Netshoes Ltd., the Latin American online retailer of sporting and lifestyle goods, reported a reduced loss in the fourth quarter as sales increased 1.9 percent.

For the quarter, the net loss was reduced to Brazilian Reais (R) 26.3 million from R49.7 million a year ago. Sales increased 1.9 percent to R575.8 million.

The net loss in the year was trimmed to R151.9 million from R170.3 million. Sales increased 8.6 percent to R1.74 billion.

Fourth Quarter and Full Year 2017

Key Highlights

  • Registered Members up 22 percent year-over-year 2017, reaching 22.2 million members, of which 30 percent were active customers in 2017
  • Invoiced Orders up 16 percent year-over-year in 4Q-2017 and 20 percent in FY-2017
  • Number of mobile transactions up 71 percent year-over-year in FY-2017, accounting for 51 percent of total transactions in 4Q-2017 and 46 percent for FY-2017
  • Total B2C GMV increased 18 percent year-over-year in 4Q-2017 and 19 percent in FY-2017
  • Total Consolidated GMV increased 11 percent year-over-year in 4Q-2017 and 17 percent for FY-2017
  • Marketplace accounted for 10 percent of total GMV in 4Q-2017 and 8 percent for FY- 2017 (+421 percent year-over-year)
  • EBITDA Brazil increased 68 percent year-over-year in FY-2017, or 194 percent excluding non-recurring effects
  • Positive operating cash flow of R$123.8 million in 4Q-2017, up from R$77,7 million in 4Q-2016, and R$24.8 million for FY-2017, with effective use of factoring arrangements.

Message form the Founder and CEO, Marcio Kumruian:

“2017 was an important year to focus the company on the core business-to-consumer (B2C) operation. The successful IPO enabled the company to strengthen its cash position and capital structure. The positive metrics achieved by the company during 2017 did not completely translate into improved financial results, as the adverse results from our business-to-business (B2B) operation impacted our overall profitability.

“In 4Q-2017 B2B operation accounted for returns of R$ 20.7 million as well as R$7.2 million in provision expenses. In FY-2017 the B2B negative impact on our operating results amounted to R$29.8 million with an inventory balance of R$118 million at year end. Against a challenging backdrop, GMV from our B2C operation in FY-2017 increased 21.2 percent on an FX neutral basis, reaching R$2.5 billion.

“The growth of our private label and marketplace operations more than compensated for an unfavorable taxation and consumption environment in Brazil, contributing to the stabilization of our gross margin when compared to 2016. Our EBITDA and net margins, excluding B2B, improved with operating leverage.

“We continue to invest in technology that drives a best-in-class experience for our customers while at the same time we are streamlining our operations. I am happy to report that in February 2018 we completed the implementation of an integrated IT sales platform and now all websites that we operate are running on a more robust, agile and fast paced platform. We recently strengthened our management bench with the addition of seasoned executives bringing solid industry experience to our key growth initiatives. Looking ahead, we expect more consistent financial performance as our strategic initiatives mature and as we intensively focus on bring our B2B and international operations back on track to profitability.”