Vipshop Holdings Limited (VIPS) 19 Nov 242024 Q3 Earnings call transcript

Ladies and gentlemen, good day, everyone, and welcome to the Vipshop Holdings Limited Third Quarter 2024 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 thank Earnings Quarter and Call. Conference everyone, for Third joining XXXX Hello, are our Eric CEO; today us With Shen, Wang, CFO. and Co-Founder, our Mark and Chairman

remind remarks, Before their made of Private under 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

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

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

sales discretionary which industry softer consumers recent facing categories to challenges decline and their reflect moved Our priorities more headwinds, in external and the to biggest concrete results opportunities merchandising aimed for with caching measure on adapt spend. growing operation trends, quarter are still the discretionary as customer third largely our quickly find weigh third segment. We meet results expectations our to improvement. Consistent took our quarter

in XX% most by membership that combination proposition the SVIP This spending. grew of digits. In through results reflects note, third well and customers growth the and our strong our value positive our customers appreciated the XX% valuable quarter, active service. best SVIP online year-over-year On merchandise, remained value at double of is

So have shop in long-standing line past. that successful a factors driving on also growth to and reliable us remain we place been in today, top have focused these the made

it's We has our merchandising deeper in assortment differentiate from capabilities. pushing highlighting critically are them a the been worry-free being customer way, merchandising important our to ensure relevant forward impactful to increasing way engagements to the value long-term more business This drive more emphasize continue We we through area throughout the believe and others. Among our experience we most service. continue to in highlights, even portfolio growth.

to into with more resilient a change they we to into family Our quarter, shape. trend-right create and assortments is skill still team the translate the apparel built relevant of mix demonstrates have better in lifestyle results. shoppers. customer set that demand, products for third Merchandising respond customer categories behaviors and it business the In non-apparel and category. our a to We we leaned better and

the see homewear basis did sports strength we in result, like outdoor goods and a broad-based As despite categories and weakness. --

As supply. our we of enter season, about feel size and the promotional the good we deep

the deep pleased especially are strong quality with offerings. much product supply, of more the We brand inventory inflow within unique discount through

about major and attract customized embraced to and Made the partners line solid to momentum XXX the More encouraged from orders. in to line worked be as lower us our half giving extend majority VIP Super with footwear Made recognized customers. womenswear brands high-value cost the more to achieved Day. quarter, Many and efficiency from we Day Super building brand third sales the as categories. higher and which for our repeat merchandising, VIP VIP, from for efficient growth SVIP renowned its we line. brands the quality growing products. In Made came long-time partners base apparel these for proven more Category Sales back partners, And brand actually our Within brand also by We record our product, increasingly a see of customers with customers than for purchase a partner of Brand promotion the hard their adding super channels have well of global from our of and serve customers. like core the in generally some previous other sales sales in came broader are of quarters. Some us through as choice, more customer

shoppers Turning We for on our backdrop, time-limited high-frequency spend who of We categories. for signs really focus behaviors to that being everyday stretched. good are that spending team Against deal our low see value to them. to and for providing customers. compelling incentive family still offers, adjusted provide prioritized members trend on target price highlight and quickly showing SVIP

is ways team Our to customers. more value our to for hard more deliver working find

and quarters. provide some access have see both also special privileges Through upgrade we after We carried online early SVIP of members. and events, trust ground on loyalty reinforce which sales are offers, for SVIP clearly and they results like the a few

best interest stay to these customer events planning aligned We to and their better meet needs. problems are multiple with

to accurate experiment that to deploy different in and more of intent to is range wide across our relevancy the continue we shop are the the One search related customers and to future, recommendations browse and likely business and the base. strengthening it's technology user of focus so for improve As categories.

and help they all looking opportunities for what do We important see capabilities AI buy growth for. is are an technology to to become driver efficiency. of customers both other contents The to to automize kinds and find leverage

shown Recently, we started shop spend our and the seasonal willing around customers the holidays marginal to a needs see customer continue -- strength of more customer our strength have some demand. People momentum. and marginal to to

with the customer yet spending fully to doing recover in back growth we portfolio. are our get While best to to discrete

our brand partners strategy to and has been pivotal long-term in that retail firm great always focused of best for We bring long-lasting customers. are to in that to a positioned create brands the value on for discount success are laser the

driving request necessary mind top the and we in believe more building retail we and market. delighted it that experience are change to help and ensure shift if timely remain our right customers we blocks And remain platform continuing us our from fundamentals strengths efforts way We all, in in the compete an we standout increase We -- their aggressive have on the through the dynamic on so engaging merchandise the This all us this win. that consumption execute diligent to expect and specialize apparel build very are to on. respond in of the manner. elaborate of keeps Vipshop will

