Jabong’s FY15 revenue doubles, net loss triples

Lately, there has been a lot of speculation about fashion etailer Jabong. The contradicting reports about turning profitable and then about the company being sold has baffled everyone.

The latest health report of Jabong is a mixed bag too!

Jabong FY15 sales cross INR 1,000 crore

First the good news. Jabong’s this year’s sales crossed the Rs. 1000 crore mark. The figure is nearly double than last year. Last year’s sales figure was Rs. 527 crore and this year it’s Rs. 1082.9 crore, as reported by ET.

But its loss tripled

Now the bad news. The company declared a net loss of Rs. 43.6 crore this FY, which is nearly thrice than last year’s net loss of Rs. 16.6 crore. People are blaming it on heavy discounting. But experts believe that the company is going through a transitional phase and high sales & loss is part of an ecommerce business’ fabric.

“There is a management churn issue but it is more difficult to bring losses down if you have to show high growth trajectory. For Jabong, loss is not a problem as long as they have enough cash on the balance sheet and there is constant product injection in its portfolio to excite consumers”, asserted Devangshu Dutta – Chief Executive, Third Eyesight.

Stagnant purchase transaction rate slowing down Jabong’s growth

While profit and loss hasn’t been stable for any etailer, industry watchers feel in Jabong’s case, the stagnant purchase transaction rate is to be blamed for slow growth rate.

This Tech Circle report highlights how Jabong’s number of orders and transactions remained static in the third quarter of this financial year. The value of goods sold has increased but number of orders dropped. It’s a huge concern mainly because the fashion etailer slowly wants to move away from heavy discounting.

But the company officials believe their numbers are encouraging, especially since its marketplace shipments climbed by 15% in Q3.

The company spokesperson confidently stated, “As we transition from being a startup to a more professionally run, profitable company, we have been continuously introspecting to bring in efficiencies in everything we do, and this is showing in our numbers. More than just discounting, we believe it has been possible due to a lot of other creative elements such as better curation and assortment, marketing and promotions.”