Vipshop Holdings Limited (VIPS) 23 Feb 232022 Q4 Earnings call transcript

Ladies and gentlemen, everyone, and welcome to the Vipshop Holdings Limited Fourth Quarter and Full Year 2022 Earnings Conference Call.

At this time, I would like to turn the call to Miss Jessie Zheng, Vipshop, Head of Investor Relations. Please proceed.

Thank you, operator. Hello everyone, and thank you for joining Vipshop's fourth quarter and full year 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 of of you today XXXX. like begins the to forward-looking management their Litigation remind that prepared US Private the Reform harbor the safe under remarks, Securities I contain provisions statements Act discussion

those Forward-looking results risks from to materially expectations. Commission, Potential our to and this forward-looking not the to subject include, outlining our made. and risks are quarter with applies the uncertainties and statements extent any earnings to are Securities may harbor differ statements statements that and cause but uncertainties in Exchange may safe release also to filing current which limited our public be

used net the relating income, on refer GAAP, not to GAAP non-GAAP operating to and measures. income measures presented U.S. earnings such per details our financial as in release call, certain to ADS non-GAAP this please reconciliation measures our net of that non-GAAP income non-GAAP are with note accordance Please for

With to call Eric to Mr. turn like that, would over Shen. the I now

economic conference we morning impacted In in earnings evening, the everyone. Welcome earnings our fourth from was by tropic top first and surge activities the Good on power once the quarter, short [ph] quarter again and made of and demonstrated the recovery COVID-XX year and XXXX you first for -- full term The line thank infections. good joining call. strong disruption backdrop.

trends recover The our remained customer up online selection of as active pick actively fared visits, related and spend worked accounting XX% than year-over-year to healthly VIP out better increase merchandising year-over-year. Customer satisfy demand. clearly for GMV customers to by we to super spending. with picking expected XX% down slightly the desire seasonal Apparel continued

while RMBX.X Overall, we income level in extremely billion quality XXXX, development year. cost through navigating at delivering net accomplished challenging

technologies. enhancement incrementally has and merchandising stronger on after pollutions fundamentals been we business serious Our

a of upgrade of and products have hundreds that value of now we reinforced at portfolio our blend brands core offering merchandising, On with proposition the the platform of our business.

end and bring New our high a to lot the platform. more trending integration and plan new size, selections, look a

For grand of higher manage way. categories, has greater positive shop merchandise. and made conventions total customized for of engagement general GMV. with outperformance partners, to deploying sales contributions on are with SVIP year year. in GMV it growth Vipshop channels the repeatedly we momentum Apparel-related shopping than XXXX, with customer launching collection to X.X support grow The That's increasing the how selective the into efficient more line to co-brands enjoyed that full resource members effective million us non-apparel cost last Operationally, a we best build Vipshop customer more base developing to innovative in quality

Technologies our become of in business. more every instrumental aspect

example, fully For absolute upgrade incentives way, brand base to lead. such platform sell a merchant measurable and offering partners the our generations enabled more engage as customers in

for in execution us XXXX, as the ahead strong post-pandemic we look Our confidence opportunity. gives

advantage set to of our inventory. take We plentiful are

they work as effectively professional Our more advantage be the brand to team with continue great buyer partners.

stay, beginning the opening. us items discretionary is opportunities of still this uncertainties and There apparel we we for continue achieve our remain follow shareholders. to profitability the on some other did health China's spending attract new more in since than and see now Though year. we recovery position customs and We delivering in both and close to are value custom to spend. capture believe before did

our Cui, to me over the this hand will David over CFO, At our go results. who point, financial call let

to of keep track, the in Eric our despite quarter, Thanks hello did fourth spike on the China. and everyone. we In infections best COVID-XX the business level

continue We revenues recover. are to our pleased that

business. our demonstrated quarter strong of the resilience and of another strength profitability While

year improved processes. cost ago dedicate control a margin Gross of across to the XX.X% strategy, categories. business Thanks all increased as two and management by well enhance strengthen to actually as from percentage merchandising points

all-time Our an as consistently operating discipline. margin achieved we operational high focus on

a with net net XX% billion helps by the record in margin up years had at X%. non-GAAP As profitability. most to full of RMBX.X the XXXX two income finish profitable result, of quarter That level year at us a off and we

year, programs. cash of our than the more we USDXXX Last free under repurchase of million generated billion buyback ADS in RMBX.X a our flow total

programs. committed are to by our to We the shareholders steadily delivering value executing

returns China's gains. the focus we best quickly, the are synergies for to the following we efficiency will our operation everyday moving time. and where provide on seize while reopening, we the As time, we opportunities At same entered resources post-pandemic but growth, our to over era, the rationally allocating maintain generate

positive are on healthy sustaining regaining profitability. We while momentum growth

