VIPS - Earnings call transcript Q2 2024 | Vipshop Holdings Limited

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Operator

Ladies and gentlemen, good day, everyone, and welcome to Vipshop Holdings Limited Second 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.

Jessie Fan

Thank you, operator. you Vipshop's 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 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

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

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

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

Eric Shen

evening, business. second and headwinds call. our everyone. thank morning joining external and environment, our the in good Good the face for slower a quarter in momentum you conference earnings multiple XXXX Welcome, In of we had

operational excellence. staying on focused agile to and respond team achieving external Our to quickly changes

Customer approaching remained strength the as up spend We cautions a co-brand to well. sales of challenging from was resilience mounted segment, GMV an reflecting second quarter, of showed held hybrid SVIP for aim In our pressure indication relatively of members see cautions and customer quarter. the the this the the and backdrop. panel aimed category marketing our fundamental under traction business. the full generated

are us, the most members core and power That's resilient spending. for with active a customer unique facing involving continued years recognize to of given did encouraging with growth the uncertainties on hard as focus key the the that XX% customer ago from year value spending continues accounted mine, of we factors to positions changed. near by the a the we where ahead, our in cohort that shop have ongoing However, SVIP shopping long-term even patents increased XX% us the that thinking as for online in spending term, not choose of

while navigate sharpening Together, are assortment core on enriching offering, throughout We these been merchandising competence focus difficult ensure times. highlighting experience. us helped our has affordability have the worry-freed our that

we selected known half, for. quality new trends, brands delivering driving emerging adapt categories, steady we pleased growth look highlights, the first brands the across to strong of mix which what to team, a talents and important by platform, than brands we is our In luxury the business with flow thanks XXX well our much the more mass richer quickly our including brands, trendy now are in selections. capability affordable Among a to customers brand more merchandising inventory from to of

to suited is needs the to meet income different layered approach age in customer well and Our brand portfolio across cohorts ever-changing regions.

increased encouraged the a We In from second Made products. quarter, also of line from are customized for Made the ago. in for year steadily progress VIP by VIP GMV than the more XXX%

customize to welcomed [ many customers. which great is expertise a by Our panel enabled price, more at differentiated and were product ] know-how brand partners

category. and conventions the category and same repeatedly We the the general portions see for customer do consistently a products VIP seen of meaningfully customized has they been same the level for Made the within apparel than brand average higher higher in than purchased

on delivering to our great of pricing customers. and blend providing we that, value, to right Beyond continue quality focus the

more generate with designed views. to work we we are their while make partners everyday new could resource customers. Recently, these for for their channels, price, savings future also most best budget, help to We consistently ways customers present and limited launched the brand low time optimize providing reliable partners promotions our our brand some we ensure the to of

other the hand, On enhancing is quality control.

hard to inspections portfolio a our working been help have this chain. supply We select by products year increasing brand customers of quality trusted throughout

and addition, provides engagement. we intend increase launch to our off-line, second our refining the dips sales we both SVIP In of customer and the loyalty the for program members, are special to that uniquely. serve with adapting approach and continue In offering, quarter, online to their we

our created the and performance. a design made layout personalized and channels cater For the recommendations that our homepage, young tailored specialized we of customer, to

the of through efficiency to things. the lines, volatile enhancement technology long-term work on temporary among line, the on process the other continue top business In face and across optimization we

For search and AI to upgrade improve increasingly capabilities motivated This intelligent are partners. ] shopping customer has our when and conditions. technology, ROI example, explanation assistant further the to to platform our applied we activity while recommendation invest of to [ continuously improve best generating provide merchandise brand serving on the team and partners with brand

change. solid model have quickly and to as work we inherently are We that do, fundamentally also more a we pivot that business it, can on much have we a customer flexible, so but priority

we execute to in we and that on term. close we our consistently ahead, we long retail be As over for merchandising as long capabilities customers, and move stay our continued the will growth inventory discount positioned investing believe continue as

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

Mark Wang

line and delivered another everyone. the Okay. We Thanks, Eric, solid ongoing despite of quarter profitability top on hello, pressure growth.

