Market Overview

Vipshop Reports Unaudited First Quarter 2019 Financial Results

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GUANGZHOU, China, May 22, 2019 /PRNewswire/ -- Vipshop Holdings Limited (NYSE:VIPS), a leading online discount retailer for brands in China ("Vipshop" or the "Company"), today announced its unaudited financial results for the first quarter ended March 31, 2019.

First Quarter 2019 Highlights

  • Total net revenue for the first quarter of 2019 increased by 7.3% year over year to RMB21.3 billion (US$3.2 billion) from RMB19.9 billion in the prior year period.
  • GMV[1] for the first quarter of 2019 increased by 11% year over year to RMB33.8 billion from RMB30.5 billion in the prior year period.
  • Gross profit for the first quarter of 2019 increased by 8.7% year over year to RMB4.4 billion (US$649.1 million) from RMB4.0 billion in the prior year period. 
  • Net income attributable to Vipshop's shareholders for the first quarter of 2019 increased by 64.7% year over year to RMB872.3 million (US$130.0 million) from RMB529.7 million in the prior year period.
  • Non-GAAP net income attributable to Vipshop's shareholders[2] for the first quarter of 2019 increased by 12.2% year over year to RMB816.3 million (US$121.6 million) from RMB727.7 million in the prior year period.
  • The number of active customers[3] for the first quarter of 2019 increased by 14% year over year to 29.7 million from 26.0 million in the prior year period.
  • Total orders[4] for the first quarter of 2019 increased by 29% year over year to 116.5 million from 90.2 million in the prior year period.

Mr. Eric Shen, Chairman and Chief Executive Officer of Vipshop, stated, "We delivered solid operational and financial results in the first quarter of 2019. During this quarter, our total active customers grew by 14% year over year, which was the result of enhanced loyalty from existing customers and accelerated growth in the number of new customers. We accomplished these solid results through our focus back on the discount retail channel and the successful execution of our merchandising strategy. Going forward, we will continue to expand our market share in the discount apparel segment, further strengthening our leading position in China."

Mr. Donghao Yang, Chief Financial Officer of Vipshop, further commented, "In the first quarter of 2019, we delivered robust financial results backed by healthy topline growth and improved year-over-year net margin. Our profitability has started to improve as a result of our emphasis on the apparel category, the shift of low-margin products to the marketplace platform, and our focus on the discount retail model. We are deeply devoted to driving improved shareholder return with sustainable growth in both top-line and bottom-line."

First Quarter 2019 Financial Results

REVENUE

Total net revenue for the first quarter of 2019 increased by 7.3% year over year to RMB21.3 billion (US$3.2 billion) from RMB19.9 billion in the prior year period, primarily driven by the growth in the number of total active customers.

GROSS PROFIT

Gross profit for the first quarter of 2019 increased by 8.7% year over year to RMB4.4 billion (US$649.1 million) from RMB4.0 billion in the prior year period. Gross margin for the first quarter of 2019 increased to 20.4% from 20.2% in the prior year period.

OPERATING EXPENSES

Total operating expenses for the first quarter of 2019 were RMB3.6 billion (US$535.6 million), as compared with RMB3.5 billion in the prior year period. As a percentage of total net revenue, total operating expenses for the first quarter of 2019 decreased to 16.9% from 17.4% in the prior year period.

  • Fulfillment expenses for the first quarter of 2019 were RMB1.8 billion (US$262.5 million), as compared with RMB1.7 billion in the prior year period. As a percentage of total net revenue, fulfillment expenses for the first quarter of 2019 decreased to 8.3% from 8.7% in the prior year period.
  • Marketing expenses for the first quarter of 2019 were RMB780.9 million (US$116.4 million), as compared with RMB645.3 million in the prior year period. As a percentage of total net revenue, marketing expenses for the first quarter of 2019 were 3.7% as compared with 3.2% in the prior year period.
  • Technology and content expenses for the first quarter of 2019 decreased to RMB383.0 million (US$57.1 million) from RMB466.4 million in the prior year period. As a percentage of total net revenue, technology and content expenses for the first quarter of 2019 decreased to 1.8% from 2.3% in the prior year period.
  • General and administrative expenses for the first quarter of 2019 were RMB668.9 million (US$99.7 million), as compared with RMB613.6 million in the prior year period. As a percentage of total net revenue, general and administrative expenses for the first quarter of 2019 remained stable at 3.1% year over year.

INCOME FROM OPERATIONS

Income from operations for the first quarter of 2019 increased by 30.3% year over year to RMB863.2 million (US$128.6 million) from RMB662.7 million in the prior year period. Operating margin for the first quarter of 2019 increased to 4.0% from 3.3% in the prior year period.

Non-GAAP income from operations[5] for the first quarter of 2019, which excludes share-based compensation expenses and amortization of intangible assets resulting from business acquisitions, increased by 18.0% year over year to RMB1.0 billion (US$154.4 million) from RMB878.1 million in the prior year period. Non-GAAP operating income margin[6] for the first quarter of 2019 increased to 4.9% from 4.4% in the prior year period.

