Market Overview

Vipshop Reports Unaudited Third Quarter 2019 Financial Results

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GUANGZHOU, China, Nov. 13, 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 third quarter ended September 30, 2019.

Third Quarter 2019 Highlights

  • Total net revenue for the third quarter of 2019 increased by 10.0% year over year to RMB19.6 billion (US$2.7 billion) from RMB17.8 billion in the prior year period.
  • GMV[1] for the third quarter of 2019 increased by 17% year over year to RMB31.7 billion from RMB27.2 billion in the prior year period.
  • Gross profit for the third quarter of 2019 increased by 16.6% year over year to RMB4.2 billion (US$592.4 million) from RMB3.6 billion in the prior year period. 
  • Net income attributable to Vipshop's shareholders for the third quarter of 2019 increased by 282.7% year over year to RMB875.5 million (US$122.5 million) from RMB228.7 million in the prior year period.
  • Non-GAAP net income attributable to Vipshop's shareholders[2] for the third quarter of 2019 increased by 140.2% year over year to RMB1.2 billion (US$168.3 million) from RMB500.8 million in the prior year period.
  • The number of active customers[3] for the third quarter of 2019 increased by 21% year over year to 32.0 million from 26.5 million in the prior year period.
  • Total orders[4] for the third quarter of 2019 increased by 33% year over year to 127.6 million from 95.7 million in the prior year period.

Mr. Eric Shen, Chairman and Chief Executive Officer of Vipshop, stated, "We are pleased to have delivered strong operational and financial results for the third quarter of 2019. Our total active customers increased by 21% year over year, demonstrating their healthy growth momentum backed by the successful execution of our merchandising strategy. The robust growth in the number of total active customers continued to drive our topline growth, represented by a 10% year-over-year growth for the third quarter of 2019. Going forward, we will continue to focus on procuring deep discount products and offering superior value to our customers, further expanding our market share in China's discount retail segment. We are confident that we will continue to drive long-term value creation and deliver solid return to all our shareholders."

Mr. Donghao Yang, Chief Financial Officer of Vipshop, further commented, "In the third quarter of 2019, we delivered solid topline growth with substantial year-over-year improvement in our bottom-line. These successes are the result of our focus on the highly profitable apparel-related categories, of which the GMV grew by 29% year over year, including GMV from the newly acquired Shan Shan Outlets. As we continue to execute on our merchandising strategy and further improve our procurement and negotiation capabilities, we believe we will see further improvement in our financial results and key operating metrics over time."

Third Quarter 2019 Financial Results

REVENUE

Total net revenue for the third quarter of 2019 increased by 10.0% year over year to RMB19.6 billion (US$2.7 billion) from RMB17.8 billion in the prior year period, primarily driven by the growth in the number of total active customers.

GROSS PROFIT

Gross profit for the third quarter of 2019 increased by 16.6% year over year to RMB4.2 billion (US$592.4 million) from RMB3.6 billion in the prior year period. Gross margin for the third quarter of 2019 increased to 21.6% from 20.4% in the prior year period.

OPERATING EXPENSES

Total operating expenses for the third quarter of 2019 decreased to RMB3.4 billion (US$473.4 million) from RMB3.5 billion in the prior year period. As a percentage of total net revenue, total operating expenses for the third quarter of 2019 decreased to 17.3% from 19.4% in the prior year period, primarily attributable to more effective cost control.

  • Fulfillment expenses for the third quarter of 2019 decreased to RMB1.6 billion (US$221.0 million) from RMB1.8 billion in the prior year period. As a percentage of total net revenue, fulfillment expenses for the third quarter of 2019 decreased to 8.1% from 9.9% in the prior year period.
  • Marketing expenses for the third quarter of 2019 were RMB721.3 million (US$100.9 million), as compared with RMB578.4 million in the prior year period. As a percentage of total net revenue, marketing expenses for the third quarter of 2019 were 3.7%, as compared with 3.2% in the prior year period.
  • Technology and content expenses for the third quarter of 2019 decreased to RMB400.7 million (US$56.1 million) from RMB490.8 million in the prior year period. As a percentage of total net revenue, technology and content expenses for the third quarter of 2019 decreased to 2.0% from 2.8% in the prior year period.
  • General and administrative expenses for the third quarter of 2019 were RMB681.6 million (US$95.4 million), as compared with RMB624.8 million in the prior year period. As a percentage of total net revenue, general and administrative expenses for the third quarter of 2019 remained stable at 3.5% year over year.

