Vipshop Holdings Limited (VIPS) 19 Aug 222022 Q2 Earnings call transcript

Ladies and gentlemen, good day, everyone, and welcome to Vipshop Holdings Limited Second 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. Please proceed.

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

we of harbor provisions that the remind U.S. contain like Litigation I of statements discussion Reform Securities Act forward-looking safe today will Before you under made Private begin, XXXX. would the to

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

our Good morning, and XXXX quarter second joining conference thank everyone. earnings Welcome, for good evening, you call. and

the by picked expected logistics quarter Our and under macro quarter recovered Supply with effectively second also pandemic up driven towards largely improving COVID-XX control. the efficiency segment came than better of and the in conditions gradually. end the results consumer chain

thanks Notably, still of we company recovery loyalty. sales the greater was our especially disciplining value strong job This good resilience performance consumption of in resilient are that result pressure, strong supporting improved uncertainties. consumers. increased bottom sector our address operations. and helped Our doing brand line flexibility were our business June. customer year-over-year. the more the the margins into in to the and has external Even top as demonstrates well a to of improved Core to a and trends by This month-on-month though execution under line entire as model pure are partnerships brand translated

During brands to in sales outperform the quarter, Core continued momentum.

team more and use to buyers uncertain with an environment ever closely worked partners. helped new quality competitive products planning more from their category Our them support customer pleased than extensive and platform our brand through marketing to supply campaigns. of engagement, manage with to business. to features We was navigate Partners we at price. turn, Brand grow with unique secured merchant In engage

by load our we in consistently quarter, and of and brand VIP In customers outside stable Luxury members. we new Accordingly, XX% Super growth refreshing field both targeting trendy more new different new out segments. net VIP GMV. with repeat year-over-year brands new again Pink of of cautious categories They support VIP such customers. channels brand to customer these several high-value while have we addition, their as Little second creating groups. grew and more contributed successfully apparel We added In the value been superior paid online the non-apparel and a customer into purchase our amid of Box, high-end mix. Trends Active showed XX% and turned few once shopping

the in recovery are for dependent we highly strategically discount on long development, term. future macro retail the the With anchored

at especially more selection are for great brands, that consumers become today. value, they great rational We as spending desire convinced in great always

go to this our over David serve partners call who best me will and Cui, to business We our CFO, adapting proposition, At brand continue customers. results. the hand value our to let will needed point, enhance over our our financial as

everyone. hello, and Eric, Thanks,

we on quarter, beat decent second our profitability delivered the performance top prior During line guidance. that solid

from to brands and apparel year many focus nonapparel margins structure margin initiative been managed the and well, working as in XX.X% to increased categories we category to streamline our gross and Our identified has cost gross ago. on opportunities This both a XX.X% to core was achieved improve effectively.

made efforts also to customers. spending Notably, drive more to operational see to We efficiency. less, and some became rational marketing as in retaining we leverage from less as continue we acquiring

to X.X X.X%. a and As income net expanded by RMB our margin year-over-year to net billion, result, increased non-GAAP non-GAAP X.X%

USD Additionally, program X our buyback in announced we billion share remain committed March. to

$XXX.X our during ADS second repurchased of have million We the quarter.

our our and near-term operate environment. continues Looking business ahead, in looking financial more strategy we'll merchandising healthy our ways Maintaining sustainable at an priority, focused efficiently. to profitability and be remain on to uncertain

Now our highlights. financial detailed to quarterly moving

would X.X I amid RMB financial in year to prior for categories as period, XX.X period. RMB the X.X COVID-XX period. prior billion all the in the soft decreased to in second compared numbers changes a started, primarily the quarter discretionary billion with are as billion profit China. was and in Gross year period. presented Total demand changes all RMB revenues operating are that prior in noted. year below get with expenses I margin year-over-year by increased the XX.X% Gross XXXX otherwise with billion from consumer Before year like XX.X% macro for XX.X% billion changing RMB percentage the clarify resurgence from prior to RMB Total X.X attributable environment year-over-year in unless XX.X compared X.X were to billion RMB renminbi, net of

X.X year-over-year net billion X.X by expenses XX.X% revenues, to As expenses prior a from to RMB total of XX.X% decreased the year year RMB period. prior in total in from the decreased percentage Fulfillment billion operating XX.X% period.

