Good morning, everyone and welcome to the LightInTheBox Third Quarter 2014 Earnings Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the call over to Mr. Christian Arnell for opening remarks and introduction. Please go ahead, sir.

Thank you. Hello everyone and welcome to LightInTheBox’s third quarter 2014 earnings conference call. The Company’s third quarter earnings results were released a few hours ago and are available on the Company’s IR website as well as PR Newswire’s wire services. Today you will hear from LightInTheBox’s Chairman and CEO, Mr. Alan Guo, who will give an overview of the Company’s strategies and recent developments, followed by Mr. Robin Lu, the Company's Chief Financial Officer, who will go over the financial results in more detail. Before we proceed, I would like to remind you of our Safe Harbor statement. Please note that the discussion today may contain certain forward-looking statements made under the Safe Harbor Provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. To understand the factors that could cause results to materially differ from those in the forward-looking statements, please refer to our Form 20-F filed with the Securities and Exchange Commission on April 28, 2014. We do not assume any obligation to update any forward-looking statements, except as required under applicable law. At this point, I would like to turn the call over to LightInTheBox’s Chairman and CEO, Mr. Alan Guo. Alan, please go ahead.

Thanks, Christian. Welcome everyone to our third quarter call. We are pleased to report a great quarter with strong performance. We continue to reaccelerate our top-line growth with net revenues increased significantly by 45.3% year-over-year, while our apparel business grew 103.9% year-over-year. We improved our marketing efficiency, gained leverage on G&A cost and grew more repeat and mobile purchases. We also made major progress in our overseas logistic operations through which we achieved greater customer satisfaction. Apparel is a huge market globally and it is also a major category of our business. We believe it is undergoing a paradigm shift in many ways as companies develop new ways to use Internet and mobile devices to reach and engage global consumers. Such a change also means leveraging big data and user generated leads to better source merchandise and adopting better supply chain integrating marketing vehicles such as the flash sales model to better manage inventory and supply chain efficiency for the industry. We believe our strengths in big data and supply chain management is an important advantage to help us successfully embrace these trends. As we articulated before, over the past 12 months, we have successfully developed our ready-to-wear apparel business. We offer global consumers access to a large variety of emerging or factory brands, providing both great selections and effective prices. We have adopted the flash sales model to help our suppliers clean up their excessive inventory at deep discount, which also help us quickly test a large number of brands to determine if their product styles match our customer base in a scalable way without inventory risk to LightInTheBox. We also use big data technology and user generated product leads to help vendors improve their merchandising effectiveness. In addition, ready-to-wear apparel also help us generate more repeat purchases for…

Thank you, Alan and thanks to everybody for joining us on the call. As I review the financial results, I’d like to remind you that all percentage changes refer to year-over-year, unless otherwise noted. Net revenues increased 45.3% to 99 million primarily driven by strong performance in our apparel category, increasing contribution from repeat customer purchase and accelerated growth in other general merchandise as well as mobile commerce business. Total orders grew 57.1% year-over-year to 2.5 million and the total number of customers who made a purchase in the quarter increased 53.9% to 1.9 million. Repeat customer purchase accounted for 41.1% of total net revenue, up from 35%, while mobile revenue as a percentage of total revenue increased to 26.5% from 21.5% year-on-year and 26.2% from the second quarter of 2014. Revenue in the apparel category was up 103.9% year-on-year to 37 million, reflecting the Company’s continued success in significantly growing this category. In between, flash sales model has been playing more important role to drive business and become integral part of our apparel business. As a percentage of total net revenues, apparel revenue was 37.4% compared with 26.6% a year ago. Revenues generated from other general merchandise increased by 24% to 62 million. With quarters of hard strategic execution, we started to enjoy accelerated growth in this quarter. Geographically, revenues from Europe increased 47.6% to 59.1 million, representing 59.7% of total net revenues. Revenues in North America increased by 57.1% to 20.4 million. Revenues from North America accounted for 20.6% of total net revenues. Revenues from other countries increased by 28.9% to 19.5 million, representing 19.7% of total net revenues. We experienced unfavorable currency exchange impact this quarter due to the stronger U.S. dollars. Gross profit was 136.6 million, up 22.6% from 29.9 million and the gross margin was…

(Operator Instructions) And your first question comes from the line of Dick Wei from Credit Suisse.

