Coupang posts first loss since 2022 as Farfetch saps profit

Coupang Inc posted its first loss in two years, after the acquisition of unprofitable Farfetch Holdings Plc and a government regulatory fine offset strong growth in its core e-commerce business.

South Korea’s largest online retailer posted a net loss of $77 million for the June quarter, versus an average estimate for a loss of $11.7 million. Excluding Farfetch and a fine from the Korean authorities, Coupang’s second-quarter net income came to about $124 million, it said in a statement.

Coupang fell more than 5% in late US trading after closing at $20.67. The shares had been up 28% this year.

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The losses overshadowed resilient top-line growth. It reported a net revenue increase of 25% to $7.3 billion. Shares in Coupang, which popularized one-day delivery in Korea, have climbed about 26% this year after the company posted its first full year of profit in 2023. It’s now seeking growth by expanding into newer arenas like Taiwan even as Alibaba Group Holding Ltd’s AliExpress and PDD Holdings Inc’s Temu push into its biggest market.

Chief Executive Officer Bom Kim told analysts during an earnings conference call that the company will continue to invest to speed up delivery across its markets.

“While new customers contribute to future growth, our growth today and tomorrow is powered primarily by the increasing spend of our existing customers,” Kim said. “We can’t stress enough how small a share we are of the massive and highly fragmented $560 billion commerce opportunity in the market, and how early we are in that journey.”

The company’s on track to have Farfetch — the online luxury company it acquired in January — reach close to positive adjusted earnings before interest, taxes, depreciation and amortization on a run-rate basis by the end of 2024, he said.

Coupang’s also grappling with allegations that it favors its own private-label goods at the expense of third-party merchants in search results. Korea’s Fair Trade Commission said in June it imposed a tentative fine of 140 billion won ($102 million) for alleged legal violations. Coupang has said it will “vigorously appeal” the regulator’s findings.