RLX Technology saw its second-quarter revenue and profit slide year-over-year as the Chinese e-vapor company faced a challenging market environment, including disruptions from illegal products.
For the quarter ended June 30, 2023, the company reported revenue of US$52.1 million (RMB378.1 million, down from RMB2.23 billion in the year-ago quarter).
The company attributed the decrease to the discontinuation of older products and the negative impact of illegal products on the market, which it said disrupted user adoption of its nationally compliant products.
Profit was US$11.9 million (RMB86.2 million, a decrease from RMB634.7 million in the same quarter in 2022).
Its gross margin also decreased from 43.8% in 2Q 2022 to 26.1%.
“Though the recent resurgence of illegal products has had a lingering impact on our sales, we believe the impact will be temporary rather than a major trend that could derail our recovery trajectory,” RLX CEO Ying (Kate) Wang commented.
RLX CFO Chau Lu added that during 2Q, the company was focused on efficiency and profitability improvement.
“Thanks to our supply chain optimizations and product design enhancements, our topline improved sequentially to RMB378.1 million, and our gross margin rebounded by 1.9 percentage points from the first quarter of 2023,” Lu said.
“Notably, our operating cash flow turned positive for the first time since the new regulations were enacted.”
RLX shares traded down 1.4% at US$1.40 following the release of its results.
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