We have seen various e-commerce companies launch their Singles' Day campaign on November 11th. So can management provide some guidance on what’s the traffic impact to LITB? That’s the first question. And my second question is on the logistics side. Besides the Europe new logistics center, could management provide some color on your logistic and warehouse building trend in 2015 and 2016?

This is Alan. So we estimate a separate press release about the November 11 promotional date, Super Singles' Day. We made $1.9 million of sales in that day, which was a historical high for the Company's Singles' Day sales. We did realize that it was not a traditional shopping day for the rest of the world. It was a Chinese phenomena to start with. But a number of Chinese retailers who are setting up in China, including LightInTheBox, was trying to make it international particularly this year. So we definitely see more attractions from shoppers global to actually participate, which is very encouraging. But still, we believe the Thanksgiving and Christmas shopping day would still be the primary dominant, the largest shopping event for the global customers out of China. That’s the first question. The second question, so we have -- I think the European warehouse was very important, because it was the first time we actually self-operate over this warehouse and it was actually executed and in many ways in a flawless way. We were very successful in establishing this warehouse in Poland and both built backbone of logistics solutions from China to Poland and also last month logistics solutions from Poland warehouse to consumers. We don’t actually operate those logistic routes. We actually operate -- we only operate the warehouse. But, well, we integrate the logistic route and the warehouse together, so it really delivers an end-to-end experience to consumers. It’s much faster than we deliver directly from China to the European customers. It’s also much more hard to operate in the sense that the product is already within the European Union zone, so there is no other frictions or hassles which was much more smooth from the customer point of view. So we were very excited about…

Your next question comes from the line of George Askew with Stifel.

Just a couple of quick questions. On seasonality, can you sort of address -- you mentioned that the Christmas, Thanksgiving holiday timeframe will be the biggest driver, but looking at our product categories, ready-to-wear apparel, letting other general merchandise, how the seasonality, the fourth quarter seasonality affect those categories?

So in general, I would say, other than wedding, in general Q4 is a big quarter, but there is more lifting in some categories than others. Electronics is certainly a very big quarter in Q4, apparel is actually too. It’s a combination of Christmas shopping season and the fact that the winter clothing is more expensive than summer clothing by nature. There’s some lifting in home decors, some lifting in small accessories, definitely slowest season for wedding. So the Q1 and Q2 are the top seasons for wedding. So that’s kind of my quick summary of the Q4 in general.

Yes, I just add one part in seasonal. Traditionally for wedding, we have growth in the next half of year. The first half of year would be better for wedding.

And then on the Baidu arrangement, how does that -- you called it a strategic partnership in the press release. How does it differ from a normal commercial relationship with mobile ads on distributed mobile apps that is entered into everyday? I mean, what’s different with this agreement that makes it a strategic partnership?

So first of all, the partnership we entered is with Baidu Dianxin, which is a unit of Baidu that is focused on mobile app development and also has more than 20 million, the installment base is outside China. Secondly, it’s not -- so when we refer to the partnership, it’s not open platform, so it’s a direct relationship between two companies to enter, that’s number two. And number three is, the agreement leaves both of us a lot of potential to explore and try out many different ways to expose our app download exposures or product exposures. So under the agreement, I think both of us have a lot of opportunity to be creative and innovative in how we actually leverage the platform.

And then just lastly, can you kind of talk about a path to profitability? We saw the weakness in gross margin due in part to the product shift, mix shift which seems like it may continue. Where’s the leverage in the model? When can we see positive EBITDA, a positive operating income?

