Seoul: South Korean e-commerce giant Coupang Inc. announced it swung to a profit in the second quarter, primarily due to a base effect resulting from a one-off expense last year. In the three months ended June 30, Coupang reported a net profit of 43.5 billion won (US$31 million), transitioning from a net loss of 143.8 billion won during the same period last year, as indicated in a company press release.
According to Yonhap News Agency, the return to profitability is linked to a one-off factor. In Q2 2024, a fine of 163 billion won impacted the company's bottom line. The Fair Trade Commission (FTC) levied the fine after discovering Coupang's manipulation of search algorithms and fabricated product reviews to enhance sales of its private-label goods. From February 2019 to June 2024, Coupang provided preferential exposure to its products over third-party sellers through deceptive algorithms, which hindered fair competition and misled consumers, as per the FTC's findings.
Coupang also reported an operating profit of 209.3 billion won in the second quarter, rebounding from an operating loss of 34.2 billion won a year ago. Coupang's Chief Financial Officer Gaurav Anand stated in the company's earnings call that growth in margins resulted from various long-term initiatives such as automation, technology investments, process improvements, supply chain optimization, and expansion in margin accretive categories and offerings. Anand expects these initiatives to continue driving margin expansion, albeit with fluctuations in growth pace across quarters.
Sales increased by 19 percent to 11.97 trillion won from 10.03 trillion won during the same period last year. The company attributed robust sales in its new growth segments-such as British luxury fashion platform Farfetch Holdings, delivery services in Taiwan, and food delivery platform Coupang Eats-as key contributors to its highest-ever quarterly revenue. Sales in new growth businesses surged 33 percent year-on-year to 1.67 trillion won in the quarter.
Coupang's acquisition of British retailer Farfetch in January 2024 has positioned the New York-listed company as a major player in the $400 billion global personal luxury goods market.