Q1 2024 Earnings Summary
- Resilient Core Customer Base with Growing ARPU: Vipshop's SVIP members are experiencing double-digit growth in both customer base and Average Revenue Per User (ARPU), growing faster than average customers. This demonstrates the company's strong ability to retain and expand its high-quality customer base, providing a solid foundation for future growth.
- Strong Profitability and Operating Discipline: Despite softer sales momentum, Vipshop achieved a record high non-GAAP net margin attributable to shareholders of 9.3%, up from 7.5% in the prior year period. The company continues to focus on maintaining solid profitability through disciplined operations and efficiency gains. ,
- Commitment to Shareholder Returns: Vipshop plans to commit no less than 75% of its full-year 2024 non-GAAP net income to discretionary share repurchases and/or dividend distributions. The company has returned over USD 2.2 billion to shareholders since April 2021, demonstrating its dedication to providing long-term, stable, and consistent value to shareholders.
- VIPS reported a year-over-year decline in active customers in Q1 2024 due to strict LTV requirements and not aggressively investing in customer acquisition, leading to some loss of customers to competitors who offer more subsidies.
- The company provided a conservative revenue guidance for Q2 2024, expecting total net revenues to decrease year-over-year by approximately 5% to 0%, citing softer sales momentum, a shortened sales window for spring apparel, and a tough comparison with the previous year.
- VIPS is not participating in large-scale subsidies and aggressive marketing like competitors, which may result in loss of sales and market share in a highly competitive industry, as price-sensitive customers may opt for platforms offering greater discounts.
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Shareholder Returns
Q: Is there a significant step-up in share buybacks planned?
A: Management confirmed their commitment to a long-term shareholder return policy, including buybacks and dividends. They have returned over USD 2.2 billion to shareholders since April 2021. For 2024, they announced a USD 250 million dividend and are committed to repurchasing approximately USD 500 million in share repurchases by December 31, 2024. This implies a significant increase in share buybacks in the remaining quarters. -
Q2 Guidance Factors
Q: What factors are affecting the second quarter guidance?
A: Management cited several factors impacting Q2 guidance, including an extended winter and early summer shortening the window for spring apparel sales. They face a tough comparison with a strong same quarter last year. Additionally, they noted industry dynamics and their choice not to invest in large-scale subsidies, resulting in some loss of sales. -
Competition and Strategy
Q: Will you adopt aggressive subsidy strategies like competitors?
A: Management stated they will not follow peers in investing in large-scale subsidies. They remain laser-focused on branded discount retail, aiming to provide value to customers and serve brand partners. They will be prudently aggressive in customer acquisition, focusing on acquiring high-quality customers. -
User Growth Strategy
Q: What's your view on user growth after a decline in Q1?
A: Management acknowledged a slight decline in active customers in Q1 due to strict LTV requirements limiting marketing spend. They plan to be more aggressive in acquiring high-quality customers in Q2, cautiously relaxing LTV restrictions to ensure effective customer acquisition. -
Average Order Value Increase
Q: Why did AOV increase this quarter?
A: The increase in AOV is attributed to strong growth among SVIP members, whose ARPU is growing faster than average customers. SVIP members are showing good traction, and expanding this core customer base is a focus for maintaining quality growth and profitability.