Now all moving presented quarterly get detailed financial to clarify highlights, are noted. started, are numbers percentage Renminbi I and the I like to financial in otherwise that year-over-year changes would our unless before below all changes

quarter XXXX COVID-XX nationwide. in billion from RMBXX.X as in billion the primarily billion of billion economic of period, compared prior infections period, fourth RMBXX.X with Total disruptions year to equitable profit RMBX.X X.X% increased short-term by from RMBX.X the net to the surge the were prior revenues Gross on year for activities year-over-year

decreased year from Gross RMBX.X billion in margin billion period. RMBX.X increased prior prior year by the in period. X.X% the year-over-year XX.X% Total the from expenses XX.X% operating to

expenses revenue, a the total with flat was As total operating compared percentage stayed which as period. XX.X%, net year prior of

stayed which year Fulfilment expenses were RMBX.X prior period. flat billion, compared as with largely

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

in revenues, RMBXXX.X and a year-over-year to from marketing prudent prior period. a X.X% prior more decreased to expenses the content year strategy. million period, net in year of X.X% by decreased RMBXXX.X Technology total equitable million X.X% primarily marketing the from As expenses percentage to

a flat content was expenses as revenues, and compared which year total of net prior the percentage As period. X.X%, with technology stayed

year-over-year X.X% billion decreased prior in RMBX.X as to compared year billion expenses RMBX.X administrative by and with General period. the

was revenue, with net in expenses total prior compared X.X% administrative of X.X% period. percentage and year the as general a As

increased Income prior year period. prior period. by XX.X% increased operation as income billion billion Operating to in from period. increased Non-GAAP year from year-over-year by XX.X% RMBX.X their from in billion in from to RMBX.X to the prior margin compared year-over-year X.X% operations X.X% the RMBX.X year billion RMBX.X with

operating prior period. Net by X.X% income Vipshop's in from Non-GAAP year from billion Vipshop's RMBX.X income margin shareholders increased billion increase period. year-over-year year X.X% increased attributable Net in attributable shareholders the to prior RMBX.X year in the from to the the period. margin prior X.X% to to X.X% to XX.X%

shareholders prior year attributable RMBX.XX the period. Vipshop's billion ADS attributable income year-over-year diluted to the net shareholders income per Non-GAAP from Net billion Vipshop's to by RMBX.X prior to XX.X% period. increased RMBX.X increased year in from RMBX.XX in to

Vipshop's buildable shareholders per diluted ADIs increased from at RMBX.XX to period. increased margin in attributable prior prior in net X.X% RMBX.XX year year from X.X% the Non-GAAP period. net to Non-GAAP Vipshop's shareholders to the to income

XX, of December RMBXX.X billion. of XXXX, of term RMBX.X cash billion restricted short As and had we investments cash and and equivalent cash

prior RMBX.X the billion year. RMBXXX.X the I'd the profit year. billion year. year-over-year as in briefly billion billion from net revenues the the prior in Income increased with of our year XX.X% from billion was RMBXXX.X in year. through in prior of Now, compared as full with operations RMBXX.X RMBXX.X walk highlights XX.X% to Gross XX.X% increased Gross for from compared year to full like were by the billion XXXX prior results. Total margin RMBX.X

