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:

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.

The replay will be accessible through May 31, 2019 by dialing the following numbers: 

A live and archived webcast of the conference call will also be available at the Company's investor relations website at http://ir.vip.com.

About Vipshop Holdings Limited

Vipshop Holdings Limited is a leading online discount retailer for brands in China. Vipshop offers high quality and popular branded products to consumers throughout China at a significant discount to retail prices. Since it was founded in August 2008, the Company has rapidly built a sizeable and growing base of customers and brand partners. For more information, please visit www.vip.com.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as Vipshop's strategic and operational plans, contain forward-looking statements. Vipshop may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Vipshop's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Vipshop's goals and strategies; Vipshop's future business development, results of operations and financial condition; the expected growth of the online discount retail market in China; Vipshop's ability to attract customers and brand partners and further enhance its brand recognition; Vipshop's expectations regarding demand for and market acceptance of flash sales products and services; competition in the discount retail industry; fluctuations in general economic and business conditions in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Vipshop's filings with the SEC. All information provided in this press release is as of the date of this press release, and Vipshop does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Use of Non-GAAP Financial Measures

The condensed consolidated financial information is derived from the Company's unaudited interim condensed consolidated financial statements prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"), except that comparative consolidated statements of cash flows for the period presented and detailed footnote disclosures required by Accounting Standards Codification 270, Interim Reporting ("ASC270"), have been omitted. Vipshop uses non-GAAP net income attributable to Vipshop's shareholders, non-GAAP net income attributable to Vipshop's shareholders per diluted ADS, non-GAAP income from operations, non-GAAP operating income margin, non-GAAP net margin attributable to Vipshop's shareholders, and free cash flow, each of which is a non-GAAP financial measure. Non-GAAP net income attributable to Vipshop's shareholders is net income attributable to Vipshop's shareholders excluding (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. Non-GAAP net income attributable to Vipshop's shareholders per diluted ADS is computed using non-GAAP net income attributable to Vipshop's shareholders divided by weighted average number of diluted ADS outstanding for computing diluted earnings per ADS. Non-GAAP income from operations is income from operations excluding share-based compensation expenses and amortization of intangible assets resulting from business acquisitions. Non-GAAP operating income margin is non-GAAP income from operations as a percentage of total net revenue. Non-GAAP net margin attributable to Vipshop's shareholders is non-GAAP net income attributable to Vipshop's shareholders as a percentage of total net revenue. Free cash flow is net cash from operating activities adding back the impact from Internet financing activities and less capital expenditures, which include purchase and deposits of property and equipment and land use rights, and purchase of other assets. Impact from Internet financing activities added back or deducted from free cash flow contains changes in the balances of financial products, which are primarily consumer financing and supplier financing that the Company provides to customers and suppliers. The Company believes that separate analysis and exclusion of the non-cash impact of (a) share-based compensation, (b) amortization of intangible assets, (c) gain on disposal or revaluation of investments, and (d) share of gain in investment of limited partnership that is accounted for as an equity method investee adds clarity to the constituent parts of its performance. The Company reviews these non-GAAP financial measures together with GAAP financial measures to obtain a better understanding of its operating performance. It uses these non-GAAP financial measures for planning, forecasting and measuring results against the forecast. The Company believes that non-GAAP financial measures are useful supplemental information for investors and analysts to assess its operating performance without the effect of (1) non-cash share-based compensation expenses, (2) amortization of intangible assets, (3) gain on disposal or revaluation of investments, and (4) share of gain in investment of limited partnership that is accounted for as an equity method investee. Free cash flow enables the Company to assess liquidity and cash flow, taking into account the impact from Internet financing activities and the financial resources needed for the expansion of fulfillment infrastructure and technology platform. Share-based compensation expenses and amortization of intangible assets have been and will continue to be significant recurring expenses in its business. However, the use of non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that they do not include all items that impact the Company's net income for the period. In addition, because non-GAAP financial measures are not measured in the same manner by all companies, they may not be comparable to other similar titled measures used by other companies. One of the key limitations of free cash flow is that it does not represent the residual cash flow available for discretionary expenditures.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Vipshop Holdings Limited Reconciliations of GAAP and Non-GAAP Results" at the end of this release.

 

 

 

 

 

 

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SOURCE Vipshop Holdings Limited

Investor Relations Contact: Jessie Fan, Tel: +86 (20) 2233-0732, Email: IR@vipshop.com