Vipshop Reports Unaudited First Quarter 2022 Financial Results

Conference Call to Be Held at 7:30 A.M. U.S. Eastern Time on May 19, 2022

GUANGZHOU, China, May 19, 2022 /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 quarter ended March 31, 2022.

First Quarter 2022 Highlights

• Total net revenues for the first quarter of 2022 were RMB25.2 billion (US$4.0 billion), as compared with RMB28.4 billion in the prior year period.
• GMV^[1] for the first quarter of 2022 was RMB42.6 billion, as compared with RMB46.1 billion in the prior year period.
• Gross profit for the first quarter of 2022 was RMB5.0 billion (US$790.1 million), as compared with RMB5.6 billion in the prior year period.
• Net income attributable to Vipshop’s shareholders for the first quarter of 2022 was RMB1.1 billion (US$172.8 million), as compared with RMB1.5 billion in the prior year period.
• Non-GAAP net income attributable to Vipshop’s shareholders^[2] for the first quarter of 2022 was RMB1.4 billion (US$223.8 million), as compared with RMB1.7 billion in the prior year period.
• The number of active customers^[3] for the first quarter of 2022 was 42.2 million, as compared with 45.8 million in the prior year period.
• Total orders^[4] for the first quarter of 2022 were 166.4 million, as compared with 175.5 million in the prior year period.

Mr. Eric Shen, Chairman and Chief Executive Officer of Vipshop, stated, “Our business demonstrated strong execution and operational agility in the first quarter, against a challenging macro environment and prolonged COVID-19 impact. We continued to execute on our merchandising strategy to support core brand partners, bring in new and trendy brands, as well as expand high-value customer base. Besides, by leveraging our merchandising capabilities, we expanded non-apparel product offerings to quickly address the changing consumer demand, which partially offset the sluggish demand in discretionary items. We are pleased that our proven business model enabled us to sustain a healthy level of profits. While we remain cautious amid ongoing uncertainties, we are firmly committed to our strategic positioning as a discount platform for branded products, looking to create exceptional value for both brand partners and customers.”

Mr. David Cui, Chief Financial Officer of Vipshop, further commented, “In the first quarter, we achieved resilient margins thanks to our initiatives to manage cost and expenses with greater discipline. Looking forward, we will continue to optimize operational efficiency and deliver healthy and sustainable profitability. Besides, we fully utilized the remaining amount under the US$500 million share repurchase program during the first quarter, and announced another US$1 billion program in March 2022. This demonstrates our confidence in our long-term business potential and value creation to our shareholders.”  

First Quarter 2022 Financial Results

REVENUES

Total net revenues for the first quarter of 2022 were RMB25.2 billion (US$4.0 billion), as compared with RMB28.4 billion in the prior year period, primarily attributable to soft consumer demand for discretionary categories and adverse impact on warehousing and logistics networks caused by COVID-19 resurgence in China.

GROSS PROFIT

Gross profit for the first quarter of 2022 was RMB5.0 billion (US$790.1 million), as compared with RMB5.6 billion in the prior year period. Gross margin for the first quarter of 2022 increased to 19.8% from 19.7% in the prior year period.

OPERATING EXPENSES

Total operating expenses for the first quarter of 2022 decreased by 11.0% year over year to RMB3.9 billion (US$615.1 million) from RMB4.4 billion in the prior year period. As a percentage of total net revenues, total operating expenses for the first quarter of 2022 was 15.4%, which stayed flat as compared with the prior year period.

• Fulfillment expenses for the first quarter of 2022 decreased by 5.5% year over year to RMB1.7 billion (US$267.4 million) from RMB1.8 billion in the prior year period. As a percentage of total net revenues, fulfillment expenses for the first quarter of 2022 was 6.7%, as compared with 6.3% in the prior year period.
• Marketing expenses for the first quarter of 2022 decreased by 41.3% year over year to RMB759.3 million (US$119.8 million) from RMB1.3 billion in the prior year period, primarily attributable to more prudent marketing strategy. As a percentage of total net revenues, marketing expenses for the first quarter of 2022 decreased to 3.0% from 4.6% in the prior year period.
• Technology and content expenses for the first quarter of 2022 increased to RMB390.4 million (US$61.6 million) from RMB337.5 million in the prior year period. As a percentage of total net revenues, technology and content expenses for the first quarter of 2022 increased to 1.5% from 1.2% in the prior year period.
• General and administrative expenses for the first quarter of 2022 were RMB1.1 billion (US$166.4 million), as compared with RMB956.7 million in the prior year period. As a percentage of total net revenues, general and administrative expenses for the first quarter of 2022 was 4.2%, as compared with 3.4% in the prior year period.

