Vipshop Holdings Limited (VIPS) 22 Nov 222022 Q3 Earnings call transcript

Ladies and gentlemen, good day, everyone, and welcome to Vipshop Holdings Limited Third 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. you Vipshop’s thank earnings quarter and call. conference everyone, for third joining XXXX Hello, are our Eric CEO; today us With Shen, Cui, CFO. and Co-Founder, our David and Chairman

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

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

on joining earnings in our XXXX executed our Good morning, growth quarter for decline as of and delivered good net revenue model. quarter, business the we third you Welcome evening, conference thank on call. everyone. proven earnings third and carefully We strong

achieved orders trends but profit month, overall growth well. meaningful and month the expansion quarter, further hold operations, macro the margin and and During frequencies purchase by on we uncertainties of weighed optimization improved and year-over-year. Through up XX% top recovery, line customer pandemic repeat

long to strength external run. also our platform to quickly pushed the the reinforce changes, for of with initiatives As to we we moved adapt ahead

Let me in the share our quarter. business progress third some of

partners First, deep capture platform the we expanded to We fashion product capabilities. high-quality outdoor our quarter. dived to outfit, and our positive related the [indiscernible] our GMV [ph] We diverse and high-end spending as in different on into et emerging enhance up ramped continued people and segments. especially to growth Chinese merchandising trendy and attracted year-over-year categories more sites, cetera. the athleisure or trend Apparel customer booked during offering,

customized had most many level achieve also line We more partners better offerings, products closely brands important to worked on or Made-for-Vipshop of than become the brands the conventions with And categories. efficiency. sales for an certain key average the which greater of

gained we Second, customer traction. better

to prudently paid appealed channels, continue of the membership’s as leveraged addition, investing And grew brands in are selection values. retain Active Super XX% nicely and net our privileges. value contributed members to Increasing male by to proportions Z grow upgraded sensible customers year-over-year their customers acquire increasingly and who more high of XX% we reflect customers customers In and Gen GMV. online enjoy are external product that customers. more VIP

efforts unlock customer identify to brand partners for capabilities business platform, review hard great like digitalize throughout worked better tools further for Third, and technological merchant system our We adding we opportunities to membership made growth. to processes. our

into discovering in basic improvements to continuously made selections customers also desired for needs. search, their their We personalization, underlying seeing and typing refining recommendations speed, while

based consistently even value business has love been on holds premise money, customers our that the which today. ahead, Looking more-true for

And ones. branded We and continue quality win the wide new the to and we products. area existing loyalty offering of values are customer exceptional trust on elevate will to committed the of

go the quality to for will over results. over point, our CFO, Cui, in the and confident long-term. sustainable this in David are call hand who growths At let our We prospection financial our me

everyone. hello, and Thanks, Eric,

quarter, third revenues line the our in our guidance. prior with came During

XX% operations. XX.X%. While X.X execution proactively with recovery strong demonstrated trends, operations, different stood effort above upward and gradual XXXX. the our their negative our X% on we categories structure in non-GAAP the billion, spending across We margin optimizing minimize again, channels. in with which on business increased was net disciplined a the we profitability Gross strong And pressure, launching continued consumption categories. best promotional from net to margins levels apparel-related income trended a seasonal once still in supplies since line hitting under or beginning cost and of to across to by the managed the see did pandemic RMB included impact we overall recovery. margins as remain resurgence preemptively to Non-GAAP securing Thanks top

value In addition, continued buyback executing steadily preserve by shareholder program. share to our we

third our operational reinforce ongoing we work as uncertainties repurchased our well which the will to approximately During focused the as $XXX.X we to us ADS. help every we’ll We to Near to drive efficiency. of business we remain and aspect enough track. on are eventually financially term, quarter, strong navigate million fundamentals, return from profitability growth believe

highlights. our moving quarterly Now detailed to financial

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

RMB as year the X.X of from billion, were flat with percentage expenses total XX.X% which operating expenses in to largely period. a net revenues, year period. stayed prior prior decreased Fulfillment As the total XX.X% compared

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

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

content increased year-over-year billion prior year X.X% RMB As prior in of by a X.X% technology X.X to from the billion total period. and revenues, year administrative net from General expenses and X.X% the expenses increased X.X percentage in RMB period. to