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

contribution impact team. continued organization third than from a as benefit Okay. throughout line we the revenues by XX.X% well financial year-over-year a was the the from deleveraging [ margin basis. This profitability revenue investment was Thanks, as lower by apparel Eric, the categories against the In disciplined everyone. maintained delivered weak top small and in driven more quarter, hello, ] management higher-margin and of our increased other solid and offset performance. a Gross on of

margin the efforts Thanks our year-over-year to result, efficiency was lower shareholders bottom expected team's but meticulous a to Vipshop's to range. net at opportunities. which line, non-GAAP our came on within As identify attributable X.X%, in

Looking still at the challenging environment.

laser We the back territory. positive long-term road our business map focused bring are on into to

engagement. capable customer balance financial on while with create We add and and of to integrated And continue a needs, value to our best focus more customer that of capabilities, and quality invest implications. sales believe reallocating category delve profitability. satisfy always these maximize we're our on better to deeper clear merchandising in in of picture we impact by moving share initiatives category, mind We a are now to operations their resource

allocation. capital to Turning

Our priorities have remained consistent.

that record the USD prudently XXXX, and a invest place. in track our our X X strategic discretionary existing USD we our Vipshop in consistency. and than own X of In support and dividend to business of first repurchased reminder, shareholders million to return to XXX months XXXX, less for USD In our XX.X Also, and build have a new program. USD buyback projects attributable look on left non-GAAP net the total through nearly we in a of we full share no share we year XX% of criteria, the have as our X-year with shareholder commit financial up addition billion million And of to plan billion repurchase program repurchase income meet distributions.

detailed our quarterly to moving financial Now highlights.

RMB with RMB quarter financial year I to and otherwise from XX.X% RMB for billion period. like billion the RMB started, unless prior period. prior Total X.X XX.X% year with in the year-over-year billion in prior get clarify RMB in from X.X% presented of year percentage are year-over-year by Gross X.X period. Gross in numbers for period. I Before expenses change noted. revenue profit decreased third that compared renminbi would X.X the to RMB was in billion billion XXXX, the XX.X the X.X to billion, margin Total net all operating all prior compared XX.X increased year below

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

decreased X.X% net year total prior X.X% in a with period. million year XXX.X prior revenues, from to expenses of period. was X.X% by million year-over-year percentage RMB As expenses the in fulfillment XXX.X RMB Marketing the compared

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

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

of in prior year year-over-year compared X.X and administrative X.X% percentage X.X% from decreased RMB the RMB accounting total year million XXX.X net period. XX.X% in expenses a and by was period. technology prior As billion to the General expenses revenues, with

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

cash of and billion and RMB September cash As billion. of RMB XX, X.X XX.X of restricted short-term had the and cash XXXX, company investments the equivalents

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

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

Instructions] Jefferies. from line from questions Thomas the of [Operator Chong come The

supportive about on Can is question government the from about outlook measures. GMV trend QX recent sentiment GMV well consumer share in the perspective margin. My the our and expectation Language] as of management after [Foreign as monthly XXXX recent

XX% growth seen margin, expect profile Given particular, we the trends? outlook GP our margin our how GMV should And should to the in of when positive think solid in about in year-on-year we XXXX? back QX,

[Foreign Language]

Okay. [Interpreted]

October that was much October XX quarter-to-date, First front the the have the still to earlier the I been good, of date, think of but November apparently we business are And guidance. if over Double into which add because of consumption. load was for leads XX days. we quarter really trends promotion, And we to and within recent some all,

us. it's and the categories, on September environment the categories us overall sentiment, home of end In our terms trading we are electronics a launched primarily government we stimulus consumer course, towards key have focused some are out rational programs But sponsored to since to the do rather beneficiary programs. boost certain give of but appliances. following not in still, of sentiment very apparel package, And the may recent bottomed such of

mid -- looking value, being signs focusing trade-offs seeing still family are and moment. budgets, the on still delaying of customers in They stretched. essentials showing making purchases of are are We for until

