Vipshop Holdings Limited (VIPS) 18 Aug 232023 Q2 Earnings call transcript

Ladies and gentlemen, good day, everyone, and welcome to Vipshop Holdings Limited Second Quarter 2023 Earnings Conference Call.

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

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

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

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

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

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

and XXXX morning We conference evening, Good with line strong you and ahead the expectations. profitability delivered on quarter top earnings second results call. second our well everyone. for joining thank of good quarter Welcome

Our lead key value to the brand by proposition driving strategy, with in has custom discount the been retail the and merchandising partners is resonating which well execute growth.

apparel By increased the quarter, often. contributing our coming over are on about by us performance category, XX% based spending. making active Paid The GMV Super back delivered money, the regional more remained are more be with time, reflecting member robust. by for customer second which At shopping XX% more second quarter value the broad-based consumers online when continued of fueled to to VIP growth, membership of XX% strength. end and decisions growth

us to a at out our with partners customers. hit share. to great customer We capture They have the are and us levels put in record drive value, throughout we more high second the process center. to build people helped organization. optimizations for do, another the to of us their new More of desired business want capability pleased efficiency merchandising also quarter. for we the with the work look great mind This everything In provides new target profitability

discount stands we to We to and competence people experience. reach place and offer of for. Vipshops branded feel free Vipshop hope the the buying online, as that that to in that clothes retail as is are And a core value, With our one custom when for the like diversity mind is wallet service selection enhancing committed products first go. well greater

from products, On range high-end merchandising, consistently more -- we the we are more brands international brands, -- quality and co-brands more new a categories, much have more secured popular supply available. trendy of become adding constantly

it's Our pricing category, were service ability as expect customers the beyond one giving provide brand from to great present We to us improved But able retailer. that. long new, fresh our to far meaningfully long-standing discount across and fashionable a best-in-class items, partners. our every has the

customers. Differentiate merchandising value is create also for pivotal to

unique with do We which a line. And offerings, made more Vipshop and are doing slow, there's we a so better customized lot can have for conversions. of

that efficient the supply knowledge They and the for the making increase continue to quality brand in of a team buyer's cater place custom to more needs. rules put set deepen competitive Our at pricing to and process expertise. partners for have it

find need customer We to goal help steadily the our are what's on platform. our moving every towards

commitment, evolving On listening keep service our their customers, to needs. analyze we and understand

supply customer chain and experience leveraging the by to service merchandising We deliver are free determined a capabilities. worry our

value enough chain quality worry us experience prioritize are enhancing our guaranteed customer free and every that monitored. of along product with the want properly everything sure make is For reliable is is is sources, the We shopping to our that merchandising example, spending we to their to every every efforts feel step here.

customers, channel experience, the customer and and quality Then we growth engagement efficiency where looking can keep at top deepen priorities. the with personalized we our

been We customer product mining accuracy the improve personalized to and recommendations. in deep have and insights prediction

have the upgrades customers to made our been Engagement quite We encouraging. with has also of App several channels. different increase to efficient SVIP

cohorts year-over-year. of Penetrations into different spending improved has

changes, day-to-day sound, the is the the we e-commerce. our external As believe in model our us structurally dedication stand unique inherent player firm to discipline as execution that navigate and business along we a in

every will revenue As of and deeper customer at and we our quality the customer the result earnings we decision the long and as continue to make, sustainable will customers loyalty for from growth merchandise engagement. attract portfolio long-term. the putting in we That center optimize benefit

let this Mark hand to call At point, financial to the over me our over go CFO, Wang, results. our

Eric, Thanks, everyone. Okay. hello, and

with We profitable quarter are pleased strong growth. another to finish

expansion Vipshop products margin second our to the the by set year-over-year, income shareholders to value. adequate results achieved revenue to was During at This quarter, leading by total net through XX.X% net capabilities merchandising quality of offer attributable increased and board. across increased enhanced non-GAAP XX.X%

as category and Our three from optimize over much apparel efficiency to for time first expanded customer our stronger the contribution benefiting margins. company-wide diligent to the momentum execution healthy a of grow very business. years, XX% Overall greater margin in to engagement, the as well and gross efforts from

margin With achieving took controllable Vipshop shareholders record a managing collaborate another step-up at high net costs X.X%. non-GAAP could. hit meaningful and a expenses where we attributable focus on to and Profitability continuous

In for with shareholders being addition, ADS we of the million quarter. our value unlock during our continued $XXX.X to repurchased

of buyback amount executing billion keep $X our will program time-to-time. We remaining from the

at we to top you we see value retail Eric environment know, place the are ahead, gain the mentioned, of operating the share. consumers mind opportunity list, their where Looking customers' as

our committed addressing operations quality ready hard We're addition long-term Our priorities. team working healthy on both is maintaining region to in ensure and in top bottom our lines. to growth to near-term to deliver and are

highlights. financial quarterly our to detailed moving Now

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

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

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

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

XX.X% from billion Fulfillment RMBX.X year-over-year billion prior in expenses by RMBX.X the to year increased period.