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

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

question you. comes First the Thank from Instructions] [Operator Chong Thomas of Jefferies. from line

consumer Thanks question about sentiment given headwinds. macro my question. for is as as of the the the outbreak well pandemic Language] [Foreign management taking My

some the management wanted from as XXXX. Just Thank months color as in get well recent in trend to you. ok about

[Foreign Language]

the our been by towards to sidelines. on our has month or So, having business seen trend actually we some been has consumers the pandemic the month and on moving months, affected are bright flattish challenges have the still has even being and in by growth. obviously staying recent been But improving --close customer side,

track of actually we the are So, terms customer numbers. in on right

So, we stay stable. expect coming the GMV in should relatively months,

optimistic will the are we GMV with customer customers, year. focus we growth customer for our as platform. pandemic as pretty growth For right over on still we year, away about challenges and time, the the next have And long going next

the next Sachs. We’ll from ahead. Keung by. Please Please from Ronald now question. go stand of Goldman our is take This line

Thank you, Language] [Foreign management.

how sequential more? demand, Second seen And revenue year-on-year inventory this sequential or our the guidance, Thank XX% First we about cost margin fell improvement? bit improvement supply we’ve Day outlook the has a how to high. that Want third. some driven within for a your in start driving that demand year? net seen And hear next that event, has should quarter next fourth you. is have reached business we normal margin new new year question our actually has will spend a done think is and the on year-on-year. that into that, Singles’ Is the we around November is driven marketing implies some to versus decline

[Foreign Language]

Eric’s translate So, first let me comments.

have we QX, in especially revenues our or office fact in a by from and disrupted digit are restricted to For more pandemic, single home. further the despite the narrow have have that areas work been been we Guangzhou located and less expect to headquarters decline, we actually, to

facing the have millions several pending So, and we parcels -- logistics of on we still also uncertainties. side, delivery. are lot of But a

navigate normal this that will and these we So, that’s business. growth. through uncertainties quite going achieve definitely impact business confident to But, our we are

been On of and various we savings cost terms the profitability we areas have initiatives. spending rational our efforts demonstrate have and going in profitability strong -- in side, to

example, For been investing as channels customer to very acquisition. prudently have we external in

new customers, and on platform of kind to quite We’re based right to in customers LTV we are new focused model. the our still trying attract the acquiring proactive on

away to freely. very going spending not are We

not our cost us on lot And from still we some the our We the in So, partners are throughout that’s side, coupons. lot cost work costs. to a cost delivering have have rather quite every potential lastly, a streamlining aspect. structure. helped blindly share with a structure We’d achieve And be away coupons. lot sending of to save of processes. And to and optimize customer prudent acquisition been manage cost other business we did brand savings of of we

and not are It’s profitability. we time is So, solid of manage seen confident we have to thing. a profitability X that kind

going profitability. We’re achieve to sustainable

operational margin, our our as margin but to the we Eric, like. our and our profit your carry particular our profit is the and of two would a is in rebates better efficiencies savings One coming we just result regarding improvement questions expense partially marketing attention I answered selections pay also ratio. coming gross and and expenses, of from add products our marketing our and that the that of from more like our in not margin margin inventories points. to the improvements

that’s So, point. one

VIP The in other our results we portfolio on do Super better that our customer focus us. that, for much grow is and point more efforts

quarter VIP Super So, this our number in year-over-year. of grew significantly

is the from from Yap of from Alicia line This Citi.

from ARPU Good of quarter provide on Thanks is latest on latest for Language] management. and is, should competition Wei management is, return [Foreign attitude provide on level think fourth level? the my some evening, impact disruption logistic as Alicia question And and Vicky would how questions. details trend? would question This some the inventory Yap. color behalf taking first of My second brands’ rate well trend? as we the management My