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

XXX.X prior from year X.X% XXX.X RMB Technology period. content year-over-year by the in period. the million percentage net expenses to in prior to As of X.X% total a marketing increased decreased expenses revenues, and year million RMB from XX.X%

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

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

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

of first Jefferies. [Operator question Instructions] line the Thomas comes from Chong Our

my set that competitive a threat think are exceeding the right expectations. given now, very with the half, second well about of recovery in we and bottom should results, And streaming, momentum how August? on about and we relating July live When top the is question we the solid second to think shopping half facing second the headwinds as video Congratulations outlook, from macro and as site? we should form come online How competition. into short market line global

[Foreign Language]

and But first year-over-year whole having sector e-commerce so been also August. question. the trend May, into to very hit by been seen to -- seen the we your improving turning Understandably, June and March July have from have hard Okay, has the is COVID-XX. we

year. show better as We the on the expected very is have we weather some for continued focused, we It's regarding there and the -- weather especially still -- dependent some very the than other month to may still spending in the seen industry on is that are a backdrop But August, month conditions, as especially we conditions. And as is new delay had July momentum. also flareups, whole the macro are recovery. about with well and sensitive apparel COVID what dependable, comparable auto on that are uncertainty the in last e-commerce for promotion slight And winter hand, demand weather macro unfavorable closing. the cautious momentum and developments may sales consumers highly Actually, and recovery to June continued. the to not

still is some there uncertainty So ahead.

streaming which difficult -- categories, are levering better and very there live all competitive But the absorb share. big in we are streaming second streaming Turning they been sophisticated in the segment market is no question performing fine, is from change for they has in There competition on Live more to years live which apparel landscape, much and X off. doing is categories. streaming. over your specialized for live we to and competition apparel platforms items, especially standardized actually still are than a think

data has streaming the of their traffic we We and been stable. relatively momentum platforms, live and the think have been monitoring business

from take question Credit next Xu Ashley We of the will Suisse. now

want question cold to My key growth? growth during question merchandising. that behavior strategy, strategy. driver been quite of the second weather So and has our what's the just recent first seen is our on [Foreign Language] the even consumer check both also to in my the about SVIP related is impact COVID And the emergence? Have good

[Foreign Language]

Okay.

And related the customers on quarters. focusing in and have quarters. we been this to online around for several SVIP GMV, expect growing XX% contribution to coming On our we the first net question they our now contributed SVIP, be higher of

offer membership a to to SVIPs. into of customers them have high-value SVIP We privileges the number to incentivize

membership VIP have Super XXth Super the we X% we stores. example, of on extra benefits, every day have For and month sales VIP also

different sellers, Now a increasingly them, on brands offering are categories on constantly they that and really they focus out a we them values on our so creating platform. best experiences shopping seeking feel can basis for time-limited

variety a have also customers of cross-platform we incentivize programs So SVIPs. more to into high-value

pretty be growing So ARPU that their confident customer base going are forward. in and will we terms and contribution SVIPs GMV of

On brand partners winter for response the merchandising lot actually, -- second question extremely related weather to time recent of to autumn the have and a in our plenty conditions, of clothing. our we strategy from

should don't For been availability to we if supply August, to problem brand seasons. with the enough. we're because our have for from we with campaign We is product as apparel the example, of highly them weather end coming have the how engaged by conditions for the our of launch going partners prepare favorable autumn a

for to before case we expect. have SKUs stock winter as example, working weather as possible For brands down the been many in gets jacket with just we colder clothing

don't brand a how So work have We inventory of time best our that's the for from with brand we problem the partners. our partners.

Next of from come from Alicia will line the Citi. Yap question

on have results. X [Foreign questions. strong Language] Congrats the I

bit and XQ question a also first second on one your considering bid August. have you been for what conservative margin. then seeing like it like second trends it quarter. your seems in And is The seems also, guidance July you've is And improving is

improve to for actually the margin Are lot. will new room base any quarter future quite level This the the there actually XQ or quarters? set as a improved further

Language] [Foreign

QX it takes Our XX% XX%, a of into number guidance of account negative factors. to actually,

us forth the are lastly, recover. and -- weather whether quite time For conditions And it's example, the also, it back we campaign the autumn in be to to consumer confidence cold takes COVID-XX we some autumn clothing. gradually cases. going for expect there will sure not to And launch be for marketing about July, for enough in marketing

achieve better line performance. our be will So a conservative, we'd but little bit we best try the top to

that will I'll very add of customers continue and second sustainable in to points growth long is goal for the and -- and good can profitability. a as spend by But into scale start we a profitability and bring later. have the details I'll the to positive good still David marketing a some did we'll expenses. been opportunities that some customers. back our rational. healthy quarter for cost start and back the time, We'll margins, whenever our few needed, But the very coming are On turned with our At quarters, we confident term, trajectory. to expenses We maintain same can at we we'll be because to take managing trying we acquire quite

to stability. David? have record financial We a proven provide track

in second have improvement while our half our growth, means could profitability really the new in we first will acquire into a that scale. our we and the our we Yes, on in And initiative. we marketing half that balance maintain and improving to for have our potentially the opportunities disciplined operational focusing And is to disciplined quality customers. spending. business be been we expenditures, looking to we but have to the increase operational efficiencies, been of And very year, efficiencies. the still goal of this have That

So net half. second all profitability, this, having that our the are we confident stable remain will least at said our for margin

of next TH of line Our comes Hou from Tian question the Capital.

