On Monday, Shares of Vipshop Holdings Limited (NYSE: VIPS), lost -0.87% to $14.78. The 52-week range of the share price is from $10.21 – $17.41. The beta value for this stock stands at 1.73 points, while its earnings per share (EPS) was $0.46. The company has total market capitalization of $8.96B and a total of 101.51M outstanding shares.
Vipshop Holdings Limited, a most important online discount retailer for brands in China (“Vipshop” or the “Company”), recently declared its unaudited financial results for the 1st- quarter finished March 31, 2017.
1st- Quarter 2017 Highlights:
- Total net revenue for the 1st- quarter of 2017 increased by 31.10 percent to RMB15.950B (US$2.320B) from RMB12.170B in the previous year period.
- The number of active clients[1.00] for the 1st- quarter of 2017 increased by 32.00 percent yoy to 26.00M.
- Total orders[2.00] for the 1st- quarter of 2017 increased by 23.00 percent yoy to 72.10M.
- Gross profit for the 1st- quarter of 2017 increased by 25.00 percent to RMB3.690B (US$536.70M) from RMB2.960B in the previous year period.
- Net income attributable to Vipshop’s investorss for the 1st- quarter of 2017 increased by 16.30 percent to RMB551.90M (US$80.20M) from RMB474.60M in the previous year period.
- Non-GAAP net income attributable to Vipshop’s investorss[3.00] for the 1st- quarter of 2017 increased by 28.2 percent to RMB799.40M (US$116.10M) from RMB623.40M in the previous year period.
“We are pleased to have stated continued robust operational outcomes with solid client gains in the 1st- quarter of 2017, starting the year on a strong note,” said Mr. Eric Shen, chairman and CEO of Vipshop. “Our strong results highlight the effectiveness of our planned concentrate on increasing our client base and gaining additional market share in China’s fragmented discount retail market. Specifically, we are delighted to witness that our total active clients for the trailing yearly finished March 31, 2017 increased by 38.00 percent to over 55.50M. In the past quarter, we made a number of strides in improving the end-to-end consumer experience across our platform, numbering our strengthened merchandising capability with various new international brands and the further development in the variety and selection of our product offerings, in addition to the continued improvement of the customization across the Vipshop platform. Our success were further recognized by independent 3rd– parties such as BrandZ, which served as endorsements of the value of our brand and the rising influence of our platform.”
Mr. Donghao Yang, CFO of Vipshop, further remarked, “We are pleased to have delivered another quarter of strong top line development with steady margins in addition to enhanced free cash flow in the 1st- quarter of 2017. Importantly, we are glad to declare that our Board of Directors authorized the Company to explore a projected spin-off of our Internet finance business, which could significantly strengthen the Company’s cash flow, positively impact our earnings, and facilitate us to further invest in our core e-commerce business. Looking forward, we are sure that we will carry on to gain market share in our core categories while maintaining our stable and sustainable profitability as China’s leading discount retailer.”
Recent Business Highlights:
- On May 11, 2017, Vipshop’s Board of Directors authorized the Company to explore a projected spin-off of its Internet finance business into a dedicated entity. The objective of the projected spin-off is to alleviate the Internet finance business’ financial impact on the Company’s core e-commerce business and shift any associated incentives and risks to this dedicated entity. In Addition to, it may make possible the Internet finance business to speed up its development as an independent entity going onward. It has been projected that Vipshop will inject all of its Internet finance business and related assets into the dedicated entity and restructure the existing variable interest entity arrangement with that dedicated entity. Certain key administration personnel of the Internet finance business may acquire minority equity interests in the dedicated entity. Vipshop’s Board of Directors has authorized the directors and officers of the Company to further explore, negotiate and finalize the terms and arrangements of the projected spin-off for its final approval.
- On May 11, 2017, Vipshop’s Board of Directors authorized the formation of a new entity dedicated to the Company’s logistics business, aiming to open up Vipshop’s logistics services to a broader market to lower costs for both Vipshop and its business partners, to discover a new program of online and offline retail integration, in addition to give consistent delivery services with its more comprehensive countrywide network coverage.
- During the 1st- quarter of 2017, the Company duly notified all holders of its 1.5 percent convertible senior notes due 2019 (of which US$632.50M aggregate principal amount was exceptional at the time of such notification) of their one-time put right under the terms of the indenture for the notes. About US$3.10M aggregate principal amount of the notes were validly and timely surrendered and not withdrawn and the Company accepted all of these notes for repurchase. The Company believes the result of the put right exercise of its notes, together with its BBB+ rating by Fitch, Baa1 rating by Moody’s, and BBB rating by Standard & Poor’s, reflected Vipshop’s financial strength and high credit quality. Further, the Company believes it is also a vote of confidence from the capital markets for its future development prospects and market potential.