INCOME FROM OPERATIONS

Income from operations for the third quarter of 2019 increased by 229.7% year over year to RMB1.2 billion (US$163.6 million) from RMB354.7 million in the prior year period. Operating margin for the third quarter of 2019 increased to 6.0% from 2.0% in the prior year period.

Non-GAAP income from operations[5] for the third quarter of 2019, which excludes share-based compensation expenses and amortization of intangible assets resulting from business acquisitions, increased by 151.5% year over year to RMB1.4 billion (US$192.6 million) from RMB547.2 million in the prior year period. Non-GAAP operating income margin[6] for the third quarter of 2019 increased to 7.0% from 3.1% in the prior year period.

NET INCOME

Net income attributable to Vipshop's shareholders for the third quarter of 2019 increased by 282.7% year over year to RMB875.5 million (US$122.5 million) from RMB228.7 million in the prior year period. Net margin attributable to Vipshop's shareholders for the third quarter of 2019 increased to 4.5% from 1.3% in the prior year period. Net income attributable to Vipshop's shareholders per diluted ADS[7] for the third quarter of 2019 increased to RMB1.30 (US$0.18) from RMB0.34 in the prior year period.

Non-GAAP net income attributable to Vipshop's shareholders for the third quarter of 2019, which excludes (i) share-based compensation expenses, (ii) impairment loss of investments, (iii) amortization of intangible assets resulting from business acquisitions, (iv) tax effect of amortization of intangible assets resulting from business acquisitions, (v) investment gain and revaluation of investments excluding dividends, (vi) tax effect of investment gain and revaluation of investments excluding dividends, and (vii) share of gain (loss) in investment of limited partnership that is accounted for as an equity method investee, increased by 140.2% year over year to RMB1.2 billion (US$168.3 million) from RMB500.8 million in the prior year period. Non-GAAP net margin attributable to Vipshop's shareholders[8] for the third quarter of 2019 increased to 6.1% from 2.8% in the prior year period. Non-GAAP net income attributable to Vipshop's shareholders per diluted ADS[9] for the third quarter of 2019 increased to RMB1.78 (US$0.25) from RMB0.75 in the prior year period.

For the quarter ended September 30, 2019, the Company's weighted average number of ADSs used in computing diluted income per ADS was 675,289,380.

BALANCE SHEET AND CASH FLOW

As of September 30, 2019, the Company had cash and cash equivalents and restricted cash of RMB6.6 billion (US$928.0 million) and short term investments of RMB57.5 million (US$8.1 million).

For the quarter ended September 30, 2019, net cash from operating activities was RMB2.1 billion (US$289.3 million), and free cash flow[10], a non-GAAP measurement of liquidity, was as follows:

For the three months ended


Sep 30, 2018

RMB'000

Sep 30, 2019

RMB'000

Sep 30, 2019

US$'000

Net cash from operating activities

221,037

2,067,480

289,251

Add: Impact from Internet financing activities[11]

(427,526)

(1,837,974)

(257,142)

Less: Capital expenditures

(1,009,475)

(1,094,668)

(153,150)

Free cash flow out

(1,215,964)

(865,162)

(121,041)



For the trailing twelve months ended


Sep 30, 2018

RMB'000

Sep 30, 2019

RMB'000

Sep 30, 2019

US$'000

Net cash from operating activities

767,985

12,053,995

1,686,416

Add: Impact from Internet financing activities[11]

1,059,238

(3,239,772)

(453,261)

Less: Capital expenditures

(3,191,761)

(4,040,032)

(565,221)

Free cash flow (out)/in

(1,364,538)

4,774,191

667,934

Business Outlook

For the fourth quarter of 2019, the Company expects its total net revenue to be between RMB26.1 billion and RMB27.4 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 RMB7.1477 to US$1.00, the effective noon buying rate on September 30, 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 September 30, 2019, or at any other rate.

Conference Call Information

The Company will hold a conference call on Wednesday, November 13, 2019 at 7:30 am Eastern Time or 8:30 pm Beijing Time to discuss its financial results and operating performance for the third quarter of 2019.

United States:

+1-845-675-0437

International Toll Free:

+1-866-519-4004 

Mainland China Domestic:

400-6208-038

Hong Kong: 

+852-3018-6771

Conference ID: 

#2094304

The replay will be accessible through November 21, 2019 by dialing the following numbers:

United States Toll Free: 

+1-855-452-5696

International: 

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