So Language] we related buildup the overseas saw declined. orders the also inventory also in [Foreign China, to and

help us. like those In the manufacturing get at and So rid a for good it opportunity to is is good to build the to past, it, seems really inventory numbers manufacturing are up. going the of VIP inventory

some work opportunity we So like such to is give us before? I Mr. Vipshop to like half. did to second the would have How Shen color capture in the going

[Foreign Language]

Okay.

Let me few my a here. share of observations

the with the not also environment, productions on So rely of because some recent are a quite few export we today. kicked that's there domestic in of off things seen about lot some to primary second, on imports, And months. brands. brands first, But work international we've they the and inventory, relevant the inventory and a

But some First, better because definitely are Inventory months of are struggling. have been getting past lot many in lot of since may building have a up. brands And things productions. back of of offline there the of COVID-XX, some are their is -- second, scaled of back their scaled a stores there lockdowns the now. the --

terms to of orders. starting pick are they So up momentum in placing

channel the I speaking, excess has last addition supply -- benefit should we actually a of the because quality should from think our inventory the which Made-for-VIP have is quite potentially generally have securing and unique brand for a the cycle -- do we to actually seen and the we favorable year. which So partners, stable, line, also we level supply, see amount is And us. in remember, inventories long-term for from we nowadays exceeded is and shop

the brand best partners think to secure have a we ability we from the So supply and don't we inventory, problem have the with our

comes question Hangen Wang of next from Stanley. Eddy Our

first your related second growth. again revenue positive growth quarters? expect the revenue is territory? to the growth driven question be mainly that The territory we that to When into will turning Language] will is should it question our growth by turn the revenue in the [Foreign for positive user My following

Language] [Foreign

cannot in the trying would our it's starting to our around coming growth decline growth in our driven factor customer the I we've goal by impact shopping the because and seen move think So because that as freely fewer seen on -- whether Yes, in people quarter, related customers COVID now of GMV, we've second third growth of before. the try our is be as to the platform a the from to our mostly quarter the revenue drastic question positive bring customers customers quarters. to

the positive on starting example, may entering why base. from basis, on the our That's last additional we customers third And into pressure XX there bring this second it But a year, For growth will so were we it's shopping was customer yea, to quarter, our this needed as rolling to people XXX in people. because spend platform. quarter, quarter. face on

We'll now from question next take of Wei Xiong the is UBS.

X And I Language] questions. have follow-up [Foreign

user positive just to First want is about returning the the territory we growth third we starting talked quarter. to from see

ask to acquisition very expense given the based year-end what's strong on result fourth more user base third strategy, the goal. and the see see macro in my this a plan the marketing to in year? we And uncertainty, a quarter bigger the want as second given promotion marketing low has last question well as chance rebound Just that our strategy guidance around conservatism built is quarter do

Language] [Foreign

terms trying stopped several new geographies. spending our customers we quarters, are in quarter less increase in the we more customer In because acquiring acquisition have from COVID or of acquisition certain because customer the of in new the restrictions, strategy, third to past

Now investing we are in trying our to restart this regions.

new App the past to pre-installation shop continues first used the and to strategy trying back with be old put who year marketing Our us targeted customers. the customers the same we're Store to time, in At for quarter. or in

trying us customers this by customers the were able are XX% shop of group marketing. reactivate bring to who back target because of various trying And leveraging we of to restrictions. COVID to We with are the

quarters, are actually, we terms quarter growth in, of the customer bring as as we of -- bring confident that -- can optimize Second, -- actually among the we our our third the the -- our take we downturns fourth condition economic to mind the performance quite share are opportunities in customers. in of in into we that's the have customers our and our And because portfolio outlook, for be to increase customer in in retail discount terms season been to under for merchandising trajectory turn the as terms if several upside we long some peak see the QX the to new because are able going going past quarter in us.

some in well. are see goes the pretty we'll everything fourth So upside confident we on quarter if

I'll just something Yes, add here.

