- Total Net Revenues: RMB26.9 billion, compared with RMB27.9 billion in the prior year period.
- Gross Profit: RMB6.3 billion, up 2.2% year-over-year from RMB6.2 billion.
- Gross Margin: 23.6%, increased from 22.2% in the prior year period.
- Total Operating Expenses: RMB4.3 billion, decreased by 4.2% year-over-year from RMB4.5 billion.
- Fulfillment Expenses: RMB2.16 billion, down 0.8% year-over-year from RMB2.18 billion.
- Marketing Expenses: RMB740.7 million, decreased by 17.0% year-over-year from RMB892.5 million.
- Technology and Content Expenses: RMB487.2 million, increased by 10.0% year-over-year from RMB443.0 million.
- General and Administrative Expenses: RMB900.7 million, decreased by 6.5% year-over-year from RMB963.1 million.
- Income from Operations: RMB2.2 billion, up 16.5% year-over-year from RMB1.9 billion.
- Operating Margin: 8.3%, increased from 6.9% in the prior year period.
- Non-GAAP Income from Operations: RMB2.6 billion, up 11.6% year-over-year from RMB2.3 billion.
- Non-GAAP Operating Margin: 9.5%, increased from 8.2% in the prior year period.
- Net Income Attributable to Vipshop's Shareholders: RMB1.9 billion, compared with RMB2.1 billion in the prior year period.
- Net Margin Attributable to Vipshop's Shareholders: 7.2%, compared with 7.5% in the prior year period.
- Non-GAAP Net Income Attributable to Vipshop Shareholders: RMB2.2 billion, compared with RMB2.4 billion in the prior year period.
- Non-GAAP Net Margin Attributable to Vipshop Shareholders: 8.1%, compared with 8.6% in the prior year period.
- Cash and Cash Equivalents and Restricted Cash: RMB21.6 billion as of June 30, 2024.
- Short-term Investments: RMB1.9 billion as of June 30, 2024.
- Q3 2024 Revenue Forecast: Expected to be between RMB20.5 billion and RMB21.6 billion, representing a year-over-year decrease of approximately 10% to 5%.
Release Date: August 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Active SVIP members increased by 11% year-over-year, accounting for 40% of online spending.
- Gross margin improved to 23.6% from 22.2% in the prior year period.
- Non-GAAP operating margin increased to 9.5% from 8.2% in the prior year period.
- Steady progress in the 'Made for VIP' line, with GMV increasing by more than 140% year-over-year.
- The company has a strong cash position with RMB21.6 billion in cash and cash equivalents and RMB1.9 billion in short-term investments.
Negative Points
- Total net revenues decreased to RMB26.9 billion from RMB27.9 billion in the prior year period.
- Net income attributable to Vipshop's shareholders decreased to RMB1.9 billion from RMB2.1 billion in the prior year period.
- Return rates have increased, impacting revenue.
- Marketing expenses decreased by 17.0% year-over-year, indicating a cautious approach to customer acquisition.
- The company expects a year-over-year revenue decline of approximately 10% to 5% for the third quarter of 2024.
Q & A Highlights
Q: Can you provide insights on consumer sentiment and macro uncertainty, and expectations for the full year GMV trend?
A: (Eric Shen, Co-Founder, Chairman & CEO) Consumption remains muted due to macro uncertainty, with consumers being cautious and selective. GMV growth quarter-to-date is comparable to Q2, with no significant improvement. Apparel continues to outperform non-apparel categories, with a slight decrease in GMV for apparel and a larger decrease for non-apparel due to heightened industry competition.
Q: Can you share operating metrics for VIP customized products and their contribution to GMV?
A: (Eric Shen, Co-Founder, Chairman & CEO) Customized products are part of our unique offerings, contributing significantly to our platform. We have over 40% unique offerings, including customized products and exclusive brand inventory. We will continue to deepen our differentiated product offerings to avoid direct competition.
Q: How are SVIP members behaving recently? Are they looking for lower ASP products or buying less frequently?
A: (Eric Shen, Co-Founder, Chairman & CEO) SVIP members remain resilient with stable average ticket prices, though their shopping frequency has slightly decreased by 2-3%. We see potential for growing our SVIP customer base, focusing on quality branded offerings and avoiding cheap knockoffs.
Q: What are the margin trends and investment plans for the second half of the year?
A: (Eric Shen, Co-Founder, Chairman & CEO) We will remain disciplined in marketing spend and customer acquisition. GP margin will remain stable, and we will not increase the take rate for brand partners. Fulfillment expenses may be slightly higher, but overall margins and net profit will be manageable and comparable to last year.
Q: Why was there an operating cash outflow in the second quarter despite decent profit?
A: (Mark Wang, CFO) The decrease in operating cash flow was due to revenue decline, earlier payment to suppliers for the 61A promotion, and the implementation of a fully digitalized E-fapiao system, which led to faster payments to suppliers.
Q: Is the return rate affecting the GMV and revenue gap?
A: (Eric Shen, Co-Founder, Chairman & CEO) Yes, the return rate has moderated but still impacts revenue. The return rate has stabilized, and there is no significant change in consumer behavior, especially among VIP customers.
Q: Why have technology and content costs increased despite muted revenue?
A: (Eric Shen, Co-Founder, Chairman & CEO) We have made meaningful investments in large models and technology enhancements, which are crucial for long-term value. These investments are manageable and expected to be value accretive over the long term.
Q: Have you observed any changes in the operating environment due to competitors loosening low price requirements?
A: (Eric Shen, Co-Founder, Chairman & CEO) We continue to see low price competition but focus on quality brand merchandise and delivering value to customers. We have cleaned up low-quality brand partners and focus on trusted, quality brands.
Q: What is the percentage of sales and gross profit from standardized items, and the latest number of SVIP customers?
A: (Eric Shen, Co-Founder, Chairman & CEO) Apparel carries a higher GP margin than non-apparel, but standardized items contribute well to the bottom line. We have 7.4 million active SVIP customers, accounting for 47% of online spending.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