- In the 1st- quarter of 2017, the Company’s CRM team began to experiment with a new Super VIP paid membership program, which offers many features counting early and exclusive access to selective sales events, privileged discounts, and free shipping and returns. Trial program members who enrolled as Super VIPs showed noteworthy developments in average order frequency and average revenue per user.
- Vipshop is in the process of developing a new generation of intelligent client service chat bots that give shopping guides before purchases and after-sales services. Through this program, the Company will be able to substantially improve consumer experience, advance administrative efficiency, and diminish costs.
- In the 1st- quarter of 2017, Vipshop added about 160,000.00 square meters of warehouse space in Jianyang, China and presently has about 2.10M square meters of warehouse capacity countrywide. In order to be closer to its clients, shorten delivery time, and develop the efficiency of its distribution, in addition to its 5- regional and centralized warehouses, the Company added 2- local warehouses in Guiyang, China and Kunming, China throughout the quarter, rising the total number of local warehouses to 7 as of March 31, 2017.
- Vipshop scaled up the application of intelligent transportation robot system in its southern warehouse and rolled out its proprietary Warehouse Control System (WCS) in its southern and central warehouses. The Company also introduced automated systems in its central and southern warehouse facilities throughout the 1st- quarter, which include conveyor belts and automatic systems for product sorting and storage, aiming to eventually develop the Company’s logistics efficiency and decrease costs.
- The Company added about 3,000.00 last mile delivery employees in the 1st- quarter of 2017 and now has a total of more than 23,000.00 last mile delivery staff countrywide. It now has about 2,800.00 self-operated delivery stations and is able to convey 93.00 percent of its orders through its last mile network as contrast with 83.00 percent in the similar period last year, covering all provinces in China. In addition, Vipshop further strengthened its logistics services by having its own delivery workers collect returns from clients directly, which currently covers 67.00 percent of the Company’s total returns, up from 30.00 percent from the similar period in the previous year.
- In the 1st- quarter of 2017, Vipshop added a number of famous international brands and now works directly with Giorgio Armani, Guess, Versace, and many others.
- At the February 28.00 Beauty and Cosmetics Festival, Vipshop collaborated with over 300.00 international and local beauty brands. Orders for the event exceeded 1.00M in just 1.50 hours. At the same time, Vipshop performed joint marketing with 70.00 major beauty and cosmetics brands on social media. At the March 8 Spring New Collection occasion, Vipshop partnered with 8.00 major apparel brands and published eight fashionable trends for 2017 spring and summer collections.
- In the 1st- quarter of 2017, BrandZ ranked Vipshop as number 40.00 on the list of “Top 100.00 Most Valuable Chinese Brands 2017.” In addition, the Company was ranked number 15.00 on the list of “Top 50.00 Chinese Listed Private Companies by Brand Value 2017,” jointly published by Tsinghua University’s China Enterprise Research Center and the Daily Economic News. These 3rd– party endorsements demonstrate the influence of Vipshop’s growing brand and the power of the Vipshop platform.
1st- Quarter 2017 Financial Results:
- Total net revenue for the 1st- quarter of 2017 increased by 31.10 percent to RMB15.950B (US$2.320B) from RMB12.170B in the previous year period, mainly driven by the development in the numbers of total active clients, repeat clients, and total orders.
- The number of active clients for the 1st- quarter of 2017 increased by 32.00 percent to 26.00M from 19.70M in the previous year period. The number of total orders for the 1st- quarter of 2017 increased by 23.00 percent to 72.10M from 58.70M in the previous year period.
Gross profit for the 1st- quarter of 2017 increased by 25.00 percent to RMB3.690B (US$536.70M) from RMB2.960B in the previous year period. Gross margin was 23.20 percent as contrast with 24.30 percent in the previous year period. The Company anticipates its gross margin to stay stable in the short term as it balances its promotional activities and sales with its marketing operating cost.
OPERATING INCOME AND COSTS:
- Total operating costs for the 1st- quarter of 2017 were RMB3.130B (US$454.40M), as contrast with RMB2.390B in the previous year period. As a percentage of total net revenue, total operating costs diminished to 19.60 percent from 19.70 percent in the previous year period.
