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Briefing Aug 12, 2020 06:13 pm EqualOcean

Vipshop Responds to Rumors of the Second Listing in Hong Kong

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News EO
Aug 19, 2020 10:43 pm ·

Vipshop Shares Down 23% After the Release of the Second Quarter Report

On August 19, Vipshop disclosed its unaudited financial report for the second quarter of 2020. Vipshop saw revenue of CNY 24.10 billion, a year-on-year increase of 6.0%. GMV exceeded CNYY 38.40 billion, and active users increased by 17% year-on-year. The company successfully maintained positive net earnings for 31 consecutive quarters. Vipshop recorded a gross profit of CNY 4.90 billion, and its gross profit margin declined from 22.40% to 20.50% due to the company's substantial investment in discounts and coupons in its promotional activities. According to general accounting standards, Vipshop's net profit attributable to shareholders was CNY 1.50 billion, an increase of 88.9% year-on-year.  The number of active users of Vipshop increased to 38.8 million, a year-on-year increaseof17%. Vipshop's total orders were 171 million, an increase of 15% from 148 million in the same period last year. Yang Donghao, the chief financial officer of Vipshop, will leave for personal reasons in November 2020. The company's board of directors has appointed Yang Donghao as the new non-executive director, which will take effect at the same time as his position change. Currently, Vipshop has begun to look for a new chief financial officer. For the third quarter of 2020, the company expects its total net income to be between CNY 20.60 billion and CNY 21.60 billion. Vipshop said that the forecast reflects the company's preliminary views on the current market and operating conditions and may change.

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Jul 1, 2020 09:18 pm ·

Vipshop Launches Live Channel

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News EO
Jun 4, 2020 04:50 am ·

Vipshop: Opening up the Source or Regulating the Flow?

►Vipshop overachieved its target net income of CNY 986 million (around USD 139 million) with a YoY increase of 20.8%.  ►Although cost control helped the company maintain profitability, it also brought difficulties in increasing the user numbers.     The O2O apparel platform, Vipshop (NYSE:VIPS), released its financial results for the first quarter in 2020 on May 27. The results showed that the pandemic had little to no effects on its profits. According to the National Bureau of Statistics, affected by the decrease from both supply and demand sides, the retail sales in clothing and cosmetic dropped by 32.2% and 13.2 % YoY, respectively. Of course, the clothing market downturn in Q1 made a significant impact on Vipshop’s performance, with the revenue down to CNY 18.8 billion (around USD 2.7 billion) from CNY 21.3 billion (around 3.2 billion) in the same period of last year. However, the company’s sales performed better than expected by Wall Street estimates (USD 2.54 billion).  Though underperformed in revenue, the resilience shown by Vipshop in turning against the market forces under the pandemic are striking. The company managed to generate an income of CNY 986 million (around USD 139 million) with a YoY  increase of 20.8%.  Resilience under the pandemic  The resilience comes from Vipshop’s cost control and business strategies. The expenditures related to heavy assets significantly reduced after the cooperation with SF Express. Execution costs, referring to expenses incurred during the lease term for using the leased asset, dropped by 21% in 1Q20 compared to 1Q19.  The marketing cost of Vipshop also reduced by 47%, amounting to CNY 410 million. Even though the sector took up 70% of the GMV, fortunately and wisely the company didn’t waste its resources on marketing on the clothing business in the first quarter.  Instead of trying to promote the sector to better compete with other clothing selling companies, Vipshop chose to cut costs to survive under the recession. Moreover, Vipshop’s choice of exploring the lower-tier market finally showed its advantages. When reviewing history, discount retail always bucks up during an economic recession, which shows a counter-cyclical resistance.  Likewise the largest discount store in the US, T.J. Maxx, has outperformed Macy’s in every downturn of the economy.  Vipshop – one of the largest discount retail companies, survived during the pandemic.  Wall Street: Promising future After the release of 10-Q, 23 analysts out of 28, tracking the company, gave it a ‘buy’ rating.  Also, the market believes the company has been underestimated. The P/S ratio of Vipshop is 0.78, which is way lower than the number from other discount stores in the US, such as TJX of 1.77 and Ross of 2.46. The lower the P/S ratio, the more possibilities of a company being undervalued.  A necessity of opening up the source  We can’t deny that Vipshop did a great job in the first quarter of this year. However, the secret behind the continuing profitability might be the over-focusing on the control of the expenditure under the pandemic.  The adverse effect on the cost reduction is the dilemma of the users’ growth. In 1Q20, the number of active users dropped to 29.6 million, from 29.7 million in 1Q19. Therefore, the company had to use discounts to maintain the user’s adhesiveness.  Being based solely on the control of regulating the flow cannot be a long-term strategy. Vipshop has to come up with plans to open the sources, further promote the growth in GMV and user growth.

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May 27, 2020 09:41 pm · Sina

Vipshop: Overachieved Net Income of 20.08%

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Analysis
Mar 10, 2020 10:34 am · EO Company

Vipshop, how to seize the opportunity to take a breath?

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Sep 16, 2020 02:59 pm · Kuaishou

Kuaishou E-Commerce Order Volume Exceeded 500Mn in August

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Sep 16, 2020 10:29 am ·

Alibaba is in Talks to Invest Zhilian Zhaopin

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Sep 16, 2020 10:11 am ·

Guiding Price of Huazhu Group is HKD 297/Share

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