Coupang’s sales growth slowed mars second-quarter profit

(Bloomberg) — Coupang Inc., the South Korean e-commerce giant owned by SoftBank Group Corp. , reported lower sales than analysts were estimating, giving the company another profitable quarter.

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Revenue rose 4.9% to $5.33 billion for the October-December period, the U.S.-listed company said in a statement. This compares to a median estimate of $5.45 billion. Coupang’s active customers grew just 1% to 18.1 million, also missing guidance.

Slowing sales growth overshadowed the company, which posted its second straight quarterly profit after years of losses. Coupang posted earnings of 6 cents per share compared to a loss of 23 cents a year ago. Analysts had forecast a profit of 4.6 cents. Coupang’s shares fell 2% after rising as much as 5.6%.

“There are economic uncertainties around the world that affect us all,” Bom Kim, Coupang’s founder and chief executive officer, said when speaking to analysts. “But as you have seen, we continue to grow much faster in the market and continue to grow at a robust pace.”

Known as South Korea’s answer to Inc., Coupang had been losing money building the business for years. The company is now trying to save money with what it calls extreme automation, which sees thousands of robots delivering products and sorting packages at its newest fulfillment center.

The automation more than doubles the efficiency of the fulfillment network, Kim said, adding that the company will further reduce costs by deploying more robots. The company is now targeting margins of 10% or more on its adjusted earnings before interest, taxes, depreciation and amortization, he said.

The faltering demand in the e-commerce sector in the wake of the pandemic has prompted Coupang to lock in shoppers with subscriptions. Coupang not only faces competition from internet giant Naver Corp., but also from retail conglomerates Shinsegae Inc. and Lotte Shopping Co., which are investing heavily in their online offerings. Coupang’s customer base remains loyal to its monthly payment service despite a price hike, said Nam Seong-hyun, an analyst at IBK Securities.

The company is also targeting revenue from other areas, including its loss-making food delivery service Coupang Eats and streaming service Coupang Play. The company also plans to expand its express delivery services in Taiwan and Japan.

–Assisted by Nick Turner.

(Updates with comments from management on the earnings call)

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