- Fulfillment costs for the 1st- quarter of 2017 were RMB1.440B (US$208.70M), as contrast with RMB1.080B in the previous year period, mainly reflecting a increase in sales volume and number of orders fulfilled. As a percentage of total net revenue, fulfillment costs were 9.00 percent as contrast with 8.90 percent in the previous year period, mainly attributable to the Company’s growth to support a increase in the last mile business outside of the Vipshop platform.
- Marketing costs for the 1st- quarter of 2017 were RMB729.50M (US$106.00M), as contrast with RMB603.80M in the previous year period, reflecting the Company’s strategy to drive long-term development through sustainable investments to strengthen its brand awareness, attract new users and enlarge market share. As a percentage of total net revenue, marketing costs decreased to 4.60 percent from 5.00 percent in the previous year period, mainly attributable to the Company’s planned balance between promotional activities and sales with its broader marketing efforts.
- Technology and content costs for the 1st- quarter of 2017 were RMB419.50M (US$61.00M), as contrast with RMB326.70M in the previous year period, reflecting the Company’s continuing hard works to invest in human capital, highly developed technologies such as data analytics in addition to new business opportunities numbering the Internet finance business. As a percentage of total net revenue, technology and content costs decreased to 2.60 percent from 2.70 percent in the previous year period.
- General and administrative costs for the 1st- quarter of 2017 were RMB542.20M (US$78.80M), as contrast with RMB382.30M in the previous year period. As a percentage of total net revenue, general and administrative costs were 3.40 percent as contrast with 3.10 percent in the previous year period, mainly attributable to a increase in share based compensation in addition to the impact from building out the Internet finance business.
- Income from operations for the 1st- quarter of 2017 increased by 23.60 percent to RMB736.60M (US$107.00M) from RMB596.10M in the previous year period. Operating margin was 4.60 percent as contrast with 4.90 percent in the previous year period.
- Non-GAAP income from operations[4.00], which excludes share-based compensation costs and amortization of intangible assets resulting from business acquisitions, increased by 31.20 percent to RMB1.00B (US$145.90M) from RMB765.20M in the previous year period. Non-GAAP operating income margin[5.00] remained stable at 6.30 percent yoy.
- Net income attributable to Vipshop’s investorss increased by 16.30 percent to RMB551.90M (US$80.20M) from RMB474.60M in the previous year period. Net margin attributable to Vipshop’s investorss was 3.50 percent as contrast with 3.90 percent in the previous year period. Net income attributable to Vipshop’s investors per diluted ADS[6.00] increased to RMB0.920 (US$0.130) from RMB0.8 in the previous year period.
- Non-GAAP net income attributable to Vipshop’s investors, which excludes share-based compensation costs, impairment loss of investments, and amortization of intangible assets resulting from business acquisitions and equity method investments, increased by 28.20 percent to RMB799.40M (US$116.10M) from RMB623.40M in the previous year period. Non-GAAP net margin attributable to Vipshop’s investors [7.00] was 5.0 percent as contrast with 5.10 percent in the previous year period. Non-GAAP net income attributable to Vipshop’s investorss per diluted ADS [8.00] increased to RMB1.310 (US$0.190) from RMB1.040 in the previous year period.
- For the quarter finished March 31, 2017, the Company’s weighted average number of ADSs used in computing diluted income per ADS was 625,339,078.00.
BALANCE SHEET AND CASH FLOW:
As of March 31, 2017, the Company had cash and cash equivalents of RMB4.430B (US$644.30M) and held-to-maturity securities of RMB746.20M (US$108.40M).
For the second quarter of 2017, the Company anticipates its total net revenue to be between RMB17.00B and RMB17.50B, representing a year-over-year growth rate of about 26.00 percent to 30.00 percent. These forecasts reflect the Company’s current and preliminary view on the market and operational conditions, which is subject to change.
This declarement contains currency conversions of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from Renminbi to U.S. dollars are made at a rate of RMB 6.88320 to US$1.0, the effective noon buying rate for March 31, 2017 as set forth in the H.10 statistical release of the Federal Reserve Board.
Conference Call Information:
The Company will hold a conference/discussion call on Tuesday, May 16, 2017 at 8:00 am Eastern Time or 8:00 pm Beijing Time to talk about its financial outcomes and operating performance for the 1st- quarter of 2017.
Worldwide Toll Free: +1-855-500-8701
China Domestic: 400-1200-654
Hong Kong: +852-3018-6776
Conference ID: #17647828
The replay will be available through May 24, 2017 by dialing the following numbers:
US Toll Free: +1-855-452-5696
Conference ID: #17647828
Analyst recommendation for this stock stands at 2.00.