X.X% was period. compared revenues, prior with net year X.X%, as in expenses the total of percentage a As fulfillment

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

in with compared percentage As a of marketing net expenses the was period. X.X%, year prior revenues, total as X.X%

expenses and period. Technology by X.X% content RMBXXX.X in year-over-year RMBXXX.X to million increased from prior year the million

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

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

of total general the prior X.X% revenues, decreased net a and to expenses administrative year from As percentage period. X.X% in

billion operations margin billion X.X% increased the year from from RMBX.X to period. in increased by prior year Income the in XX.X% X.X% period. to prior Operating year-over-year RMBX.X from

year by the increased year RMBX.X increased from operations billion year-over-year operating margin Non-GAAP prior billion period. period. the XX.X% in X.X% from X.X% income to to prior Non-GAAP RMBX.X from in

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

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

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

to year-over-year change. XXXX, approximately the to billion, X%. increase net expected between operational and that to RMBXX.X not preliminary conditions, subject current to Looking our of our quarter which market view and billion X% we forecast third the of RMBXX.X reflects total a forward these is representing and revenue Please be of

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

the Instructions] [Operator question Thomas of first ask Thomas. you. Thank from Chong comes line from Our question, Jefferies. your Please

for my I management taking questions. have questions. Thanks evening. good two Hi,

in The coming trend the quarters. think monthly first expectations regarding we about well consumer question is sentiment. management how Can the about and our as as recently, comment it GMV

our And margin question about is my outlook. second

Given the quarters? Thank coming think we strong should how about it margin you. in QX, in

Language] [Foreign

[Foreign Language] [Interpreted]

Okay.

continue to X% opportunity to to especially the typically that know, size. on good and line until it's for track terms third ramp GMV now, total QX, for be is you has enter are very with pretty we as we In apparel season trend X% confident on we because, a up and and everything it's QX revenue GMV the as see growth slow apparel is into in summer tracking track, lower guidance will ticket quarter, our GMV growth. And been of a X.X months, the of still

are us to and of QX higher winter categories. opportunity strength clothes, ticket that people because typically the for While entering better, for a grow in GMV when a are size which apparel going presents into better not the

and about the not GMV are as don't the we the sustainable And the GMV confident COVID capability the normal pretty grow for we because merchandising everything is about to our longer in term. longer very confident have term, and operations, are we consistent growth, and for

a and a have on daily QX, keep very confident now OP out will very we pretty the margins, we the of because In earnings order we that our dedication have And a a we good it's healthy margin. we margin are consistent -- level. job, NP did the margin, that margins terms GP the including in long-term of all have we and maintain handle capability margin, we discipline think trend in good a operation. growth And built and

Right. Thank you, Thomas.

Our Alicia your from from next question Alicia. ask Please Citigroup. Yap question, comes

Jessie. have taking my questions. evening, Eric, questions. good Mark Thanks Hi, for two I and

gross quarter? bit a this for this exceptionally us it's usually, First, can the management the with mean period, promotional to actually margin gross good. I little the trend quarter, margins share during But reason tend improved lower.

sustainable new a this margin is this improved going margins could be forward? that gross So level

pattern. then And question consumption second the is

the of doing your particularly kind within design fashion type or what like of or well. is that anything Specifically apparel,

kind the apparel catered any wanted the would you sense you. or discount that a Just can be they Are what the on have apparel more to deep consumers within actually is category of spending. are or Thank of get sportswear appreciated. share more towards a color

[Foreign Language]

[Interpreted] Language] [Foreign

Okay.

your the promotional during very a QX. We GP question Going back margin. GP good even period to did margin on have first in on performance