recovery to a plan doing are better on we is are pick into think much we haven't But margins, And of prior worry be to lastly, So think as to in macro GMV to get going think as XXXX. on seeing confidence quarters. believe do we small we to recovery, seen for would depends compared a outlook, cautiously. so not XXXX. And it's of very -- QX the GMV a XXXX about. have of sentiment we there factors, we meaningful lot of it's decline growth, consumer that were best there unpredictable. brought uncertainties. pretty our But We number to It whether to in in going is up. too going consumer in a on And are whether business I forward back a especially trend probably to terms our part compared

are We on dollars. growing focused profit

terms and expenses, we a be should XXXX. of disciplined. able very we amount to to dollar are be going expenses That's And structure, be but -- in margin some cost on should could also think to stable relatively we the certain big all. continue and and levels. to absolute have on And not be there for it side, or maintain be done what from swing changes I cost

Alicia come from Yap Citigroup. of line question's the from The

to question overall also performance my up XQ and the is on just follow guidance. So Day Language] Singles [Foreign the

about during in you period? not terms wondering, growth Day Day is because you're positive the -- your that just that days, that is And trends. wanted December Singles of So able sure the achieve to the period XX-plus conservative a guidance, too actually Singles then how during

because XX% that's visibility rate. why So the decline are December that not on X%, return the And also you're sure. providing in then

compare Day XX? the So June and if year's can last for Day Singles you versus year Singles return versus this rate

[Foreign Language]

[Interpreted] Okay.

performance, on First did basis. of a compared of think basis, all, comparing promotions well. cycle full Double are on of it doing Basically, XX cycle to I XX days the to we as most we roughly XX as last are And this that days very platforms full year.

quarter, benefited of give a base have extended factor very period in for QX comparing ] about on -- is we one it is revenue if we -- guidance the We of are with sure. are doing our on also also customer a XX% just expectations. and basis, very QX, still And expectations. especially We challenging exceeding And over well we XX apple-to-apple actually high our business GMV growth also an a But of unexpectedly. wins, campaigns. Actually, a do basis. the metrics and our days relatively [ had whether. at cold which last We it's on with is line think conservative look -- promotional just in our

year. year, going as to apparently not last this cold as be is So

this little [ this to net And QX think be into guidance -- ] bit quite factor is our That's we QX -- based weather why well. going challenging. guidance so as we a

SVIP And lastly, contribution, contribution driven case, because very policy services rate factors for on our years. a mostly apparel to has X have return and return and our been like X stable we cetera. rate structural return like in And also et

actually their to platforms a return the our are adding extremely of expectations, policy, which basically, trending Double sudden rate like percentage in points in rate case So return during rate. change not of who return lead X return XX high just with a had the terms other in is line in

Keung Sachs. Ronald come Goldman from question's line from The the of

[Foreign reached gross quarter. Language] questions. gross One third record the your X high were margins Last year, in fourth is higher. quarter Just margins even

for should the apparel outlook for Just good XQ. which about for we how margin the gross mix, think is usually margins and gross

that tax related we profit offshore wider of your outlook? is How expenses. to think to Second transfer and operating onshore financial Is returns? profit increase was in XX% a income this decline line about seemingly to cash should our than

Language] [Foreign

XX%, outlook, I higher we grow. into invest revenue. was apparel as also So QX in driven looking benefit to terms from contribution had other margin for think a QX, by and small you know, we to GP our of [Interpreted] continue which But

environment, we our given the sustainable of portion we especially a an invest So would current to current margin if see that. competitive do to gain in dollars, opportunity profit growth

we but range within XX%. QX, for So be should well GP margin the QX, it than marginally be lower to of in expect it

Okay.

Okay. And question, me talked regarding first supplementary the some comments. you about the give let margin, you gross

the third quarter, by For following driven margin was expansion reasons. the primarily the gross

the is higher higher-margin a had year-over-year. categories, The first apparel one which contribution

one cost-saving including to initiatives and merchandising incentive portfolio, improve many is so on. have gross second we optimized customer The margin, well-managed

third revenue, means we Shan of other revenues, contribution for Shan as The is the higher That income net which recognize other rental recognized That Outlet revenues. net because recognized we the also Shan booked higher-margin like income. some approach. revenue -- from Outlets Shan is

gross revenues, the the question. good in X So higher which other for before. that that's was revenue reasons higher, gross is your that than And very for main margin the means second booked a question, is okay? So

that tax of Just in mentioned effective regarding Hong non-GAAP share Mainland, as the we entities we distribute The China some mentioned the before, Jessie Kong. dividends the entities to the we do the the expenses. in that from need buyback, reason Okay. rate, to is

around we billion. This quarter, RMB X.X remit

have that withholding expenses. -- XXX RMB income So means we we million tax have

Okay.

withholding XX%. mean, would tax income the expenses, ETR to I XX% factor, around the exclude So have been

withholding for tax exclude the still to be XX% could the term, long around the impact, I EPR think income XX%.

