Vipshop's 2023 performance exceeds expectations, with strong sales in wearable products

On February 28th, discount e-commerce platform Vipshop (VIPS:NYSE) released its unaudited financial results for the fourth quarter and full year of 2023.

According to the financial report, during the 2023 fiscal year, Vipshop achieved a net revenue of RMB 112.9 billion, representing a 9.4% year-on-year increase. Non-GAAP net profit reached RMB 9.5 billion, marking a 39.1% increase from the previous year's RMB 6.8 billion. Net profit attributable to Vipshop's shareholders increased from 6.1% to 7.2% for the full year of 2023.

In the reporting period, Vipshop's fourth-quarter net revenue grew by 9.2% to CNY 34.7 billion, with a gross profit increase of 19.3% to CNY 8.2 billion and a gross profit margin rising from 21.7% to 23.7% compared to the same period last year. Non-GAAP net profit was CNY 3.2 billion, marking a 43.4% year-on-year increase. Vipshop attributes this performance to the active customer base and expenditure growth driven by the recovery in non-essential consumer goods consumption.

Moreover, Vipshop's annual Gross Merchandise Volume (GMV) surpassed CNY 208 billion in 2023, compared to CNY 175.2 billion in 2022, marking an 18.7% year-on-year increase. As clothing consumption continued to rebound, GMV for wearable goods in 2023 increased by 24% compared to 2022, significantly contributing to Vipshop's milestone GMV surpassing CNY 200 billion for the first time.

In terms of user base, Vipshop's active user count for the 2023 fiscal year reached 87.4 million, reflecting a 3.9% year-on-year increase, with an order count of 8.123 billion, marking a 9.8% increase. For the single quarter, the active user count reached 48.5 million, a 2.3% year-on-year increase, with an order count of 2.343 billion, showing a 7.2% increase.

Additionally, Vipshop announced its inaugural annual dividend policy. According to this policy, the company's board of directors will distribute annual dividends to shareholders registered after the market closes on March 15, 2024, amounting to USD 2.15 per ordinary share or USD 0.43 per American depositary share, totaling approximately USD 250 million.

Despite positive core data, Vipshop acknowledges some "unmet" achievements in 2023, such as the overall customer growth falling short of ideal expectations. The company's Super VIP (SVIP) active user count increased by 13% to 7.6 million, contributing 45% to online consumption. SVIP's contribution to Vipshop's GMV is substantial and enduring. In the third-quarter report of 2022, Vipshop disclosed that SVIP users accounted for 40% of the online net GMV.

In this annual report, Vipshop stated that SVIP membership renewal rates significantly improved, and per capita consumption also increased. During a conference call, Vipshop executives forecast continued growth in SVIP consumer contributions in 2024. Apart from SVIP user expansion, Vipshop plans to continue efforts to expand its overall user base in 2024.

In the past year, major e-commerce platforms engaged in intense price competition. For discount e-commerce, the advantage lies in "low prices," with the key emphasis on ensuring product quality alongside professional platform services. Throughout 2023, Vipshop consciously reinforced the consumer perception of "low prices but high quality," intending to build a more trustworthy relationship with consumers. In 2023, Vipshop strategically introduced lower discounted items during key events such as 618, Double 11, and annual sales, combining limited-time and limited-quantity offers with projects like "Kuang Miao Plus." Simultaneously, Vipshop established its own appraisal center and collaborated directly with brand partners.

"We are continuing to explore how to better adhere to the brand's special sales positioning and make users more aware of our value," stated Vipshop executives during the conference call, expressing the intention to increase certain marketing expenses in 2024 to continue acquiring customers. "In 2024, we will strengthen the expansion of brand image and positioning, including on platforms with a large user base such as Xiaohongshu and Bilibili."

As of the time of writing, Vipshop is priced at USD 19.49 per share, with a total market value of USD 10.582 billion.