Language] [Foreign

million on delivery. first roughly pending side, X So, have currently logistic the we orders

are in are orders Some to X going [indiscernible] over And especially of the million the actually actually three orders months. for waiting our Xinjiang, million, staying which delivered. locked of been has be or X.X down warehouses the to actually

time. really has it’s the extended So, and Guangdong. like Sichuan, tough a to Recently delay places Wuhan

rates. return see some we with cancellation X -- But is portion the So, of in total a expect pick our to delay up orders. still million the or just is manageable

returning thing challenges and are quarters. I going the the brand stores some -- of certain pace, is that And So, fulfillment needs. the that delivery can time, it’s quite and a with have resurgence fourth competition make COVID meet to them our we with manage struggling, expect on And the think for still normal the choose with especially -- from. hope we customer partners but, efficiencies lot they have one hard away over inventory to we channels we pandemic side, very and think and And offline to third to -- latest clear money. in to

of are know, And partners, proposition of with us partners channels we we which channels, in and we retail have discounts. manage these live supply of their secure strong and to other the their a deep think we -- discount streaming, inventory. a I go we including -- and brand including think online should the one -- to to clear value lot

And of the then well and some on offerings actually -- for transfer and selling of suppliers them customized to many the our actually and of channels Vipshop. platform, some are other not

partners branded from as our So, strong growing -- a we growing kinds And very-strong customers and long and our value to value lot capabilities more out are we brand needs the share discounts, care have inventories we from and there secure think quality can maintain secure have inventory products who And with deep competence offerings. of to all proposition we of are there. confident product of meet supplies for their we in we as we money that the we will platform. can merchandising

stand question. line is from you. This Morgan. Andre ahead. go Thank from Chang We’ll Please the the next take Please now by. JP of

We question the gross the of you, that margin is -- upside Language] margin efficiency our for ago. over noticed five strategy past improve the significant company the years future question. still achieved years, management, margin. against has my helped gross gap My company back product [Foreign but is there Thank taking two about gross to a the probably

strategy margin So, we here? a relatively I wonder the that sees management the room still benefits improved things, to term current or the level the through see being good toward historical whether the stable other margin released gross and near be or should

Language] [Foreign

net always solid achieving should mind On that bear margin, profit one GP you margin. Okay. thing in we on focus and sustainable

is GP Turning the actually margin, one customer savings of biggest coupons. the cost rebates from factors to the or

this We we are not -- are currently quite on side. prudent

GP -- this example, XX% rebate month, margin, of that lot a XX%. For our and coupons, to if go down we investing we could probably of achieved or

So, that’s one savings. biggest the of

that with rate, on rate said they not take the from we going increase we’re for Second, business. many struggling partners are times take have their because brand to

have at should have years seen go current for line QX, level, still operating So, But further that gross our not five QX the largely net the optimization level the lot we profit that on stable. remain remain other means XXXX stable G&A leverage something. procurement, of of certain and gross and XX%. margin level grow still to customer This ago, to margin, of achieve will potential It should expenses. the acquisition through a the say for on We at back operations. That’s can the we margin.

margin, net grow. So, for still to room profit we have the

Stanley. Morgan Please from Wang Eddy of line the from is This go ahead.

you look GMV but other the year-over-year Thank for user per this noticed GMV per question stable. question. behavior hand, per actually sales my per customer about in the sales taking quite if order net on at customer, My actually Language] order We [Foreign net the change. and quarter, we that is declined

impact, of that GMV have of your because what’s in decline? the we COVID trend which So -- you. metric? actually not the sure is Thank thought the it about because is generally has or resulted increased, this this this And further

[Foreign Language]

well apparel Actually year-over-year order did we normally per higher for growth. categories. And is -- the revenue return per rejection at from categories, higher rates. QX which positive between Actually and growth to difference apparel quite carry categories contribution relatively booked X.X% GMV attributable apparel order primarily in

a is see It GMV It has income reflected look totally -- very why consistently would quarter. if has statement. per the ARPU the had stable. that’s the quite other David? during that returns and in you the you order, on So at thing are manageable. exchanges But on that’s declined level. And profit little impact been profit, our bit the

Yes.

I key think, Eric the on question. this answered points

It higher And that worsen categories part. in drop that the less on on the the ARPU. Just clothes consumers’ we and did remain relatively We have because stable purely of as because clarify will apparels pretty future is out, standardized is because the pointed And demand the ARPU of is of reason that And the summer return other believe that and shoes to that well not the in item. revenue The will actually the increased. rates mix. and spend also return softer not season. rates. that you situation people and apparel,

the is for that. another So, Thank And soft. consumption that reason contributed you.

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

taking time for you today. join us the Thank to

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

disconnect. does participating. the Thank for This And you conference today. you conclude you. may Thank for now