Vipshop Holdings ((VIPS)) has held its Q4 earnings call. Read on for the main highlights of the call.
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During the recent earnings call, Vipshop Holdings presented a mixed sentiment. While the company celebrated growth in its apparel category and an increase in Super VIP membership, challenges were evident with a decline in total net revenues, increased operating expenses, and shrinking margins. The financial outlook for Q1 2025 indicates the persistence of these challenges, with expected revenue declines.
Apparel Category Growth
Vipshop’s apparel category experienced a 2% year-over-year increase and now accounts for 75% of the total Gross Merchandise Volume (GMV). This growth was instrumental in the company achieving RMB200 billion in total annual sales, underscoring the strength of this segment.
Super VIP Membership Growth
The company reported a significant 50% increase in active Super VIP members in Q4 year-over-year, which played a crucial role in driving 51% of the online spending. This reflects Vipshop’s successful strategy in expanding its loyal customer base.
Gross Margin Achievement
Vipshop reached an eight-year high with a gross margin of 23.5% for the full year. This achievement was largely due to the robust performance in the apparel sector, highlighting its contribution to the company’s profitability.
Non-GAAP Net Profit
The company reported a non-GAAP net profit exceeding RMB9 billion for the full year, with a solid margin of 8.3%. This indicates a strong financial performance despite external challenges.
Capital Return to Shareholders
In 2024, Vipshop returned approximately $770 million to shareholders through dividends and buybacks, demonstrating its commitment to delivering value to its investors.
Decrease in Total Net Revenues
Total net revenues for Q4 2024 were RMB33.2 billion, a 4.3% decrease from RMB34.7 billion in the prior year. This decline underscores some of the challenges the company is facing in maintaining its revenue growth.
Operating Margin Decline
Vipshop’s operating margin fell to 8.6% in Q4, down from 10.6% in the same period the previous year, indicating increased cost pressures.
Increase in Operating Expenses
Operating expenses rose to 15.2% of total net revenues in Q4 2024, compared to 14.0% in the prior year, highlighting a significant increase in operational costs.
Net Income Decline
Net income attributable to Vipshop’s shareholders dropped to RMB2.4 billion in Q4, compared to RMB3.0 billion in the prior year. This decline reflects the broader revenue and margin challenges faced by the company.
Revenue Guidance for Q1 2025
Vipshop provided forward-looking guidance, anticipating Q1 2025 net revenues to range between RMB26.3 billion and RMB27.6 billion, which suggests a potential year-over-year decrease of up to 5%. The company is focusing on expanding its merchandising capabilities and utilizing AI to improve efficiency and customer experience.
In summary, Vipshop’s recent earnings call reflected a dual narrative of growth and challenge. While the company celebrates significant growth in its apparel sector and VIP memberships, it faces declining revenues and rising expenses. The forward-looking guidance indicates continued challenges ahead, with a focus on strategic initiatives to navigate the competitive landscape.