to to optimize margins. responsive achieve and healthy environment operational to efficiency we remain challenges, evolving we our As weather managed the external

year gross Vipshop's our to our high from shareholders managing to XX.X% at cost-saving margin at category margin consolidated mix apparel ago. attributable margin Non-GAAP X.X% XX.X% higher a disciplined increased of Thanks approach level to Specifically, a and series skills remained a reflecting net business. from to matters.

in balance our for business. near profitable the to our In growth the softened. has are unique positioning confident growth term macro and our in with and health long drive We our long-term of goals the run. profitability the outlook Well, midst to remain protect sustainable dynamics, of and competition

are our shareholders. we with utilized significant been of having With share accelerated We committed that, during million our pace second the over to cash $XXX buyback returning quarter. to

of XX% mentioned to to our amount plan In repurchase new in income share will repurchase existing fully to $X billion no remaining program. dividend year net a non-GAAP shareholders full place share the distributions. and up attributable call, program less discretionary we under the earnings through be addition, after last And we than of as we on commit our utilize Vipshop's

our to moving Now detailed financial quarterly highlights.

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

XX.X period. for billion the net billion in XXXX profit of revenues second prior with billion year from by XX.X% year X.X compared RMB Total decreased the increased billion X.X increased period. X.X% XX.X% to the in XX.X year-over-year Gross from period. to RMB the in quarter the year-over-year RMB billion, from to Total Gross or year year period. RMB RMB X.X expenses operating prior in margin billion, prior X.X prior by X.X% RMB

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

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

the period. RMB million decreased XXX.X XX.X% RMB prior-year from million year-over-year by XXX.X to expenses Marketing in

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

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

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

XX.X% increased year to from billion prior prior the to from X.X Non-GAAP RMB shareholders period. billion RMB period. year was X.X the Vipshop's in income to X.X% the period. billion compared RMB with from X.X% year-over-year income by operating operations Non-GAAP attributable year margin billion Net in RMB in increased prior X.X X.X

X.X% Net in net X.X income X.X% X.XX compared shareholders RMB attributable the prior the attributable income to RMB ] in billion billion to Net period. RMB shareholders period. compared RMB with compared was Vipshop's in year [ X.XX the Non-GAAP prior-year margin Vipshop's diluted ADS attributable with was Vipshop's with was X.X period. per shareholders to prior-year

X.XX with prior-year Non-GAAP per shareholders net diluted Vipshop's Vipshop's X.XX net compared period. was RMB X.X% attributable ADS with RMB was in prior-year attributable margin the X.X% shareholders to Non-GAAP to in period. income compared the

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

to forward RMB between of and approximately year-over-year the expect XXXX, be XX.X quarter a of revenue we X%. billion, billion XX% to decrease RMB representing Looking third to XX.X total our net

this reflects to With Q&A. like subject operational to is would open to note change. I view which Please call conditions, forecast the market current and our that preliminary of now and that, the

Operator

from the [Operator it of Chong our comes Jefferies. Thomas take Instructions] And and from now we're line first to question, going

Thomas Chong

Language] [Foreign

macro trend, year? [Interpreted] the My about sentiment first can our the question uncertainty. for be about color expectations Any in an GMV the is consumer monthly that shared full

and about the And how now? Can we is category. standardized the And X about the quarter-to-date? question growth how the category about And apparel any about should apparel management think GMV my second color for environment. the are categories the these contribution is about right comment competitive

Eric Shen

Language] [Foreign

[Interpreted].

Okay.

continues being going quite know discerning muted consumption that question your quite momentum consumers it's uncertain consumption macro the on be selective going quite And terms sustainable. forward. to we In macro of be But environment, see is due cautious, to as whether and we that to the feel don't we uncertainty.

quarter-to-date we much we growth in that's pretty GMV seen continues. Quarter-to-date, QX too comparable not such from what the trend quarter. have prior see is we see improvement And our why to

pretty quarter-to-date, with all offering at We looking to cause to in at question is to not large of second is decrease see continue price follow non-apparel heightened versus terms that, more decrease comparison we some and categories. larger industry slight apparel due to in competition the only makes terms trend, apparel outperforming choose apparel successful we extent, which items in and to actually competition. we This standardized don't a categories everybody a in our non-apparel follow. subsidies, categories On of see GMV non-apparel

to stabilize competitive ticket SVIP strategies In the hand, category, continuing half, we the to average making their second going our and and of as And to other apparel especially standardize size. plan improve on the to we're our item. series a we're frequency adjustments continue grow to with the customers

and narrow bring to business try loss we So to its list. to back this flattish we're trying segment

as purchases category to as intention plan apparel as well We our increase SVIP well. members to customers non-SVIP increase leverage the the from

