Vipshop Holdings Limited (VIPS) 19 May 222022 Q1 Earnings call transcript

Ladies and gentlemen, good day, everyone and welcome to Vipshop Holdings Limited First Quarter 2022 Earnings Conference Call. At this time, I would like to turn the call to Ms. Jessie Zheng, Vipshop’s Head of Investor Relations.

Thank you, operator. Hello, everyone, and thank you for joining Vipshop first quarter 2022 earnings conference call. Eric our Co-Founder, CFO. are and and today Cui, David us Shen, Chairman, our CEO; With

will made Before would the XXXX. you today like begins U.S. to forward-looking management their Reform remind that prepared Private Securities the Act provisions Safe Harbor under remarks, Litigation I contain of statements of discussion

not used our Harbor with which Safe the outlined certain are earnings earnings to and ADS this GAAP. our like operating statements to to non-GAAP release our statements in that and and to statements release materially as non-GAAP of income our measures from risks Securities include, call accordance non-GAAP to differ Potential per would uncertainties forward-looking the may risks those that the I Forward-looking net With income uncertainties to note limited our to but refer the are to in Mr. current relating with such U.S. may financial and public be the this in also filings subject results extent any Exchange cause turn now to, income, call made. expectations. Commission, for actual presented call to GAAP net Shen. that, and Please over measures. reconciliations non-GAAP Eric not on are details measures Please applies

discouraged with steepened slower and customer We of merchandising to has a serious and macro remained China Starting for resurgence sales and great the which competitiveness from the on consumption, our joining in This our places, top to consumers pressure lockdowns Despite on track the had XXXX expected further to Welcome or controls conference March the further on spending, strategy our you sentiment. evening, fulfillment already logistics thank in on our disruptions. morning city warehousing efficiency everyone. on our call. good general challenging for items. cases in long-term. especially Good and first quarter quarter environment, tightened been COVID-XX execute and earnings undergoing discretionary of capacity had undermined and delays strengthen many the than due we

delighted profit leverage healthy resilient our disciplined first through that achieved to model margins sustain sales of operations. brand, see to more level merchant platform. are core proven quarter, enabled us improve and a In provide through to continued We to offering support for we upgraded our them the business

also brands, high-value we We platform. in selection Furthermore, enriching our brought on trendy expanded and many our new product customers.

quarter. of XX% year-over-year net Our Active GMV online grew XX% in about and the customer Super by contributed VIP first

With the of COVID-XX We our offerings offset soft a everyday outbreak developing, use. capabilities. range consumer leveraging product demand we categories. in apparel have demand changing in categories, including added products responded the for non-apparel quickly This helped in merchandising part to by

flash-ups, ongoing While for remain COVID-XX platform cautious discount we strategic a amid committed strongly we branded are to as our ahead position products.

go over look the me We results. and Cui, create our who At call our opportunity partners this brand financial let to CFO, for will our value this point, will take consumers. hand exceptional to the over David to

discipline. Thanks, Eric, to initiatives macro to performance cost despite first In our expenses and headwinds, manage top-line quarter, and held thanks our relatively hello, the with soft everyone. well, up due margins greater to

Our gross margin showed a resilience cost-saving after we number of implemented measures.

after products traffic improve low-quality prioritizing margin core brands, and on we the many example, to became effectively profile low-quality we brands. resources to of shifting more able were categories For focused – product while

in became well marketing more Our above X%, spend. efficient non-GAAP margin we net as also stayed

optimize will profitability. we continue ahead, Looking sustainable efficiency and healthy every make operational effort to and deliver to

we This share we demonstrates for in the months. to time of announced this our our to from program shareholder potential On announced $X execute program, share and business may fully we our that the had million buyback over commitment value utilized In billion year, which another March buyback confidence addition, long-term. during the XX year. quarter, period last we $XXX time creating XX a