INCOME FROM OPERATIONS

Income from operations for the first quarter of 2022 was RMB1.3 billion (US$202.3 million), as compared with RMB1.5 billion in the prior year period. Operating margin for the first quarter of 2022 was 5.1%, as compared with 5.3% in the prior year period.

Non-GAAP income from operations[5] for the first quarter of 2022, which excluded share-based compensation expenses and amortization of intangible assets resulting from business acquisitions, was RMB1.5 billion (US$239.8 million), as compared with RMB1.7 billion in the prior year period. Non-GAAP operating margin[6] for the first quarter of 2022 was 6.0%, as compared with 6.1% in the prior year period.

NET INCOME

Net income attributable to Vipshop’s shareholders for the first quarter of 2022 was RMB1.1 billion (US$172.8 million), as compared with RMB1.5 billion in the prior year period. Net margin attributable to Vipshop’s shareholders for the first quarter of 2022 was 4.3%, as compared with 5.4% in the prior year period. Net income attributable to Vipshop’s shareholders per diluted ADS[7] for the first quarter of 2022 was RMB1.61 (US$0.25), as compared with RMB2.18 in the prior year period.

Non-GAAP net income attributable to Vipshop’s shareholders for the first quarter of 2022, which excluded (i) share-based compensation expenses, (ii) investment gain (loss) and revaluation of investments excluding dividends, (iii) reconciling items on the share of equity method investments, (iv) amortization of intangible assets resulting from business acquisitions, and (v) tax effects on non-GAAP adjustments, was RMB1.4 billion (US$223.8 million), as compared with RMB1.7 billion in the prior year period. Non-GAAP net margin attributable to Vipshop’s shareholders[8] for the first quarter of 2022 was 5.6%, as compared with 6.0% in the prior year period. Non-GAAP net income attributable to Vipshop’s shareholders per diluted ADS[9] for the first quarter of 2022 was RMB2.09 (US$0.33), as compared with RMB2.41 in the prior year period.

For the quarter ended March 31, 2022, the Company’s weighted average number of ADSs used in computing diluted income per ADS was 680,268,635.

BALANCE SHEET AND CASH FLOW

As of March 31, 2022, the Company had cash and cash equivalents and restricted cash of RMB14.3 billion (US$2.3 billion) and short term investments of RMB5.0 billion (US$791.8 million).

For the quarter ended March 31, 2022, net cash used in operating activities was RMB1.2 billion (US$188.7 million), and free cash flow[10], a non-GAAP measurement of liquidity, was as follows:

Share Repurchase Program

As of March 31, 2022, the Company had fully utilized its US$500 million share repurchase program that it announced on March 30, 2021, resulting in repurchases of 7,514,514 Class A ordinary shares in aggregate.

On March 31, 2022, the Company’s board of directors authorized a new share repurchase program under which the Company may repurchase up to US$1 billion of its ADSs or Class A ordinary shares for a 24-month period. 

Business Outlook

For the second quarter of 2022, the Company expects its total net revenues to be between RMB22.2 billion and RMB23.7 billion, representing a year-over-year decrease rate of approximately 25% to 20%. 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 RMB6.3393 to US$1.00, the effective noon buying rate on March 31, 2022 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 31, 2022, or at any other rate.

Conference Call Information

The Company will hold a conference call on Thursday, May 19, 2022 at 7:30 am US Eastern Time, 7:30 pm Beijing Time to discuss the financial results.

All participants wishing to join the conference call must pre-register online using the link provided below. Once pre-registration has been completed, participants will receive dial-in numbers, a passcode, and a unique registrant ID via email. To join the conference, participants should use the dial-in details in the email and then enter the event passcode followed by the registrant ID.

A replay of the conference call will be accessible until May 26, 2022 via the following dial-in details:         

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 https://ir.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; the potential impact of the COVID-19 to Vipshop’s business operations and the economy in China and elsewhere generally; 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 income and 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) investment gain (loss) and revaluation of investments excluding dividends, (iii) reconciling items on the share of equity method investments, (iv) amortization of intangible assets resulting from business acquisitions, and (v) tax effects on non-GAAP adjustments. 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 revenues 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 revenues 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. 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 (i) share-based compensation, (ii) investment gain (loss) and revaluation of investments excluding dividends, (iii) reconciling items on the share of equity method investments, (iv) amortization of intangible assets resulting from business acquisitions, and (v) tax effects on non-GAAP adjustments add 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 (i) share-based compensation expenses, (ii) investment gain (loss) and revaluation of investments excluding dividends,  (iii) reconciling items on the share of equity method investments, (iv) amortization of intangible assets resulting from business acquisitions, and (v) tax effects on non-GAAP adjustments. 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,technology platform and Shan Shan Outlets. Share-based compensation expenses 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.

Investor Relations Contact

Tel: +86 (20) 2233-0732
Email: IR@vipshop.com

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