Release Date: November 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- SVIP membership growth remained strong with an 11% year-over-year increase in active SVIP customers.
- Gross margin increased to 24.8% from 23.6% in the prior year period, driven by higher-margin apparel categories.
- The company maintained disciplined financial management, delivering solid profitability despite weak top-line performance.
- Vipshop Holdings Ltd (VIPS, Financial) has a strong inflow of quality brand supply, especially within the deep discount inventory.
- The company is leveraging AI capabilities to improve customer experience and drive growth and efficiency.
Negative Points
- Third quarter sales declined due to softer results in discretionary categories as consumers face economic headwinds.
- Total net revenue for the third quarter of 2024 decreased to RMB20.7 billion from RMB22.8 billion in the prior year period.
- Non-GAAP net margin attributable to Vipshop shareholders decreased to 6.3% from 8.1% in the prior year period.
- The company faces a challenging environment with consumer spending yet to fully recover in discretionary categories.
- Vipshop Holdings Ltd (VIPS) expects a year-over-year decrease of approximately 10% to 5% in total net revenues for the fourth quarter of 2024.
Q & A Highlights
Q: Can management share about the recent consumer sentiment after recent government supportive measures and the expectation on 2025 outlook from the perspective of GMV and margin?
A: Eric Shen, CEO: Recent business trends show October was strong due to early promotions, but overall consumer sentiment remains cautious. The government’s trading program boosted some categories, but apparel, our focus, saw limited benefits. For 2025, we plan cautiously, aiming to return to growth, but macroeconomic factors and consumer confidence remain unpredictable. Margins should remain stable, focusing on profit growth.
Q: During the Singles' Day period, did you achieve positive growth, and how does this relate to your Q4 guidance?
A: Eric Shen, CEO: We saw over 20% GMV growth during the extended Singles' Day period, exceeding expectations. However, Q4 remains challenging due to high weather-related sales last year and conservative guidance. Return rates are stable, unlike other platforms with policy changes.
Q: How should we think about the apparel mix and gross margin outlook for Q4?
A: Mark Wang, CFO: Q3 gross margin was 24%, driven by higher-margin apparel and cost-saving initiatives. For Q4, we expect margins to be slightly lower but within the 23% range, as we continue to invest in growth amidst a competitive environment.
Q: Can management share insights on different product categories' performance and changes in consumer behavior during Q3?
A: Eric Shen, CEO: Apparel saw a small GMV decline, while standardized items faced more competition. We are adjusting strategies to improve performance. SVIP customers grew 11% year-over-year, with stable ARPU despite a slight frequency decline. We focus on increasing engagement and cross-category purchases.
Q: What are the reasons for the decline in ARPU for SVIP members, and how does the trading subsidy scheme impact Vipshop?
A: Eric Shen, CEO: SVIP ARPU decline is due to reduced frequency. We are enhancing SVIP privileges to boost engagement and cross-category purchases. The trading subsidy scheme has limited impact on our apparel-focused business, but we are exploring opportunities for broader category inclusion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
