What’s new: U.S.-listed Chinese online grocer Dingdong (Cayman) Ltd. reported a net profit attributable to shareholders of 47.8 million yuan ($6.9 million) in the fourth quarter of 2022, its first time in the black after the firm doubled down on cost controls.
Quarterly revenue grew 13.1% year-on-year to 6.2 billion yuan, according to the financial report published Monday.
Dingdong’s shares traded on the New York Stock Exchange surged 20.25% to $5.89 on Tuesday.
The context: Dingdong’s fourth-quarter profit comes on the back of a 346.8 million yuan net loss for the previous quarter and 1.1 billion yuan net loss in the same period last year. It also follows the demise of Dingdong’s former archrival Missfresh Ltd., which in July shuttered its mainstay instant-delivery retail business.
Both Dingdong and Missfresh are built on a fast delivery model, promising under an hour delivery for orders placed online for customers in major cities. But ensuring the speedy service put high cost pressure on the firms as it required a dense network of warehouses to ensure proximity as well as a high number of employees to manage the warehouses, and perform packaging and delivery.
On the earnings call, Dingdong founder Liang Changlin said the company finally managed to slash operational and marketing costs by improving supply chain efficiency. One approach is by selling more food produced by its own factories rather than purchasing from distributors, he said.
Related: In Depth: Missfresh Implosion Highlights Bitter Business of Selling Groceries Online
Contact reporter Guo Yingzhe (yingzheguo@caixin.com) and editor Bertrand Teo (bertrandteo@gmail.com)
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