Net in income Operating operating in billion year. Vipshop's year. increased margin prior income operations Non-GAAP XX.X% prior in the income year. increased RMBX.X margin billion Non-GAAP from RMBX.X prior by to X.X% to year-over-year billion X.X% from year-over-year billion X.X% increased shareholders X.X% increased to XX.X% attributable RMBX.X in from to from RMBX.X year. the the prior to by the from

in increased net to prior to the shareholders to attributable year. year. billion shareholders billion Vipshop's the X.X% income to margin by from ADS RMBX.X Net year-over-year from to from the diluted Vipshop's prior attributable year. Non-GAAP RMBX.XX in XX.X% to Vipshop's increased RMBX.X shareholders prior X.X% income increased Net attributable per in RMBX.XX

shareholders Non-GAAP to diluted to in from attributable attributable the year. X.X% per Vipshop's increased year. increased ADS to from Non-GAAP the prior income RMBXX.XX shareholders to net X.X% Vipshop's prior in RMBX.XX

expect billion, reflects billion conditions, between Looking forward X% market that change. of increase and approximately note of our to subject net first to of and preliminary XXXX, operational RMBXX.X Please which our year-over-year RMBXX.X we current forecast to this a be total X%. the and the representing to is quarter revenues view

With that, I'd now Q&A. like to open the call to

question our [Operator instructions] first Citi. with comes from And Alicia Yap

is open. line Your

Your line is open.

Alicia two of for my Wei behalf management have questions. I This Thanks, Yap, on language] [Foreign and is question. Vicki taking

on First, how step by e-commerce campaigns the Will have to management on landscape? competition recent promotional impact step-up view discount as well? Vipshop peers marketing up any current the

that will for this of you. is XXXX? and question terms second how for impact acquisition is what My new year margins company plans Thank user in channel the

Okay. [indiscernible]

model is question on First buzz e-commerce especially some in the there answer the to shelf industry, e-commerce. your obviously competition, in

remember, have factors launched a standardized on segment. like subject sophisticated sizes remain depends apparel, not of depend focused peers but on items. other that styles, a lot on only does apparel Some pricing, not And is But much campaigns. highly also Vipshop

to SKUs. on even are from trying unique Second we our standardized unique items, secure brands X,XXX with top product supply

possible. looking SKUs many are as as We for not

We to much are SKU. trying a build selective more

in getting we pricing war. involved not a So were

business We are healthier in our trying grow a way. to

by in not of a growth. are customer profitability sacrifice going lot subsidies using for We to exchange

the feel keep on any to grow reinforce largely as better its top customers The live competitive will has the customers, the unique this value customers streaming landscape actually -- discount front. we a moderated. key and proposition the is been has additional perception Vipshop and to Vipshop grow but with retail think mind -- I there, about well. already then for business of pressure have don't will top the key mind naturally in its to On point competition

On your achieve year this customer goal second to quality in question growth user our is strategy, on growth. new

to are we'll quality that this to try during the are ensure proactively to the model different to We at indeed customers. high from acquire ROIs more acquiring to definitely post-pandemic customers. same take channels time, new the evaluate continue stick the we to LTV era But opportunity,

more percentage a will customers year. should -- we for revenue of in at So very on stay as probably last overall, to absolute we marketing a comparable we had little to acquire a level have as but expenses as amount, spend healthy bit

and it continue going year to we'll -- of stick won't continue big our have customer stress terms is for acquisition so practice profitability. to overall our a last to on in this So,

you. Thank

question from next America. of Bank [indiscernible] comes Our with

Your open. line is

on questions. and Sure. two the Good I solid evening, results. have David Jesse, congrats

demand one first apparel whatever overall such products? observed there change, clearing frequency they any or good. Any change trend colors behavior like supplier the or of clearing like, of or like or as demand the regarding any goals clear is Have downgrade, year -- have from The consumption to upgrade, date. the we observe observed pent-up new we like of trends a over plan side, stocks any be side? will brand launching Is we the

platform XQ specific second have bit of mentioned quarter, in little a is grow Is like than in we question key and previously -- this observed we any in change there because in marketplace. revenue our this first of we marketplace? some mix GMV The actually like like have faster the our terms our the plan three

did people recent Okay. question, around. expected the feeling trend posted a moving We with other spending comfortable see than see traveling faster in or Joyce will ground, recovery lot your apparently you And of on consumption apparel and discretionary items. the on more the in pandemic.

rate. do positive growth numbers customer for seen We've they demand have conversion well apparel as strong of categories. as So

the on consumption that's side. So

is there because COVID the On of last lot partners inventory very brand lot actually, down of tough due the year offline to especially supply a out actually it a locked impact. year side plentiful had a there stores

supply we've So, both the and momentum on than a stronger expected. the on side, seen demand side

Yeah.