Now highlights. our moving detailed to quarterly financial

get prior for our changes caused percentage are from networks are first Gross for RMBXX.X all in prior RMBXX.X XX.X% numbers decreased in quarter billion billion consumer with below that to billion from demand a in soft primarily financial and period. compared Before unless was revenues I impact margin compared renminbi, period, noted. attributable year discretionary and year-over-year I clarify presented profit XX.X% the like of as the China. billion to XXXX year-over-year started, increased otherwise net would year period. billion and the on Total Gross changes, in RMBX.X warehouse in with billion period. as categories to XX.X% Total were the worse RMBX.X by prior in expenses resurgence by the RMBX.X prior year to logistics COVID-XX the operating RMBX.X year

compared As a expenses billion XXXX. Fulfillment which X.X% year-over-year operating decreased year RMBX.X from percentage period of billion corresponding flat revenues, stayed as with XX.X%, RMBX.X the the prior total period. to the net expenses total in in by was

total the prudent strategy. Marketing was by decreased XX.X% expenses primarily As year with X.X% year-over-year to prior the prior year marketing net period, revenues attributable RMBX.X to compared fulfillment in million period. a expenses of billion RMBXXX.X as percentage more X.X% from in

to in decreased of period. to and in the prior X.X% percentage Technology period. from revenue, prior million year the net increased expenses content expenses RMBXXX.X year a from RMBXXX.X total As marketing X.X% million

the total million prior period. to net the percentage X.X% as content with X.X% and and prior were from technology of administrative expenses in revenues, year billion period. increased General expenses RMBX.X year RMBXXX.X a in As compared

a attributable Net X.X% Operating with prior as the year administrative operations billion Vipshop’s was shareholders with RMBX.X year RMBX.X in attributable margin attributable the the X.X% X.X% prior as Vipshop’s shareholders period. Vipshop’s compared diluted as was compared income in period. Non-GAAP Non-GAAP billion RMBX.XX was to the the the period. attributable as in billion RMBX.X was to period. with period. compared income with diluted with year RMBX.X X.X% Vipshop’s compared year billion year was RMBX.X the prior compared was in as prior as year as with was revenue, prior to income billion X.X% period. year shareholders compared with period. As the ADS RMBX.X billion expenses, as as in per and operations year income Income compared from the in attributable RMBX.XX was X.X% prior Vipshop’s net RMBX.XX Net RMBX.X margin year shareholders Non-GAAP prior with X.X% Non-GAAP prior compared the net ADS Net margin per shareholders with net billion prior compared in attributable was the period. as in X.X% to income period. year compared period. to from RMBX.XX margin prior Non-GAAP general in to as with was prior net Vipshop’s X.X% of shareholders was operating with RMBX.X in X.X% in year compared billion percentage total period.

the As and of of of March cash short-term company XXXX, restricted equivalents RMBXX.X investments and had and cash RMBX.X billion cash XX, billion.

a RMBXX.X to that approximately the operational subject quarter reflects forecast Please and between to this condition, call note would Q&A. change. Looking is preliminary With market and of forward which second expect to to billion revenue of our to RMBXX.X XXXX, our current view the to I be representing now that that, and open XX%. XX% decrease like rate year-over-year total net the billion, of we

Instructions] Chong question [Operator you. Jefferies. with is Thank first Our from Thomas

is line Your open.

outlook our question the second recovery the evening. the month performance of of about about margin May? in we momentum taking half in impact as about is questions. good as the guidance. first question the my year? management well business And Can comment business should for Hi, the comment Can momentum. second to my pandemic management Thanks second My and expect is quarter far April that so for about the management

control business. look ongoing been uncertainties of our the actually impacted for reflects – outbreak normal and restrictions as weak in quite actually our current the sentiment. as the the significantly the COVID outbreak general our the had has quarter when guidance to Omicron potential The until March Entering well for second business consumer the middle from

logistics Our warehousing faced whole capacity of chain problems. disrupted the or and a lot was and delayed supply

warehouses shipping that our and Entering until handling facing and suppliers continued of now Some and – we were had got we May, pressure. April, also terms a of. into had and down of delayed also closed part been are in restraint logistics actually

today, including till we be cannot X still think have based suppliers regions efficiency. million and I reasons, restricted orders that undermined various fulfillment over because the in of that actually actually delivered

MBS we items, June, not will data places to seen of and come Especially, faced consumer signs discretionary we May like apparel. sentiment, performance actually restrictions clear for very expect COVID will haven’t impact that expect also other seen consumer or we latest also have we and see very And the for a that soon. back. we don’t recovery. disappear confidence Beijing the has controls So point including sluggish And

So feel will momentum generally but as speaking, the expect very significantly we optimistic for it don’t second be well. for don’t we half, worse the

in margin healthy level we confident are On and think maintaining pretty profit a the margins. I of side,

more a and of cost We expenses low maintain a discipline managed ROI in scaled carefully. operations. also challenges of very our our face much a we lot While we and high lot of uncertainties, level We spending. back

profitability pretty confident So year. are sustainable this healthy and we for deliver will we that

