$DANG Posts Unexpected Profit, Stable Margins

Dangdang had investors exclaiming Friday. Shares of the Chinese e-commerce company rose nearly 10% after reporting an unexpected profit.

$DANG Dang I missed it. Had to say it. China Dang Dang!

— berla (@tberla) Feb. 28 at 11:00 AM

$DANG Breaking out of Wedge!!! http://stks.co/r02zu

— StoXXXy (@StoXXXy) Feb. 28 at 09:47 AM

Fourth quarter EPS rose to $0.04 per share on $325.7 Million in net revenues. Wall Street had anticipated a loss of $0.07 on $315.83 Million in sales, according to the Analyst Ratings Network.

$DANG 6:56 am Dangdang beats by $0.11, beats on revs; guides Q1 revs above consensus http://stks.co/p030e

— Paul (@pbanik) Feb. 27 at 10:49 PM

Profit margins, which have been a problem for other Chinese Internet companies such as $SOHU, $CYOU and $BIDU, actually improved for Dangdang during the quarter. It reported gross margin expansion of 17.6% from 13.4% a year ago.

Management attributed the margin expansion to a successful transition from book retailer to high-end marketplace. “Dangdang returned to profitability in the fourth quarter of 2013,” said Peggy Yu, Dangdang’s Executive Chairwoman. “This reflects our commitment to improve our financial performance and solid execution to transform Dangdang from an online bookstore into an integrated online shopping mall targeting mid-to high-end consumers.”

The company guided for the total value of goods on its site to grow 100% in the first quarter of 2014. It expects about $282 Million in sales, based on current RMB to Dollar exchange rates.

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