X.X%. our changes, X%, Your GMV by GMV GMV and narrowed second And down regarding then question down the is by right? revenue -- narrowed revenue actually our

of is post the -- items the So were end year return and the actually reason because the exchange the towards for pandemic up. that and

the is that primary reason for So that.

Thank you.

Our next with [indiscernible] question from UBS. comes

Your line is open.

the I margin my regarding taking questions. side. for management two have questions you Thank

net the is margin. First

net Do we So we much optimize looking the costs? year-on-year that further the expenses XXXX, long-term margin margin net to confident and can on continue expect improve how in our more XXXX can we at room becoming target? and are

should think does And How improve margin the first And on the longer my trends in margin. management further the you. as as well the think second gross XXXX? about term? question is on opportunity about Thank how the to gross quarter we

together. will Yeah, I questions combine two the

might gross margin, over net leverage could room because be over both for stable There objective year. improve room Our a the remain for us is There for a to volume, be net cost. margin to of there. the procurement margin the

our margin, gross the of aim terms is in to So, remain stable.

Thank you.

with Our comes from question Jefferies. Thomas next Chong

line Your is open.

please development, the the XXXX? Thanks months? recent updates some and you on my and you monthly How sentiment what's business management the taking four in trend GMV receive our consumer year for for Could provide outlook question.

outlook and the we've momentum Overall, actually, than in we of the are a year pretty terms people of optimistic growth. lot for coming about back After the of spring terms seen in this we to expected their momentum expect recovery, are spending this expect we stronger a base festival, low a year. into categories to of which stronger continue second and other because -- partially apparel have is and going a quarter, last

remember March chain May, supply and disruption, lockdowns, such as to a Shanghai we you year lot from if of Especially last incident. the had problems

second for COVID cleared the same the the about continue second our the So, year we're outlook. optimistic period growth a -- QX dropdowns of quite the with quarter second half, momentum and last should of away, for and we think into QX thing for and lot half the for

you. Thank

Natalie [ph]. Our next question comes from Wu

line Your open. is

taking My the is for related Thanks with power of question. existing or spending users. question the my AOB

is of operating the wondering that metrics? Just the can reopen, there pandemic, post chance that be regarding any observed kind pandemic

also paying the regarding the customers. And question is active second

first active I'm I the of goals true. if year? this positive active customers the the return is to your that of target goals paying wondering if are they should number that in customer paying just think quarter,

around. become more On are customers around trend, they lifting moving we've than the apparently more of customer COVID or comfortable travelling of because restrictions before and with seen have the becoming active

a stable. growth first So shop quite positive than active quarter. we've that lot saying customer are they order before, going customer in order average size And size, yes, more but we remains are to the the members book seen --

of to continue members the for quality all year, when had customer for quarter it'll on full growth. quarter second which we base we XX% last pretty And are in the the grow because second achieved trend low the customer year And, in the the because COVID the impact. have decline we positive for of we customer had

comes question next Our instructions] from [Operator [indiscernible].

open. is line Your

Okay.

So in top be the the growth that didn't last COVID plus years, much. due may really grow three the to

went a lot. So the margin actually up

is room improve limited So margin, the I the forward. assume to going

become growth under So this conversation, topline the critical.

you. Mr. details share some growth your XXXX? to improve in So the strategy? Shen how about or topline thoughts the Thank What's

Okay.

from because the limited restrained we increase improve side, first and gross the the were very margin Palmers subsidies. past there we in [ph] think a also were year On don't about unnecessary to -- margin we take raise very providing the

for margin gross would would the be So stable future. be remain --

And net we increase there structure cost the and still is gains. us think some room for the margin efficiency improve side, to

but GMV margin course still of most So how customers opportunity most grow net profit to provide important the should to that there us the margin, and improve thing is and for any for the is upside the expansion.

also orders to business So operations. quality of size. and used customers increase super base. through will want conversions our continue management thickness expand customer our innovative repeat and VIPs also order cases, We'll average add our to and quality we through dedicated channels, on We a existing customers improve And improve of from growth improve at to new we focus look customers personalization.

achieve are there we business can are to our a lot pretty So we increase this that ways of growth confident year. business quality And momentum. our to our build

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

today. for join time taking to you Thank the us

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

This conference. you. Thank concludes the

have Everyone, great disconnect. day. now may a You