Vipshop Holdings Limited (VIPS) 23 May 232023 Q1 Earnings call transcript

Ladies and gentlemen, good day, everyone, and welcome to Vipshop Holdings Limited First Quarter 2023 Earnings Conference Call. At this time, I would like to turn the call over to Ms. Jessie Zheng, Vipshop Head of Investor Relations. Please proceed.

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

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

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

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

start XXXX. XXXX first Good call. morning in and good We a evening, thank you earnings conference quarter strong off everyone. joining our and for Welcome were to

and to capture execution even through the opportunities stay with customers business micro combined leadership, strategy partners us consumption the relentless post-pandemic the to on steadily merchandising navigate brand and closer recovery. in and Our and focus fundamentals allowing long-term agility, challenges,

year-over-year. categories, in good saw GMV a we quarter, first double-digit momentum which apparel-related booked the During growth

The Paid shopping year-over-year branded regained merchandise members strong. with keep great Super Customer purchases. along of online holiday with Our the stronger. a more XX% seasonal and spending it in active nicely our about even to first average abundance trends represented the will grew in remained also membership and rebound growth We VIP growth customer ended number activities. who customers appetite for social on frequent growth and value the quarter device XX% spending. has of the proven a

strong trending. continue measures was place, efforts us. leading differentiation sense brands for into On of value affordable are living great needs but the and co-brands, to attract merchandise of are efficiency our more engagement number Profitability on top customers focus strategic on capabilities at and offerings. new merchandise true holistic continue that we fresh about a to we double-down a service to as with industry and related we execution in time offer more exceptionally building customer all the great and expansion, of excellence On as long-term we expand our that merchandising, differentiates things premium to and high-quality more

We product for continue to VIP portfolio within the Made optimize the apparel line.

brand on We and to fill gap our will can guideline that categories the platform. products high-quality a certain in general develop the price customize for in brands partners

are they level. investing set is take to of cohort, to we certified merchandising merchandising Through internal with the sets at driven talent our to our with to upgrades. them well-designed comprehensive a capabilities intend understand engagement, high-value addition, by expertise we because will be model. our we business enable In of our especially new skill in heart programs, Customer a

just Vipshop search. destination enjoyable a sale is to not not the shopping goal to just make Our –

customers. offerings customer to to our We more content are provide relevant digging and into the personalized insights inspiration,

of are the innovative trending We product categories. and and lifecycles lifestyles, creating promotion the customer around channel trading

differentiation. has been and orders source another these initiatives expect cross-category We repeat Service of to increase purchases.

our and quality for enhanced more reinforce we money customer value were involving perceptions and paid mind the With price we We this will the customers. mind grew achieve top is we program, believe branded and as cohorts. will carefully. to better terms quality assurance, engagement keep to driving members and We authentic of We capture reliable household environment of logistics, both Vipshop and for also consistent to high-value tailored there advantage. this, as long-term. customer to change shape as merchandise our a in and do loyalty need our across well the as in our service we to through grow levels reasons positioned top in more as well opportunities Quality the as service budgets efficient manage customer bottom with three share are line demonstrate of lot product growth best-in-class in exchange of can keep consumers base across

work in warmly Mark. in a will step earnings and his over all started of Cui our David CFO best his will the for I Lastly, endeavors. On the wish his vision to experience personal current also and Directors tireless our finance contributions welcome in to David CFO, would past will for new tomorrow. team. to years like position the succeed like David from extensive make from of great Wang down team, our our the and would X him the release, reasons. him I behalf His as starting as thank Mark management accounting Board and

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

Eric and hello everyone. Thanks,

emerged team colleagues, challenges I to with hard strategy. long-term great my full company’s last support my mentioned, be for along part trust and company the But way. position stronger is we a It what and is dedicated time steadfast that asset and a in been Eric of business CFO. joining As at past to uncertainties. the years The earnings foundation like financial growth and conference the honor as and they the to investment your do. our to express achieve Eric and together were through has weathered today of call our times and solid would X communities Board, the with gratitude management

up pleased and aggressively results, achieved of secured to to it the We that and a fast exceeded in our expansion Turning the on gross the earnings strong needs consumer sales optimization, from apparel-related year-over-year. teams quarter increased categories cost measures the expectations. as our and to double-digit good to a inventory are contribution year. deliver well-rounded sets for responded into changing track with continues going position Margins opportunities pretty ahead gross as good aspects margin expand us sales the growth meaningfully higher margin recorded remained profit we

continue disciplined We fast expenses to held strategy. high-quality growth and be our in to