NET INCOME

Net income attributable to Vipshop's shareholders for the first quarter of 2019 increased by 64.7% year over year to RMB872.3 million (US$130.0 million) from RMB529.7 million in the prior year period. Net margin attributable to Vipshop's shareholders for the first quarter of 2019 increased to 4.1% from 2.7% in the prior year period. Net income attributable to Vipshop's shareholders per diluted ADS[7] for the first quarter of 2019 increased to RMB1.27 (US$0.19) from RMB0.77 in the prior year period.

Non-GAAP net income attributable to Vipshop's shareholders for the first quarter of 2019, which excludes (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from business acquisitions and equity method investments, (iii) tax effect of amortization of intangible assets resulting from business acquisitions, (iv) gain on disposal or revaluation of investments, (v) tax effect of gain on disposal or revaluation of investments, and (vi) share of gain in investment of limited partnership that is accounted for as an equity method investee, increased by 12.2% year over year to RMB816.3 million (US$121.6 million) from RMB727.7 million in the prior year period. Non-GAAP net margin attributable to Vipshop's shareholders[8] for the first quarter of 2019 increased to 3.8% from 3.7% in the prior year period. Non-GAAP net income attributable to Vipshop's shareholders per diluted ADS[9] for the first quarter of 2019 increased to RMB1.19 (US$0.18) from RMB1.05 in the prior year period.

For the quarter ended March 31, 2019, the Company's weighted average number of ADSs used in computing diluted income per ADS was 696,453,497.

BALANCE SHEET AND CASH FLOW

As of March 31, 2019, the Company had cash and cash equivalents and restricted cash of RMB6.3 billion (US$938.3 million) and short term investments of RMB40.3 million (US$6.0 million).

For the quarter ended March 31, 2019, net cash from operating activities was RMB692.0 million (US$103.1 million), and free cash flow[10], a non-GAAP measurement of liquidity, was as follows:

For the three months ended


Mar 31, 2018

 

RMB'000

Mar 31, 2019

 

RMB'000

Mar 31, 2019

 

US$'000

Net cash from operating activities

171,245

692,005

103,112


Add: Impact from Internet financing activities[11]

(718,952)

(1,217,177)

(181,365)


Less: Capital expenditures

(816,167)

(1,111,025)

(165,548)


Free cash flow out

(1,363,874)

(1,636,197)

(243,801)




For the trailing twelve months ended


Mar 31, 2018

 

RMB'000

Mar 31, 2019

 

RMB'000

Mar 31, 2019

 

US$'000

Net cash from operating activities

415,752

6,266,508

933,739


Add: Impact from Internet financing activities[11]

2,304,275

(104,832)

(15,620)


Less: Capital expenditures

(2,705,155)

(3,888,818)

(579,452)


Free cash flow in

14,872

2,272,858

338,667


Accounting Pronouncements Adopted During the Quarter Ended March 31, 2019

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," and associated ASUs related to Topic 842, which requires organizations to recognize lease assets and lease liabilities on the balance sheet for the rights and obligations created by those leases. On January 1, 2019, the Company adopted Topic 842 using the modified retrospective transition approach, under which the new standard was applied to leases existing at the date of initial adoption, and prior periods were not restated. In addition, the Company elected to apply the package of practical expedients permitted under the transition guidance which does not require reassessment of prior conclusions, lease classification and initial direct lease costs. Adoption of the new standard resulted in the recording of lease assets and liabilities of RMB451.4 million on January 1, 2019. The adoption of the new guidance did not have a material impact on the Company's consolidated statements of income and consolidated statements of cash flows.

Business Outlook

For the second quarter of 2019, the Company expects its total net revenue to be between RMB20.7 billion and RMB21.7 billion, representing a year-over-year growth rate of approximately 0% to 5%. These forecasts reflect the Company's current and preliminary view on the market and operational conditions, which is subject to change.

Exchange Rate

The Company's business is primarily conducted in China and the significant majority of revenues generated are denominated in Renminbi. This announcement contains currency conversions of Renminbi amounts into U.S. dollars solely for the convenience of the reader. Unless otherwise noted, all translations from Renminbi to U.S. dollars are made at a rate of RMB6.7112 to US$1.00, the effective noon buying rate for March 29, 2019 as set forth in the H.10 statistical release of the Federal Reserve Board. No representation is made that the Renminbi amounts could have been, or could be, converted, realized or settled into U.S. dollars at that rate on March 29, 2019, or at any other rate.

Conference Call Information

The Company will hold a conference call on Thursday, May 23, 2019 at 8:00 am Eastern Time or 8:00 pm Beijing Time to discuss its financial results and operating performance for the first quarter 2019.

United States: 

+1-845-675-0438

International Toll Free:

+1-855-500-8701

China Domestic: 

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