I can answer this question, George. Basically, when we look at our model and our position in the market, we think our primary goal at this moment is to drastically drive up our revenue so that we can have more market share and acquire more customer base, which you can see in our result in the third quarter we have like a high percentage growth in both other and customer base. I think that’s the first priority. Because this market is in the very early stage and very fragmented, we must build up our position for the future. About the gross margin, when we look into the gross margin, I think there are three factors in this quarter. The first one is the current headwinds. Other Internet companies always report these headwinds. And the second one is the product mix change, mix shift, our percentage in the category in some extent this quarter. And the third one is pricing strategy. When we do the analysis for that, I think currency headwinds is the first factor and product mix is second factor, while the pricing strategy is the additional factor. When we look forward to the gross margin, I think our growth driver in the apparel ready-to-wear business have very stable gross margin across quarters, because how we are using our product selection plus the velocity of the sales should drive up our revenue rather than by the low price. So another way is when we look at our volume increase, I mean the revenue increase, we have a better position with suppliers and we can achieve economic scales. So in the long run, we are very confident to stabilize the gross margin in the long term. About profitability, I think I already answered the question, because our primary goal is to acquire the market and on the other hand we tightly control our cost. And on the other side, for example the overseas fulfillment center, we utilize the asset-light model to run that. So in the future, we are confident on that too.

George, this is Alan. Just building on top of Robin, just from a strategic point of view, we certainly take -- as a company we take profitability very seriously. We very carefully are crafting our strategy to our path to profitability. But we also are very aware of how early we are in this market. And we are still a relatively small revenue size company in the e-commerce world. So we definitely want to keep up growth momentum while gradually improve our bottom-line. That’s the strategy we take.

Your next question comes from the line of Cheng Cheng, Pacific Crest.

My question is on - geographically, the other geography has seen two strong quarters of growth. I am just wondering if you can provide more color on a breakdown on where exactly you are seeing it and maybe which categories?

Cheng Cheng, this is Robin. I think the two reasons to drive up the revenue in other countries, one is we have better product selection, the other one is our more effective customer acquisition channel. Regarding the other countries, we see the growth in general across the countries and the South America and Russia is a big growth driver in these categories. In general, I think we greatly improve our platform capabilities, that’s why we can say we have growth across categories and growth across countries. But we still are primarily focused on our two major markets, North America and Europe, which achieved much larger growth percentage than the other countries.

And just to follow up a little bit on the gross margin question. You mentioned a couple of reasons and you kind of ranked them from one, two, three. I was wondering if there is any more color on magnitude within the currency exchange pricing strategy to that sequential decline in gross margins?

Basically for the currency headwinds, we calculated we have $1.7 million unfavorable impact on our revenue. Of course it's directly effect of gross margin. Excluding that, our gross margin would be 38.1% in this quarter. And other than that, we have both product mic change and pricing change. Actually we don't disclose what are the components for that, but I should say the product mix change is the much, much big major driver in our gross margin.

Your next question comes from the line of Jiong Shao with Macquarie.

This is [indiscernible] calling on behalf of Jiong Shao. And I have a question on the marketing expense. So we see that the marketing expense reduced nicely and so I was just wondering for the marketing expense what's the sort of mix amount, social media, ad networks and mobile app distributions, like from a quarter ago and also from a year ago. So what do you see the change in the spend mix? That’s the first one. And just on top of that, you have a partnership with Baidu and you try to distribute more of the mobile apps through it. How should we think about the impact to the marketing expense, if you guys can share on that?

I think I can answer the first question. Of course, in our prepared remarks we mentioned about how important the social media channel is at this moment. When I look at the fans in Facebook, we can see we have a great increase of our number of fans in the Facebook. Of course from the marketing side, we switched our expense to social media. And of course for that, for some specific products, we have achieved better cost effective result for that. So I think that answer for your first question.

For the Baidu Dianxin partnership, I think it's still too early to tell. We just signed the contract. I think we will engage a number of experiments with them and figure out the right way for the right product. I think it's premature to give any direction or indications on the actual dollar impact at this moment in time.