Operator

And Citi. from Yap line the Alicia the comes question of from

Alicis a Yap

[Foreign Language]

[Interpreted] I have X questions.

the First the is the share just for VIP, how operating GMV? in can of to SKU of and that of wondering customized contributing is under quarter products customer management some these of actually much terms if number products that the this metrics for

margin And and the SVIP And is has change members is management just second behavior because the that ASP the wonder, observed of also nonlife very sticky also just than their know should question any recently. and then the resilient. product. I I if higher wondering remaining be

this For those or frequent less products ASP, buying member money more are example, they to lower for actually looking SVIP before? are than slightly also value

Eric Shen

[Foreign Language]

we platform within brand of price. is discounted those SKUs our of of including offerings inventory over apparel like products, XX% exclusive and have terms part unique access retail products, actually customized to In our [Interpreted] so offerings, products XX% on category, customized with unique

our we the great customers. merchandise, competition combination So the deepen offer avoid direct peers. of to our And product forward, our will great to that differentiated prices going to it's a with continue we offerings

slightly platform less on these the they our We our foundation the frequency to customers, of regarding shop traction, time ]. quality question before think roughly our see We compared in base change as SVIP shopping platform. growing is very of whose don't a customer remained enter price on customers. quality -- do their leveraging will stay especially see and has than on we offerings capabilities, a average coming SVIP solid But the X% quite of And we On actually, behavior the of branded frequency to do our manageable. customer quarters, cheap knockoff. reach ticket trust from been the of pressure significant leveraging about in X% a second have service away we we [ focus see SVIP our lot brand the table potential instead very their SVIP on because

little customers SVIP a we that bit, will because are base well a ]. as But SVIP of the in confident where up contribution, much grow non-SVIP very will they us, customers. do our LTP with have terms as we mathematically, regionally continue returns spend we attractive. tick We why that's to attractive to is compared of see but ] nextly, SVI terms So of ARPU in very [ [ higher more

Operator

And Andre of the from Chang next question from line comes the JPMorgan.

Andre Chang

Language] [Foreign

My first does XX% margin Judging decline is mean highly from that of revenue, remain the question the year-on-year and this [Interpreted] quarter third about to X% company marketing user acquisition. investments. over investment disciplined will

So the half second in we the there's the the trend margin considering versus third quarter think third previous remain about and margin half? margin quarters? the quarter few quarter will How in normalization second supported second of like should the

management decent very second behind Can And profit, see my cash what's question the quarter, cash operating we the which in operating a Despite is rare. about second highlight reason is it? outflow the flow.

Eric Shen

Language] [Foreign

[Interpreted] translate on question in terms First, Eric's investments. comments me a of let

We some we continue and of to in have, to relax customer threshold customers extent, proactively to acquire as terms to acquisition. LTV our

So in we are prudently channels, to new be disciplined. quite we continue but investing

perspectives for us customer continue the acquisition haven't from different acquire customers. very the channel efficiency to We found after to effectiveness the evaluate good we and of

marketing So terms remain we of half. will disciplined second in for spend the

partners Margin-wise, we et is our remain going quite return it's additional of ] philosophy they a margin create to cetera. traffic the are a have brand working nowadays, in that of GP for to [ pressure confident to stable. of ROE because for brand with -- under situation. And and bid always our are But partners lot dollar on side, goods win-win for

create So them. for our burden to we are take brand don't increase not going for to rate additional want partners. We

will stable. quite margin GP So remain

higher. fulfillment on going And return side, slightly bit with the we the foresee expense do little expenses a higher still

operating half, believe from investments. we So the our in too continue much that we see probably leverage will Overall, don't prudent fulfillment. our we second with

as dollar and margins it comparable. profit quite be as not net good manageable profit absolute the second of net compared half the be may year, should year, in to last So amount last as will quite although be