X.X%. to return our record by net As shareholders a result, value we Non-GAAP leverage. XX% and reached high net Moreover, expense proactively. continue to at saw increased we margin income year-over-year a decent new

an quarter, in amount buyback fully and the share $X billion from of existing of the million share amount utilized have During we program we $XXX to billion. the announced repurchase today, program remaining $X increase our

financial to highlights. our quarterly moving detailed Now

financial would Before like otherwise and that our numbers percentage year-over-year clarify the changes all to presented get in unless started, are I I renminbi noted. below changes are

customers the of for quarter RMBXX.X from X.X% discretionary active driven attributable increased categories. prior revenues year-over-year in RMBXX.X primarily recovery the by first net billion XXXX billion to of to in growth spending Total the consumption the by and year in period,

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

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

year a period. As fulfillment net decreased percentage from of the X.X% total to in revenue, prior expenses X.X%

increased the to Marketing by prior period. RMBXXX.X million expenses XX.X% from RMBXXX.X million year-over-year year in

net as and with X.X% prior content marketing year was year-over-year expenses increased period. RMBXXX.X from prior Technology million expenses year As which in a percentage stayed of period. total flat to million the revenues, the RMBXXX.X compared X.X%, by

X.X% revenue, net the technology X.X% percentage in a As period. from to of content decreased expenses year prior and total

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

XX.X% from year X.X% by Non-GAAP billion by prior of to increased in from prior from XX.X% X.X% and period. the to As from margin in general Non-GAAP billion increased year Operating billion to billion prior X.X% RMBX.X year-over-year period. net decreased year RMBX.X administrative revenues, the prior a to increased expenses from Income year total period. X.X% X.X% increased margin RMBX.X period. income operations income the percentage period. prior from RMBX.X year in operating the to year-over-year the from operations in X.X% in

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

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

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

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

like say is like Now, to I new who the Mark, him to to introduce call. everyone. also hello present would I CFO, our would at

release and all worked way financial have than with I to Okay. of of introduction, evening, I Finance take am am during years opportunity Vice would for more Thanks, to the have earnings my with short CFO very It’s David XX glad I CFO David. future Xiaomi the his experience. efforts like you. Group. and Vipshop. quarter to great opportunity honor the I [indiscernible] contribute past that, am this meet do Previously, management I Thanks. Good take morning years. everybody. and to looking to I I By thank to in Prior forward And can attend President out of first the management business. our success to in the of to great working Group. everything to of this good

would Q&A. Okay. the open to With that, call like I – now to like

Instructions] from Jefferies. Chong with First question Thomas comes [Operator

open. is line Your

marketing this our this preparations event year? my the more particular, set about first management the Hi, should observed about is good questions evening. recent how seeing and results. Can and expectations industry also congratulations consumer the our trend we how coming of and the monthly And quarters? GMV strong And is recovery, for think of My question about are that campaign. consumption the management for months? for for you strategies question recently sentiment management on in [indiscernible] the the in also, about Thanks our comment my a taking second

Okay.

In general pandemic life the after terms in after X months, see a when we of years work are the people actually, past and current effect. trend strong consumption several to do festival of very coming or recovery the normal spring back

well, and people into as demand out the seems So the very rebound do strong having to in a we that travel, activities. recovery do It see it see May promotion. quarter-to-date. of we apparel-related along and and in or are XX a as categories And going a in people for momentum pent-up were meet are meeting continues terms out friends. April that going friends more with often social parties And of in June lot really strong

very to important promotion. sector. going course, a the period starts extended early it X in Of event It’s promotional month to it’s and it’s of e-commerce this be – length very of up year,

we everybody We think before. merchandise our than lot for a to are of do and still focus focus and we promotional strong efforts branded of is flow on on categories, branded discount the still nothing a on I retail we we and prepare discounts. apparel-related year making campaign, securing

be campaign So for the we will well. as here

you. Thank

with comes Wu question International. Haitong next The Instructions] [Operator from Natalie

open. line Your is

Hi, my Thanks question. taking for good evening.