Another question will be on the consumer behavior between the uses on your PC side and also on the mobile app side, if you can share a little bit more, like for example on the order size, the conversion rate and so on, that would be helpful.

So, we think mobile is very important from two different perspective. Number one is consumer is definitely moving towards mobile in the sense of the mobile -- how many hours they are spending on their mobile devices versus on their PCs. So from this perspective, it’s absolutely very important. And also number of units of device shipped, number of Android unit device or iOS unit device shipped every quarter versus number of new PCs, there is a very clear adoption curve factor in mobile compared with PC. And number two is their usage patterns. In PC, it’s much more task oriented, while in mobile it’s more of lifestyle oriented in the sense that people use a lot of their fraction of their time of a couple of minutes to browsing through their mobile apps at any potential time while they’re waiting for subway or they’re sitting in a taxi and all those things. So our goal of the mobile app development is certainly to make the user experience so easy and so compelling, so it’s not only at a time where you have a specific purchase means you actually come to the approximately, rather it become part of your lifestyle. You actually explore product and the interesting product ideas while you may not actually have had a particular demand so that there is a huge demand creation opportunity on the mobile device.

Your next question comes from the line of Sisi Lu with China Renaissance.

So my question is regarding to the marketplace strategy. Can we have a quick update on that strategy and how we’re going to think that it will affect our gross margin in the future?

Well, as we articulated before, in addition to our retail business, we’re engaging -- we’ve started to engage in the open platform strategy. It’s still very early. We’re working in progressing and developing our platform, increase our features. We have a very basic feature today that we can offer. But we think in order to secure our business, we need more richer features. We’re also on track with acquiring 'trial' customers, meaning platform sellers. So we already have a number of them who are trying out our platform and generating orders every day. But it’s still -- but for Q3, it's immaterial for our financial, but we think it’s very important in the coming years.

Your next question comes from the line of Dayan Ban with TD Securities.

We see a very positive trend that the fulfillment expense for other has kept going downwards since Q1. What is driving this trend? And with the launch of European fulfillment center put any pressure on the expense side?

So, you’re talking about fulfillment, right?

Yes.

I think that we made a progress for that with the increased orders. We keep the -- we made progress for the cost effective, especially for the fulfillment cost per order. And we also, as I stated before, we had a very strict process to set up our overseas fulfillment centers and we also strictly select one product we approve in the overseas shipment so that you can say both our inventory and our fulfillment cost didn't go up for that. And also I should say, in the fulfillment cost we still have like a payment process which is almost variable to the orders we processed. Generally, we think we can have a better other fulfillment cost.

And just a follow-up, I know this -- there is a 4 million cash outflow from operating activities. Is there any comments on this cash flow conditions?

Sure. Q4 is a big season for us, so we have 1 million inventory increase, which possibly helped out our cash outflow for that. And otherwise we have 1.7 million unfavorable ForEx which already gave us another impact in the cash outflow. In total that’s about 2.7 million in that. And the other 1.3 million is just like routine operations.

(Operator Instructions) Your next question comes from the line of [Rio Gu] (ph) with China International Corporation.

I have one question. We know that from your third quarter results your revenues from repeat customers is increasing, the y-o-y number. So in the long run whether it still has a upside room?

Repeat customer, as you know, that’s very important metrics we measure the success of our model. We have continuously improved our repeat customer quarter-over-quarter. And comparing -- look at our position, I think we still have space to improve, but we still need hard work to do that which is our the most important metrics inside the company.

Your next question comes from the line of [Daniel Jacobs with Quora] (ph).

I think my question was mostly answered, but if you can just spend a little bit more time talking about your partnership with the Baidu subsidiary and you how you think that potentially changes your growth profile?

This is Alan. I think as we said, it's a distribution deal with potential. It focuses on overseas customers on mobile app. We will try a number of different things and ways to see which one has most attraction. We think it’s very mutual and beneficial. We think it’s a very good example for our direct partnership with traffic source providers, outside open platforms that we engage in. We think we try looking for -- and their app installment base, it's more than 20 million outside China, which is significant. And there will be -- I think it’s also a good role model that if it works very successful, we would definitely looking for other partners in the future as well. But it’s still very early, so it would be very premature to quantify financial impact at this moment in time. So, and also this is very -- the mobile is one of our most important strategy at the company.