Mark Wang

activities primarily question answer operating For net the cash cash the question. from let the for operating The following decreased your to second second flow, me due reasons. the regarding quarter

shopping ] May. one is first [ and reason in I mean the festival middle the decline started The revenue year, promotion, year-over-year, the XXA second is of the this

related to fully instead at and little of we means recipient which June which our our case the third the bit cost And [indiscernible] suppliers and expenses So reason need of implementation earlier in to the [indiscernible] the July. and system this pay is of state year digitalized taxation administration earlier. a the means of

in our that So connection, this little faster pay last a we year. than suppliers in bit

cash So reasons the operating flows these are main change. for X the

Operator

from the And Keung question comes the line next Goldman Sachs. Ronald of from

Ronald Keung

has a One [Foreign is, and Language] [Interpreted] revenue GMV questions. that X gap. I see the

down, been while flat. So has gone order had the that is GMV When that our see the return I gone rate volume up. has

still these a despite about environment more the delivery say free to more fair to are return get bit items. the thinking relationships, and people buying it's then the of macro So

is that cost seeing? versus that Is some muted revenue. dynamics technology we're the and I see has gone content the of up the Second

So streamline where costs headwinds on or revenue room investing technology? cut side? the are these given to of the we some we see Do of sort in some

Eric Shen

of of the little but of revenue return and moderated return is on higher, into question your from a terms revenue. last trending year The growth the In actually [Foreign gap, the has translated a Language] [Interpreted] on it's is bit result GMV lot rate rate. impact a

revenue return has we rate started relatively have X% managed for and return from this impact X% on year, well the on of rate been to Last year, platform. versus X% our stabilize a had

average size In terms consumers of to don't order they total size average we sticking orders, brands see versus actually with the too the number of as are change much still prefer. order

before flat bit where compared as shop. discerning, because especially to a don't they intentionally selective buying and want just a choose They're So slightly we little to more when becoming they're buy and when cheaper. to

consumer the don't customers. in So especially change much of VIP see terms behavior, we too

second investments talent, had question models, And investments. last in large service, year, cetera. we content including technology the meaningful regarding made and et Since

this We important data, the driving long-term we value, because to to for and front is believe customers lot improvement. our given on technology very continue invest we of will large a enhancement do see especially room of sale

term and and total believe not is of bit We higher in revenue, technology but as investment will our a prudent much, over the to value long technology it's too a be accretive content content going totally percentage and manageable. be little

Operator

And our to Nomura. last line the today. from question Shi the going we're take Jialong from for question of Now comes

Jialong Shi

[Foreign tier industry major heard checks. including have for X I platforms, hearsay question some We about from loosen China questions. is on apparel our e-commerce the prices some Language] [Interpreted] help One to requirement categories, from Chinese category. that check our low certain

So any are by on operating just impact VIPS if if loosening low possible a changes half seen environment. is what second wonder there outlook? the And VIPS on competitors, in prices has the

And follow-up. online is the what what percentage GMV. by customers also the quarterly of sales wonder And to my and number their gross the a second profit contribution latest standardized and of the And SVIP is just is items? I question the generated

Eric Shen

In first price of on question low the your [Foreign terms Language] [Interpreted] strategy.

the we continue forward. will going to that product good and with see to industry. to subsidies, quality merchandise, low continue There we grade continue price customers on try brand promotion We focus going lot our for we momentum to see competition to of are factors. But within on a Vipshop, offer and

with continue that not our for focus strategy. and delivering We on business our are scale. chasing we'll customers We to value

we lot or we quite building starting customers, trusted trend in year, will a up to a focused on merchants from actually of brand portfolio offerings. brands quality our on And with side, product low-quality addition, partners be this the on

products. only we focus on So quality those on focus and brands quality

On Apparel the items the GP return and rates. lower much than little question regarding a second bit are carry apparel higher But margin margin category. line, actually, bottom for our to GP standardized because non-apparel. non-apparel

In pretty bottom track a line. can to had the to back into second as they [indiscernible] on have standardized of items well. So that contribution impact they so we'll margin business the good growth the flowing half, positive the try bring

online roughly Lastly accounted on VIP active Super second SVIP quarter, by of XX% base, our X.X have the for end million customer of we customers they spending.

Operator

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

Jessie Fan

for Thank to join today. you taking time us the

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

Operator

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

a You day. Have nice may all disconnect. now

Vipshop Holdings Limited (VIPS) 20 Aug 242024 Q2 Earnings call transcript