the say, Just expectations the of prospects, know effect, just for longer-term reopened kind and if growth one the anticipating? kind next Shen-zong, wondering future? low the margin What also let’s of beyond you of do the in first what I Thank base bonus don’t the sustained high the quarter you are And can the be normalized curious, year? rate you. post have just

Okay.

especially are their least at high In we take more advantage think when from branded current the have retail, still pandemic. environment the benefit budgets because in do manage the this we we very carefully that to and terms of discount I year, long-term opportunity consumers of going growth target, hope after for household

we pretty about full So year optimistic are the growth.

fluctuations small we focus growth. also may profit In margin, on confidence, of very although have terms quarter-to-quarter. high see of non-GAAP a level we profitability, we we have still from high we – high-quality remember, achieved record But

And matters look we growth. confident our very with as spend already to further be in disciplined We’re – profitable still money, to has place also cost the we where calculation spend not terms in margins. very continue that of growth. efficiency and We expand terms want careful in every our also for gains, are and of number for can returned. we and quality sure just And are we we to we very make expenses, we dollar of do that growing to

So pretty can level profitability. we confident high that we are a relatively maintain of

post other year we much average Thank e-commerce players? still compared and than curious bonus growth can Just the manage next longer-term, the with [indiscernible] in you. rate higher

peers because our streaming we be grow good what in to leadership are spend to terms of be we we from as emerging see are better try ourselves, at time our discount The for only customers. very experiences strengthen but a fully promotion, is We to branded lot and next going to competition rapidly and grow better years of couple subsidies terms pricing increased in at the customers retail. to actually like In with of of going solidly. grabbing cannot – from formats we live better may offer not and of do also thing brand can what offerings, people and really merchandise growth, achieve long-term do our are guarantee good to imagined, lot a as we we

also long-term fully are optimistic we to for the that fully we are So our and but that. growth, landscape from we time competitive aware about evolving is time, are prepared

Language] appreciated. [Foreign Much Understood.

Instructions] Nomura. Jialong [Operator The Shi comes next question from with

is Your line open.

Okay.

for two have the First taking VIP. question of management all, questions. My my thank here. I first is you questions for very Super much about

VIP may by wonder just contributed of And active GMV member? members? Super what is VIPs latest the is what second the question Super was of the growth I into outlook converted VIP more member? on in Super VIP customers quarterly Is many the So And number how XQ – second my for be half. about

Just provide grow colors much half? wonder Thank management be the line as the can able second in to if may top any you. to how

first Super the In XX% the question. contributed we answer purchase represents XXXX, XX% million, total to I’ll revenue. X.X QX a our active VIP year-over-year, increase who which about had of

active registered we – with the would regarding can in I over how annual exceeded considered could have be active have So that like to in question we response your say, many that customers, converted conversion. we Super be could XXX VIP, million XX [indiscernible]. customers customers million for And also,

ARPU, basically, have So a be who XX conversion. roughly we So a we these million higher we customers, high-value also, about – customers for have all active right? could target contributed consider the this among

of in are terms to SVIP, we adding Just David’s point members. continue of to the going expand base the to SVIP our

do to privileges their and increase more well. place, to purchases, their going lot frequency as to a motivate spend and increase orders them longer repeat to cross-category stay repurchases to of to membership We’re to more

– priority customer list our the expansion. our on is this of So

base of terms to with both And pretty trends the seen half for second year, that our growth foundation continue the a QX half. have we laid going we QX. in very have the These In good actually this the solid can customer and momentum spending. customer expand confident for are we in momentum into second of reasonable

relatively out pretty rational we confident have spending, customers continue and to expand scientifically We base. to customer can at that are find increase our a we

in of in apparel-related expansion, quite and be customer addition increase and advantage offering we a we terms a things purchases. we offerings, clear creating terms non-apparel-related And that, conversion to can to categories that merchandise can personalized merchandising of leverage stable of of categories. our between the the have do In lot pricing

growth of So maintain we a healthy do of set have very initiatives momentum. our to a comprehensive good business and

