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Vipshop Holdings (VIPS) Q2 Earnings, Revenues Miss Estimates

Zacks Equity Research
·3 min read

Vipshop Holdings VIPS reported second-quarter 2020 adjusted earnings of 27 cents per American depositary share, missing the Zacks Consensus Estimate by 3.6%. Moreover, revenues of $3.4 billion missed the consensus mark by 0.2%.

In domestic currency (RMB), earnings jumped 85.1% year over year to RMB2.24 per ADS. Additionally, revenues increased 6% on a year-over-year basis to RMB24.11 billion.

Quarter Details

Gross Merchandise Value (“GMV”) increased 9% year over year to RMB38.4 billion. Notably, GMV contribution from apparel-related categories increased to 69% from 63% in the year-ago quarter. GMV contribution from Vipshop’s Fengqiang and Kuaiqiang channels reached 50% of the company’s online GMV.

Moreover, total orders increased 15% year over year to 170.5 million. Additionally, the number of active customers increased 17% year over year to 38.8 million.

Vipshop Holdings Limited Price, Consensus and EPS Surprise

 

Vipshop Holdings Limited Price, Consensus and EPS Surprise
Vipshop Holdings Limited Price, Consensus and EPS Surprise

Vipshop Holdings Limited price-consensus-eps-surprise-chart | Vipshop Holdings Limited Quote

Vipshop witnessed strong recovery in apparel demand beginning May. The company ran a promotional campaign in June that helped it attract new customers.

Markedly, conversion rate for Vipshop’s app increased 10% year over year. Moreover, repeat customers as a percentage of total active customers increased to 90% from 87% in the year-ago quarter.

Gross profit declined 2.9% year over year to RMB4.94 billion in second-quarter 2020. Gross margin contracted 210 basis points (bps) to 20.5%, primarily attributable to the company’s strategy to reinvest into discounts and coupons during this year’s June promotional event.

Fulfillment expenses declined 23.8% year over year to RMB1.68 billion. Further, general and administrative expenses increased 13.9% to RMB804.6 million.

However, marketing expenses increased 17.2% year over year to RMB1.03 billion. Moreover, technology and content expenses fell 27.7% to $144.5 million.

Operating income increased 27.1% year over year to RMB1.50 billion in the quarter under review.

Balance Sheet & Cash Flow

As of Jun 30, 2020, the company had cash and cash equivalents of RMB7.40 billion. Net cash from operating activities was RMB5.1 billion.

Management Change

Vipshop announced that CFO Donghao Yang, will step down from his current position in November.

Guidance

For third quarter of 2020, Vipshop expects revenues between RMB20.6 billion and RMB21.6 billion, representing a year-over-year growth rate of approximately 5-10%.

Zacks Rank & Stocks to Consider

Vipshop currently carries a Zacks Rank #3 (Hold). Autodesk ADSK, Autohome ATHM and salesforce.com CRM are some better-ranked stocks in the broader computer and technology sector. Currently, all the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Autodesk, Autohome and salesforce.com are set to report their quarterly results on Aug 25.

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