As cost control grow. a good help we very mentioned GP earlier, our we have to margin

confident And campaign. or good waste subsidy don't industry-wide the in on delivering want gross a money dimensions or able gross we big are we participate margin this that maintain big blindly necessary swing to a had our we vouchers of compounds profile. matter we a actually customers. margin longer don't wouldn't would we level no to to example, And very promotional expect of term. For are the still, quarter-to-quarter, We whether from not. we And achieve

strong everybody the the terms out, second within is categories, had have traveling very et cetera. for demand, because out don't the growth dining in partially, and performance we And quarter COVID In we today, to and last apparel the pent-up as compared year. of going a of very,

different actually good wear, see such we given categories, wear, a et including see broad-based did women's categories, very apparel wear, we active men's underwear, kid's activities, cetera. momentum So and across social strength within

also mix and for purposes, bags, match going are spend and And well. very shoes on a also lot consumers which

offering, value products, are because think and Of discount money consumers their this rational decisions value course, for of for they they products. place list on we product susceptible and more now very deep for look top to make

very we fashion very styles, as of well. growing course, different and that well if do for years diverse a designer more sportswear are a started very brands some which for see the ago, apparel at categories, trend among popular. details and And women's has trend a some been And the look growing couple mentioned, of of within designs we you wear,

seeing think apparel in basically, good we're very I So category. momentum

Thank you.

next Our Wu of comes Haitong Natalie question International. line Please from from question, Natalie. ask the your

taking for one have the future you cross I back. Hi, thank regarding growth question. my

this growth the So affected number simply If it better guidance similar into then? you to it safe the growth macro a say quarter. competition to XXXX? Or is strategy will by and for X% increase Is or by the the for year of rate shift sales or growth effect? your latter, indicate marketing mainly entering normalized base X% could to

Language] [Foreign

[Interpreted] Language] [Foreign

Okay.

actually QX, for slow apparel categories. will X% -- pretty the are guidance relatively for enter have to in we season primarily and you And strong growth. the In momentum lower consumers are over naturally of of would the is X% have we return they higher apparel over because know, is spending. apparel terms the growth the partially that orders, return more into also we about revenue think when slow better, growth and rates. when higher. slow -- place rate but GMV their But then QX, their in find of to And be course, and carry and much And trending they we cautious

their the to long-term that our reason share. customers for their service. provide this Another And rate to and mind return to our we gain part to provide taking is exchanges appreciate actually of services for services customer worry-free a to a excellent of for is initiative return customers lot

business So impact. -- too about its don't actually and care built model, our and we in short-term it's much already

into base to returning a because year, stronger in The also third as in the impact not effect rate. I COVID last actually QX, quarter. going more meaningful mentioned, we're is play, growth definitely And was

probably easy don't compare. have we comp So to an

-- increase marketing this rate to we of branded healthier course, our looking opportunity grow a starting in much capture value our business quarter, try are proposition want growth to For in already discount -- our we spending leverage at still are for prudently more our grow to customers. to we the to spending longer -- in the retail term, and to products very and

we than guidance better the that can So grow we confident provided. we are we are

you. Thank

your Our Wang ask comes Eddy. from question, next from Eddy Stanley. Please Morgan question

Language] [Foreign

higher the Thank you, with second first my is rate share question regarding management return also quarter, third My the for taking second Can of if in and return have quarter the rate. question. seen the the you so the fulfillment at rate see you the we quarter trend bit us first in a actually, far, quarter. than look because that quarter, we little

expect expense that And you. higher so a we to rate bit little should ratio Thank -- this going forward? fulfillment

[Interpreted] Language] [Foreign

Okay.

GMV, seen in terms In and up quarter, revenue up return it's actually, between from of to quarter. quite first we the starting And is the significantly. the going gap trend second have rate

that initiatives a to and level. started return expect higher, would So not similar QX QX could bring a much [Indiscernible] the we have we to is maintain be take because as QX it but should potentially some to be normalized level rate higher, more

trying our rate, is satisfied, exchange consumers return enjoy at would our many or free the if just But it's that earlier, they could services. estimate mentioned VIPs, we gap had very seen the They in platform. have of between And level different return GMV versus to over for for future reasons the the that, we -- not years. consumers one are shop to on several bit seen we and having our the past said past have revenue love the GMV, be through a be quarters going several little on your they benchmark and that they for than revenue

consumers of is on rates and are that household of is because the delivery budgets in or their back potentially, the quarter. the fulfillment more nowadays, expense, exchanges higher they And may terms with fulfillment associated forth. cautiously mostly another second trended spending in cost carefully. cost But return reason the manage it's And more returns reason that part