The Instructions] from next [Operator Xiong question Wei UBS. with comes

open. is line Your

some e-commerce of in Thank to you, recently price question the first in industry be terms plan management, have is my their more as aggressive for In taking the competition. competitiveness. the growth user question. and of regarding our announced investments peers My

our take to expense. proposition maintain the we what in competition? second, on of value light the wondering marketing to heightened just just follow-up actions And So can

up, want we the to do positive. So growth the have we is user the coming to that and investment step given related when big ROI up promotion

So the the should expense how in trend second Thank about marketing the we think for as well the as quarter full expense ratio year? marketing you.

Okay.

we brands encourage this So environment? Actually, and are what platforms. resource competition, faster in We of to terms in focus still apparel-related and good prioritize compete We other popular grow allocation platforms and really going at. them traffic some than our focus on are categories. actually we to on our to on we to how

product team, our for, are and We of with selection we our through expertise we needs and pricing. really well very buyer strict will demand in have terms selections sure we selection, want have requirements product pricing terms product terms to In consumers cater professional long-term in our consumer partners. what make as to looking as of know our of brand

In addition, customize our of some brands we closely actually product to with offerings our for worked core high-quality customers. very

We will a of understand create e-commerce, differentiate merits continue offering e-commerce compare be largely continue including streaming of to shelf-based to to that customers. live there are to further We value live are and our we cannot formats we there player and streaming, because with. more lot merchandising our know

we lot we have our lot to a a more example, and more selections SKUs, offer For customers.

merits our in pricing product a customer terms selection. capabilities and is how competition we our but or live demands. and with of and We even focus merchandising we that, manage still to that be of building priced other unique offer to more going long-term customers streaming strategic are and know better on meet understand ahead, cannot there lot wars there certain players So, to

have about you marketing don’t spends, terms worry In too to that. of much

We our manageable are in be terms to It’s quite marketing optimistic in spend QX. overall. of quite going

– of is be basis probably revenue I on the incremental X.X%, increase think a a marketing or X%, a total very It’s only X%, X%. most. is total to spends probably increase X% not to as going percentage of as to jump to at going XX%

you, clear. you. Thank Very Thank management.

Andre [Operator with JPMorgan. comes Our from question next Instructions] Chang

open. line Your is

English. have Thank taking question. for questions. translate two Let my my question management I me into you,

growth Does growth is business? you. are is category quarter. the we one first the improvement driver. and marketplace what’s about on The XP does the Two, the clearly is faster company growth growth this driving as Thank What revenue GMV group, understand geographic driver? that making well? this also than mean that in user revenue to quarter? And that’s group noticed is progress the good more case, margin the the the to contribute the If that acceleration

Yes.

menswear, In terms much categories in shoes in like women’s QX apparel of sportswear, non-apparel wear, category, growth see at doing did people going they are better broad-based kids double-digit because GMV need match. are and wear categories. mix recurring often to than out overall, We and bags and subcategories and

terms less recovery, slightly cities different recoveries hit across but outperforming, they of Tier actual much. with more the in X Understandably, by most geographic not tiers cities, of In or pandemic. were also

On it’s not actually, gap, the the NP. and revenue GMV about

growth. elevate as higher in It’s is no mix change to things in service We and price because NP, key achieving rejection to in any to this excellence translating change change categories, apparel services return will – contribution as And focus and contribution on trust customer our the better well and in customers on of for higher long-term. its we selection, advantages, the categories merchandising carry are actually actually those know, and high-quality return terms loyalty or regarding we to several the we experience. relatively don’t Over rate. due our time, QX have see quarters. the so are that focus of as apparel the from last And in But customer going remember, to strategy you NP. revenue

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Okay.

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programs. terms share In of repurchase

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So, very we shareholder we have be to feedback for definitely that investors and investing company. to share our committed lot And buyback with are and a value will investors investors, creation our continue return we program. of stable regarding actually sure have want our to make hear in we through this pleased a positive practice, will that

much. so you Thank Helpful.

time. I at show this further questions no

closing for time, now Jessie this So, turn any at will I back conference the remarks. to

you taking the for Thank time join us today. to

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

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

now may You disconnect.