Thank you.

is Our from Citigroup. next with question Alicia Yap

open. Your line is

the have non-apparel a my question management. product. evening, Good you. into related questions. to thank Hi, taking expansion Thanks the I for

can the would management strategy terms second remind what can soft any we just inventory consumption this model inventory? do current color lack it is we the And of is elaborate discount, We color level there promotion you a the change a you various some business any is, brand just products of of but so still And is can or Can kind kinds get good? for of is little is so even on lot this of share approach is the apparel business? So demand? us, through – strategic like is? on so leverage shift in can detail though this demand the are any navigate because weak, more question the a or strategic or can bit category? So that for the a some there be the of temporary then apparel

from of from I complement us on which customer to we standardized products XX% focus on company, are and category. a standardized actually still lot and good a first, on we products. the help range as still diverse our Actually, dependent to think apparel season platform. very They a Standardized overall generally cater products. very to Okay, factors. of rest other have needs, XX% apparel can Currently,

products to very products standardized summer carefully. customers For example, standardized in in would summer, a we clothing. buy like approach lot also, to typically addition of And

pricing. We make from we to needs, top a supply from something shopping example, and clothing, For for will a to meet to provide competitive customer unique try shop want they them the they choose have sure very when experience. with brand to with especially have one-stop else we

products. use So to customer our offering, outbreak, on with in we added is products. given are overall This strategy for especially on strategy products including everyday standardized standardized And I our from our to the think this our product is overall line set non-apparel proactively meet needs. COVID-XX

the brand brand continued have But when We through improve hard customer lot brand the the to partners inventory, them Shanghai. faced by a they and they their supply. lot we efficiently. to They a gradually to generally help ARPU. these contribution time, restricted And the think and in will improve But some of a store sell COVID of also of regions, of very lot to platform of disclosures on have hit from pressure, at improve inventories are same speaking, partners [indiscernible]. the our lot very brands and ability the on inventory I a facing overall especially experience quality from based our are also standardized secure products are these overall apparently, including

So this online our positive is business. a to

downturn, I think in although it’s market but the the speaking, not generally is – bad. a that

as we through providing for to them. will valuable inventory, I we sell their think be can a long brand help a As proposition

for margins margin gross mix? standardized trends we Can the I total product How in the given near-term? the the forward think about the or a quick have follow-up going on should

will standard low not the we we product Generally, choose the what very items, carefully products that’s with we For that accept margin. will carry.

So apparel carrying. still that impact the not XX% also, our represents overall, the total And margin is the product of bad. of

the to stability. committed gross are we margin So overall

you. thank Okay,

comes Our Goldman Ronald next question with Keung Sachs. from

is Your line open.

expectations and Any June management. cash rates rates month for April Second is guidance, of us. on My run in on you, on revenue Thank a the of seeing? for stronger flow, expectations you, whether Shen that David. we and on the Thank we’ve assumes better question growth your that some is that June first some and XX seen the that are cancellation May June we’re similar a the of growth reduction some that. quarter assuming and of what second we’ve into seen of free rate

besides any I you. also lodged, any So and Hong Kong to behind? of reasons those, the program policies any want that to the want hear listing? been hear buyback updates on And that for what – Thank we’ve dividend potential any were

Okay.

The second in quarter and run-rate. guidance May actually the the already factored April

not still has going basis. think come of I have COVID-XX we as for yet. it’s had this And continue and sure. May. trend latter coupled with with restrictions consumption downside expect we are and our related back June we the a we in It’s will on saw – going the sentiment controls April momentum half then And down cases, similar observation, from to and be year-over-year down

that’s creating the for this quarter-to-date. reality So,

second reality. our reflection a of is guidance So, just quarter that

the absolutely, it went increasing cancellation year-over-year, In we us. dampened we has a the of of logistics orders cancellation have from e-commerce And significant general the delayed. sector. has been points percentage X actually losses due and very cancellation orders of to to up rate terms customers seen rate, middle to see actually sentiment caused And from actually going has up cancellation the of March,

with expect lifted, over time. think sure the to confirmation restrictions I we rates hope for gradually normalize that we

We like have quarters. for profitable over consequent been – XX

a encountered and time business. softer profit that confident are even we we will to though difficult continue making So, we

in So, expenses. should negative, miscellaneous our we – In operating other the cash mirror profitability. QX, flow payments to lot a because free general, flow and cash our for turned cash made of suppliers

accrued And listing, the should So, our of profitability. the reason flow cash terms Hong run, cash then that and our Kong accounts the main long radar. payable flow. expenses negative is is for in In decrease the the mirror in so in still the