when the this our profitability. We'll So these we quarter third we're be careful sacrifice the and in initiatives when all after, quarter will not program. marketing launch really implementing we

past try all is We ensure in ROI did to programs a what will we better as to much the on good. the job those do to compared and

We from Andre line the from question of have JPMorgan. our next Chang

my Language] So [Foreign me X translate let questions.

and impact margin seasonal question is the mix. the gross The the about first on product

So quarter the gross which this higher the margin. question But for the season second decline to peak invest is is environment? about in is also, driver? to year, historically, doubling be And What's apparel gross in And of pace any to the will seasonal than that at seems be the margin quarter. third sales, macro current milder we CapEx, usual? mix? still second lead this the the mean Second going which quarter there the change does into are

[Foreign Language]

Okay.

gross to promotion in seasonality second quarter, margin, not the that apparel the we gross And there are the margin In margin does third On rather our sales be demand think and because -- much. because actually lower was of weak. the quarter, apparel so impact much. gross tends not

many taken our cost stabilize margin. try and to year improve just to to try gross we actually sell many have may saving initiatives So we that and less this want apparel. I promotions, share to

For example, stopped delivering of our cost at we have own the coupons benefits.

partners at that engage time. to giving to customers. prudent brand to coupons We're trying to trying in some be are do additional We

lot ceiling that optimize not a structure, Second, gross of we initiatives economical, so taken process And to is part well. of try lot measures we be that lastly, our to those -- related cost-saving in to done which the of proves to have have a the channels, as margin. cost stopped investing

handle to trying benefits. returns sacrificing customer are without our way better we example, in a For

that initiatives will we So confident stable maintain going effective, to we these very proved are be and a relatively gross margin are quite forward.

expenditure the quarter is The CapEx Shenzhen capital in in largely for the outlet.

amount less So are in line the and that a appears outlet. we CapEx if land necessarily for lot be rights the new year, a the cash of in not payments Shenzhen be we upfront, quite the lot comparable. with will more, outflow or year-over-year, is particular comparable. use year, should over outlets look This the X of should quarter, but it the add maybe the times this the opening quite But for the

comes question Natalie from Haitong next Our International. of Wu

me [Foreign translate Language] I myself X. and have briefly, Let

is power. to the translates the active if how million refers -- positive. turning the a this mentioned And one third user which kept margin customer the also quarter. marketing growth If to regarding that million million just profile addition does user if growth expenses, users. as first align number of previously. regarding the the just The is yes, in wondering actually with additional I to wanted of to previously we sales margin clarify year-on-year stable the translate mentioned cost active terms the the just to in XXX XXX second RMB And of constant, RMB the one, that X.X bargain

the So the that stock, inventory help current more just just situation, suppliers during and been favorable curious witnessing given a power your get wondering, affected for issue has bargain intensified offer? enhance an COVID does from that

[Foreign Language]

Okay.

active the on -- But it's million RMB have It old that may acquisition It's single a XXX not customers, a XXX per customer customers especially mean we doesn't acquiring in little million lower spend quarter we X reacting to more RMB RMB customer. much have doesn't every mass. -- customers, to cost, quarter, the spend is adding will past new on to XXX that expensive. the bit customers. than not First,

ensure better as going growth. period customer our we recommendation you year. our great of And positive of marketing are that have to goal is and a can the as to So and of selections have higher much. great same revenue what We of seen we going as leverage prices to achieve a spend than spend to not personalized for we great last percentage that combination be well don't total brands,

grow power. securing don't products, still inventory may can't are of range. to we work to brands, partners and want inventory, now. to core we we the will and normal bargaining them we mentioned sure support rate of because of we can still the the faster -- on best increase unique much consumer make on now have it buying we brands, because discount supply have product platform. the kind We -- the core a on I've really platform just of we to we supply our of actually, to on that plenty for out stronger and little and is with If to afford a on Second, model. keep any deliver value quality brand very closely a a probably most the within have decrease offerings help it's higher brands increase as can And are certain probably percentage our from take Vipshop mind consignment supplies, they take for have model quality But consignment as share our bit the the with customers and

that's and So our win-win situation We suppliers. brand work we how both with parties. create can for support them a

the back small, the of A portion addition customer those first would the add your clarity large calling registered acquisition. customer Yes, is relatively for regarding question come just active customers. people call I the of from cost back The yes. to calling should to registered, existing

management. question-and-answer will turn I session. constraint, At the back you to concludes Jessie closing Ms. our Zheng today's to remarks. Thank conference this time, that time the Due for

join today. the taking time us for to you Thank

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