Barclays. from line come from of question's Duan Roger The the

questions. going have translate I'm X myself. to Language] [Foreign I

And do like performance it in apparels on seen second of GMV in in terms shopping terms in quarter? management we see we of question whether for terms quarter, of management have can frequency because third size? any SVIP during First, different looks behavior quarter terms the my grown difference any users. changes Can is categories in have bucket third consumer in average product share share or contribution of

[Foreign Language]

Okay. [Interpreted]

apparel and And quarters. of giving advantage series are small to First, had it's targeted while have as still other decline the a items of making on especially platforms. QX, incentives. bigger not competition we we and some but category-wise, of see prior terms we that, by are a price compared worsening because competitive it's decline, GMV, limited on with in And adjustments out standardized

are shoppers family we doing for daily chance essentials. And especially of from increase different to we example, which narrow the of For very early across roughly seeing we accounted We gradually of and QX, from SVIP, on categories, spending. their results XX% online standardized active momentum. solid that, customers X.X shopping VIP million in we our loss in some would seeing that hope are items. And a Super had for

growth the to XX% apparently, customers therefore, them In of new their quarter, for SVIP ramp year-over-year. And base, was time it customer ARPU. terms up takes that and for frequency

have, they size see decline from was ARPU we any of loss customers, whole example, driven stable. on Apart But SVIP do in health customers. less consumer base. don't the and average ticket frequency small if -- primarily for a SVIP remained the a by frequency actually their to as we that, SVIP to additional at So but gradually are we see see effect X-year same cohort, we the stable, actually relatively look some dilutive but extent, performance that

Nomura. The line of question's Shi from come Jialong from the

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

in possible the the is question were or ARPU the for average SVIP just the the the about subsidies funded decline in government. by to more second first member, trading get ARPU about management. The What is for -- decline The from SVIP question for for spending reason member? color the trying

VIPS of benefited any subsidy if likely benefited from wondering trading scheme? this be will the or Just business

Language] [Foreign

frequency [Interpreted] in So do customers, a they that realize for have even the cohort SVIP for we same small customers. decline of

efforts We with SVIP are to customers. lot of engagement making a increase

to to SVIP to who become we and renewal cover the also customers privileges, more we -- for in planning the of terms of discount For who membership example, first are for brands first X% and additional bar SVIP merchants. the planning for for are customers new member lower time. And

actually program a private their of is such And shoppers SVIP for lot also majority loyalty trust do trust this offers Vipshop. because product, -- service, they customers. second of is -- strong especially if SVIP wouldn't and provide repeat combination a I and from have increase loyalty value a to special the launching most retention and online of And SVIP think in and we customers essence of opportunities are very great the category. with to, SVIP we for events actually, most ground shop to often. reinforce one, We our us to on and as and sales to orders. And business -- And outlets, primary intended family customers. And for our more programs purchases, cross-category find still for enhancement apparel is for hesitate that's is trading also the offline more the

additional not This to platform And million recognized revenue. be business, instead enough -- So GMV a a electronics RMB drive XXX our shop programs. could accessories It for trading still home our few by hundred expect appliances. we million to million as a of apparel or place few is great we is and customers and program. couple that -- more a benefit XXX be online, barely from meaningful the from for trading ranging million from there should sales to RMB

cooperate we said the to programs government to -- moving see trading whether be Having we the extend trying are with departments are they would other willing that, to categories. to

but we see program the do expanded hasn't additional the now, if should it benefiting categories to that. for we to from opportunities categories, course, trading apparel be Of extend

the this Due concludes turn Q&A session. call I'll time, any the closing At time Jessie back to to this constraint, for remarks. today's

for Thank join you us time the taking today. to

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

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

now may You lines. disconnect your