of using non-GAAP
net income (loss) is that it does not include all items that impact our net
income (loss) for the period. In addition, because non-GAAP net income (loss)
is not calculated in the same manner by all companies, it may not be
comparable to other similar titled measures used by other companies. In light
of the foregoing limitations, you should not consider non-GAAP net income
(loss) in isolation from or as an alternative to net income (loss) prepared in
accordance with U.S. GAAP.

The following table sets forth the reconciliation of non-GAAP net income
(loss), a non-GAAP financial measure, from net income (loss), our most
directly comparable financial measure presented in accordance with U.S. GAAP,
for the periods indicated.
                                                            
                                      Three-month Ended September 30
                                      2012                   2013
                                      $                      $
Net loss                               (6,144,624)           (4,977,026)
Add back: Share-based compensation     364,409               1,068,733
expenses
Non-GAAP net loss                      (5,780,215)           (3,908,293)

CONTACT: For investor and media inquiries please contact:
        
         In China:
        
         Ryan Shi
         Mecox Lane Limited
         Tel: +86-21-6495-0500 or +86-21-5464-9900 Ext. 8161
         Email: ir@mecoxlane.com
        
         Nicholas Manganaro
         Ogilvy Financial, Beijing
         Tel: +86-10-8520-3073
         Email: mcox@ogilvy.com
        
         In the U.S.:
        
         Justin Knapp
         Ogilvy Financial, U.S.
         Tel: +1-616-551-9714
         Email: mcox@ogilvy.com

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