-- the it’s some we're going peak model is apparel, manageable. high, totally the season fulfillment longer going especially is just extremely but a season to building of the not it ratio Probably slower So be think the still for expense high. be full-year is part to for manageable, or it's business we model term, in

you. Thank

Morgan. Chang from JP from Our question, your ask Please Andre. comes the next of line Andre question

Language] [Foreign

question noticed bought of over share this I return program for shareholder have quarter a ADS buyback. that of $XXX the I company has round and $X back years. two million current billion versus

free equivalent cash So the to program. the pace amount And is our the than of significantly is faster pace average buyback the flow. also

at what's here? us for buyback our you. can of of return principle kind level, shareholder and So management what shareholder Thank of the you share is get what with to can my and about the pace, return buy investors what the question can understand the so from you strategy the share kind philosophy

Language] [Foreign [Interpreted]

Yes.

we We is buyback specific have as underappreciated, or Actually, as compared to buyback share when Okay. don't a much the rules program. philosophy the fair value. price just to

have So we don't a specific pace.

We are just committed. very

Mark. return Okay. This question. Thanks to would is for we Yes, your our shareholders. to like value

we means that of XXXX. second XXXX, executing our shareholders the we around a million about returned steadily repurchase as as So And $XXX to buyback And of second quarter, second program. we utilized our of quarter billion quarter have starting total current the have been billion of our $X from have share $X programs. of

values, execute another mentioned focus that our share just continue from I we also we thing And will so yes, think also this the will Eric, to that by is program and time-to-time. price on our we price enterprise the that from the If is okay? and -- buyback we we value, believe cap do you. the share below Thank really time-to-time. will share then market believe

you. Thank

question question, next Shi from Jialong. from ask Nomura. Please your Our comes Jialong

much, you taking evening. Thank Eric, very good Jessie questions Mark, for and my

[Foreign Language]

two questions. have I

one follow-up is first return on this rate. a The question

year, in increase a apparel in average might this how category. power the compared apparel -- bps increase since cautiousness, or rate So other industry rate this this the have China the in those than the not the rate category, compared role just return wondering to just during also the or for also for same rate competition played of peers for to this the return consumers apparel industry return for whether period. wondering the return And in

member. VIP Super the about is question second My

VIP much contributed GMV quarter Super what in second was by you. the quarterly latest How members. of super your VIP? is Thank the wonder Just of number

[Interpreted] Language] [Foreign

to shelf-based our peers, a return the are player, Vipshop of we e-commerce is quite terms rates unique. as business model versus In and

We decide shopping to their put for decisions if example, they whether have and products not. customers are motivate their have to would flash they coupons return, often they ways service have peers, retailer our XX-minutes real-time of buy their some not discount a curve, offer they to staff. consumers customer And any through deliver it, or make and vouchers sales only we and to to in

a we So model. running different are business very on

trending as than return industrialize some our is points estimate. data to typically, X doing -- return have don't of we them. percentage set to higher rate because according some full industry And the to have phenomenon of are just Whether we peers rate still our the research, from X it's our all up, players, we the

So we the don't that. situation. have a We're evaluating conclusion on still

part As are the whether cautious, estimate. consumers but have sentiment, because scientific We to way our consumer of becoming solid to determine shrinking. reason it's mentioned also wallet is concrete don't consumers’ probably we that more that's a is

they probably So consumers we that. typical estimate to But return or their whether it's more rational. best put don't is and have conclusion card to then that becoming regional competition, the shopping as in one And them pay whether are Because two. we think don't rate. a they return to our they keep keep the on the to it decide on for items, all or behind

whether the shop or to they return need made platform. So decision items just our all their we've to consider some already And just on to they to that. of keep need

competition. because it's not of So the

as have of And rate VIP XX, X.X to up. XX% the is don't a we contributed active we VIP, spending. So who return of why of to final Super we online at trending conclusion members, as million June our -- have a total on in summary, --

GMV, love that VIP of have because a members, because for reassuring love love return -- a customer exchanges. SVIP one be they offer the than Non-SVIP much on little they rate little is of a experience. worry-free think is this our higher. should higher Again, shop, bit shop to -- In platform that place we terms on And return is reasons very they their

[Technical the rate why of Difficulty] is trending one reasons that's return So the

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

join us for taking time today. the to you Thank

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

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

now may You disconnect.