And if you just look out to 2015, I know you commented that your focus is on growth, not profitability. But do you expect either in 2015 or 2016 that you’ll achieve profitability? It looks like you’re still reinvesting pretty heavily in achieving the growth figures you’re achieving.

As I commented just now, the top-line growth is our primary goal and we don’t provide guidance beyond that. But what I can say, we’re committed to lower our cost as much as possible in the consideration of our future growth and the base line setup.

And if I have to add on top of Robin since this question has come up quite a couple of times. If you look at the percentage of loss compared with our total revenue, it’s actually decreasing and it’s actually not a significant percentage. So that means we are not that far off from breakeven or profitability. I think that, number one, that is the direct result of our attractive margin profile to start with. We have more than 37% of gross margin. That was a huge -- that has always being a huge leverage for us to crafting our business plan to become a profitable business. And it’s also direct result of our business model which has very natural scale of economy by definition for both retail business and the more important for Internet business. So, and thirdly, we also have very good unit returns, so our working capital is actually positive while we’re growing outside the operation loss, which is also a very good metric for us. So if you can combine all those things, three things together, we feel very confident about our growth as we’ve given for the Q4 guidance and we also believe that we have a business plan that eventually will lead us to our profitability. But certainly, we feel it’s premature at this moment in time to give a very specific timeline on which quarter it will actually happen. But when we have -- when we feel ready, we will certainly in the future give you guys more colors on that.

Your next question comes from line of Rick Shea with Vardon Capital. And Rick, your line is open, are you there?

Could you give us a little more color on how broad based the apparel growth is? Is this happening in one category? Is it happening across different classifications? Is it regionally concentrated? Just maybe a little more color there.

I think qualitatively, I will say the apparel business, especially the ready-to-wear apparel business is really very significant and fast growing in a very pervasive way in a sense that we’re actually getting attractions from many geographic markets and also from many sub-categories. And also, we have an opportunity to actually have new sub-categories that are still in early stage of development, for example the kids fashion, kids apparel. And we think overall apparel, it’s a gigantic market in both market size and also in the number of sub-categories. So we think that we are still in very early in our -- we are very early in our own growth profile in this category and we are also still very small from the whole market potential perspective as well.

Your next question comes from the line of [Yu Taio] (ph) with [indiscernible] Securities. And Yu, your line is open, are you there?

I have one question. We hear about the Company’s construction of warehouses around the world. Can you introduce the Company plans in this field?

So, the overseas warehouse?

We hear about the Company’s construction of warehouses around the world. Can you introduce the Company’s plans in this field?

Yes. Actually I think you’re talking about overseas fulfillment center. Just now, we just stated, we don't construct these warehouses. We enter into the lease with landlord or we just utilize the asset-light model to do that with the most cost effective way.

Your next question comes from the line of [Yi Zu] (ph) with [indiscernible] Securities. And your line is open, [Yi] (ph). [Yi] (ph), your line is open, are you there? There’s no response from that line. You do have a question from the line of [John Hurrow with Hurrow and Associates] (ph).

I’m wondering about the hiring of the two former executives that used to work with Amazon. Exactly what they did for the Company during their brief stay at LightInTheBox and the real reason for their departure? Could you just touch upon how they helped you and why they may have left so early?

So, just to clarify, one of them still is working in the Company. We previously made an announcement about their departure. Other than that, we don’t think there’s any additional color we want to add. And also it’s been many months since the announcement.

And there are no further question at this time. And Christian, are there any closing remarks?

Yes. This concludes our third quarter 2014 earnings conference call. Thank you for your participation and ongoing support of the LightInTheBox. We look forward to providing you with updates of our business in the coming weeks and months ahead. Thank you very much. Have a good day.

And this does conclude today’s conference. You may now all disconnect.