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TheStreet Open House

Mecox Lane Limited Announces Third Quarter 2010 Results

Operating Expenses

Total operating expenses were $21.1 million in the third quarter of 2010, an increase of 19.8% from $17.6 million in the third quarter of 2009.

Selling, general and administrative expenses were $20.1 million in the third quarter of 2010, an increase of 20.4% from $16.7 million in the third quarter of 2009. The increase was primarily due to an 11.6% increase in marketing and advertising expenses, and a 40.2% increase in compensation and benefit expenses.

Depreciation and amortization expenses were $1.1 million in the third quarter of 2010, an increase of 5.1% from $1.0 million in the third quarter of 2009.

Income from Operations and Operating Margin

Income from operations was $0.9 million in the third quarter of 2010, an increase of 410.2% from $0.2 million in the third quarter of 2009. Operating margin was 1.7% in the third quarter of 2010, compared to 0.4% in the third quarter of 2009.

Net Income and Earnings per ADS

Net income was $0.8 million in the third quarter of 2010, an increase of 246.4% from $0.2 million in the third quarter of 2009. Non-GAAP net income was $1.6 million in the third quarter of 2010, an increase of 59.5% from $1.0 million in the third quarter of 2009. Diluted earnings per American depositary share ("ADS") attributable to Mecox Lane shareholders was $0.013 in the third quarter of 2010. One ADS represents seven ordinary shares.

Cash

As of September 30, 2010, Mecox Lane had cash and cash equivalents totaling $21.9 million, compared to $18.8 million as of December 31, 2009.

Financial Outlook

The Company estimates for the fourth quarter of 2010, net revenues for the online platform segment to be in the range of $43.7 million to $46.2 million; net revenues for the directly operated stores segment to be in the range of $7.8 million to $8.2 million; and net revenues for the franchised stores segment to be in the range of $5.7 million to $6.0 million. This is the Company's preliminary view and is subject to change.

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