Kong are team Our options. Board we we and plan a And Hong the the and plan. but dividends, pay dividends, execute still The to – listing time we have our are plan program. the management some got still to we currently, the share evaluating out committed to so don’t execute buyback

you. Thank Understood.

next Our Wu with International. Natalie is question Haitong from

Your line is open.

management. Thanks evening for my Good taking question.

shift future. mentioned goods in is my the regarded you mix decided question the the So, Since product have with that product towards shift. mix standardized to upcoming you the

Just wondering, help more expansion. give category because us some about us have categories color standardize you also can exactly ‘XX, are products which you back the you to, referring in XXXX tried and

So, the Thank just if ourselves difference should you. how we differentiate products? with wondering e-commerce other standardized compelled to platforms a we round way general large of standardized Also, shift? if shift from is there product

These In platform, are looking and products, terms we products, of products, actually strategy categories home kitchenware, our all our life and etcetera. are on healthcare the at. items goods, on including are already non-sized standardized standardized beauty products grocery

as make each category, that carefully very offerings product sure on sometimes, see to not the to very unique supply SKUs quality can We in other to be necessarily brands, you have has and reasonable platforms. margin. provide manage want a will as We we pricing as and be very supply top from competitive it the brands. And from very a may gross there many –

Currently, will very carefully. from items. approach standardized standardized we So, we have items XX%

from let’s improved drag an overall are And to, XX% margin basis. the going of actually say, improve on our increase customers. a ARPU not a XX% current contribution Our is gross and to be items gradually on goal the over it to time, standardized

more our time, the experience a we platform. customer balanced will over for we think So, have

you. Thank it. Got

is with Robin question Daiwa. next Leung Our from

open. line Your is

management John questions. Choi. my Thanks is Hi, taking for on asking Robin behalf of this

because slightly gross carry the but change the than This higher. they is our in quarter, SVIPs, the quarter remember it expectation. I margin is higher the mix? Is as lower of category mix this the And margins, also members, the

expected a the better the more gross to margin? on So, is the if any the half? the we half question see gross second to trend the could see going what also, Are SVIP on I user growth management mix. comment second we And the that is this the And impact increase margin? trend than second continues quarter wonder in the in reason

Okay.

So, cost brands of the taken improve on measures we this platforms. our our and the That year, have many carried margin. includes to saving products the selection

For of brands. example, the that we were able prioritize and to margin the some of our improve shifted profile we resources after the selected to many brands categories we non-core core

margin. improve helps our that So,

by we quarters, eventually healthy the still to total and earlier, gross our the to carry then potentially the be bottom remain disciplined to about mix, talked standardized on we And for GMV, apparels healthy of XX% choose right, sure that and we product. we also. representing line will gross make the carefully For we make a supplemented the and category will a margin coming sure our the net standardized continue that And as overall achieve and margin also improve are what could margin. it products, have margin stable

of margin. of In slightly we spent VIP the margin their much of impact because terms since to know time spent a more, so are has can they when gross Super provided then group. the But the overall, contribute matter they much more VIP to ARPU of lot the it’s they Super their the a benefits just frequencies, the higher, lower and and overall gross we positively

we So, the of to of – balance. overall margin. is gross committed a improvement kind then are And in summary, it but the

from acquisition given facing uncertainties are But going time. tight our apparently we much I in marketing will less growth and customer especially favorable we time-to-time, has the spend actually relatively environment. ARPU over many that our been performance on, business of growth terms customer In overall been for a stable given half, second line not and customer our with the evaluate has think our

We So, and just money instead much evaluate will high-quality very want acquiring customer will ROI invest a lifetime focus throwing away, we to value we customers carefully will of ensure they too on low valuable that be don’t platform. to on customers. our to their

customer are growth. customer will to stable the committed we And relatively So, we that believe we base. maintain a for quarters ahead

you. Thank

today’s time Jessie turn At back closing the I any that remarks. for this session. time, concludes to conference to Due question-and-answer constraints, will

you Thank us today. taking time to join for the

next forward We you to any contact have please you to our If or don’t questions with follow-up, look speaking hesitate team. quarter.

This concludes for participating. today’s call. Thank conference you

You disconnect. may now