Q4 2023 Vipshop Holdings Ltd Earnings Call
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Operator: Ladies and gentlemen, good day everyone and welcome to Vipshop Holdings Ltd's fourth quarter and full year 2023 earnings conference call. At this time, I would like to turn the call over to Miss Jessie Zeng, Vipshop's Head of Investor Relations. Please proceed.
Speaker Change: Ladies and gentlemen, good day, everyone and welcome to VIP shop Holdings, Limited's fourth quarter and full year 2023 earnings conference call.
Speaker Change: At this time I would like to turn the call to Ms. Jessie Zheng VIP shop.
Jessie Fan: Of Investor Relations. Please proceed.
Jessie Fan: Thank you, operator. Hello everyone, and thank you for joining Vipshop's fourth quarter and full year 2023 earnings conference call. With us today are Eric Shen, our co-founder, chairman, and CEO, and Mark Wang, our CFO. Before management begins their prepared remarks, I would like to remind you that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.
Jessie Fan: Thank you operator, Hello, everyone and thank you for joining VIP shops fourth quarter and full year 2023 earnings conference call with US today are Eric Shen, our co founder Chairman and CEO and Mark Wang our CFO.
Jessie Fan: Before management begins their prepared remarks, I would like to remind you that the discussion today will contain forward looking statements made and to the safe Harbor provisions of the U S. Private Securities Litigation Reform Act up 1995.
Jessie Fan: Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our safe harbor statements in our earnings release and public filings with the Securities and Exchange Commission, which also applies to this court so that any forward-looking statements may be made. Please note that certain financial measures used on this call, such as non-GAAP operating income, non-GAAP net income, and non-GAAP net income per ADS, are not presented in accordance with U.S. GAAP. Please refer to our earnings release for details relating to the reconciliation of our non-GAAP measures to GAAP measures. With that, I would now like to turn the call over to Mr. Eric Shen. Good morning and good evening, everyone.
Jessie Fan: Forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectation attached.
Jessie Fan: Potential risks and uncertainties include but are not limited to those outlined in our safe Harbor statements in our earnings release and the topic filings with the Securities and Exchange Commission, which also applies to this call to the extent any forward looking statements may be made.
Jessie Fan: Please note that certain financial measures used on this call such as non-GAAP operating income non-GAAP net income and non-GAAP net income for Ats I'm not presented in accordance with U S. GAAP. Please refer to our earnings release for details relating to the reconciliation of our non-GAAP merits to get married.
Jessie Fan: With that I would now like to turn the call over to Mr. Eric Shen.
Jessie Fan: Okay.
Eric Ya Shen: Good morning, and good evening, everyone welcome and thank you for joining our fourth quarter and full year 2020 Street earnings Conference call.
Eric Ya Shen: Welcome and thank you for joining our fourth quarter and full year 2023 earnings conference call. We delivered a strong finish to the year 2023 with a set of results well ahead of expectations. This has been achieved with the successful execution of our merchandising strategy to see the opportunities in value spending. A Maid, Strong Seed, and No Demand. In the fourth quarter, appellate categories were once again the bigger driver, with a 29% growth in GMV year-over-year.
Eric Ya Shen: We delivered a strong finish to the year <unk> industry with the statutory results well ahead of expectations.
Eric Ya Shen: This has been achieved with a successful execution of our merchandising strategy to see the opportunities in wireless spending.
Eric Ya Shen: Amazingly strong seasonal demand in.
Eric Ya Shen: In the fourth quarter apparel categories were once again, the bigger driver with a 29% in <unk> year over year for.
Eric Ya Shen: For the full year, appellate categories have been consistently outperforming the industry average, up 24% from a year ago. That helped us close RMB200 billion in total annual sales for the first time in our history. We also gained strong momentum with high-value customers. In the fourth quarter, active Super VIP members increased by 14% from a year ago and accounted for 46% of our online spending. On an annual basis, we have 7.6 million active Super VIP members who purchase 45% of their tokens on our platform. Our strategy is simple.
Eric Ya Shen: For the full year, a pillow category have been consistently outperforming the industry average.
Eric Ya Shen: 24% from a year ago.
Eric Ya Shen: <unk> helped us close to RMB 200 billion in total annual sales for the first time in our history.
Eric Ya Shen: We also gained strong momentum with high value customers.
Eric Ya Shen: First quarter active.
Eric Ya Shen: Two Super VIP members increased by 14% from a year ago and accounted for 46%.
Eric Ya Shen: Our online spending.
Eric Ya Shen: And we.
Eric Ya Shen: We've had seven 6 million active Super VIP members.
Eric Ya Shen: Who purchase at 45% of our pretzel.
Eric Ya Shen: Our strategy is simple it could be laser focused.
Eric Ya Shen: It's to be laser focused on discounted retail for brands. We embrace change and focus on retail fundamentals. We are consistently adapting so that customers can find the desired blend, seek great value, and enjoy wallet-free service with us. That's how we try to gain further mindshare so that when customers feel like shopping for clothing, they will come to us first.
Eric Ya Shen: On discount retail footprint.
Eric Ya Shen: We embrace change and a focus on retail fundamentals.
We are consistently adapt so that customers can find desired plan.
Eric Ya Shen: Great value and enjoy a worry free service with us.
Eric Ya Shen: How we try to gain further market share when customers still like shopping for clothing, they would come to us.
Eric Ya Shen: On merchandising expansion, we did well to enrich and diversify our brand portfolio. Our team brought in over 1,500 new brands last year, covering more trendy and high-end brands. A majority of Apollo-related sales came from the several hundred core brands, who took advantage of our, Furthermore, the channels like Super Brand Day, Super Category Day, and today's Top Brands, which all hit record highs in sales last year.
Eric Ya Shen: All merchandising expansion with developed in reached.
Eric Ya Shen: Diversify our brand portfolio.
Eric Ya Shen: Our team brought in over 1500, new brands last year, covering more trendy and high end brand.
Eric Ya Shen: Yeah.
Eric Ya Shen: A majority of our apparel related to the sales cadence problems with tableau hundreds co brands.
Eric Ya Shen: Took advantage our.
Eric Ya Shen: Further the channel like Super VIP.
Eric Ya Shen: Super brand day Super category date, and today's top brands, which are at record highs in sales last year.
Eric Ya Shen: The new brand also ramped up sales quickly, leveraging our target support from traffic allocation, customer engagement, and promotional campaigns. Our merchandising team is more skilled through our internal certificates program.
Eric Ya Shen: <unk>.
Eric Ya Shen: Also relative sales quickly leveraging our targeted support from topic allocations customer engagement to promotional campaigns.
Eric Ya Shen: Our merchandising team is more skewed through our internal certificates.
Eric Ya Shen: They demonstrated their expertise in identifying, selecting, and negotiating for quality brand goods at a big discount across a wider range of categories. They built strong relationships as they worked closely with brand partners to address their business needs and challenges. We now have a talent pipeline ready for more opportunities to differentiate our product. On Made for VIPshop, brand partners are happy to deepen their collaboration with us after they see meaningful sales contribution. Currently, we have over 150 brand partners in this program.
Eric Ya Shen: Program.
Eric Ya Shen: Demonstrate the expertise to identify select.
Eric Ya Shen: And the negotiation for quality branded goods at a deep discount across the wider range of categories.
Eric Ya Shen: They built strong relationships as they work closely with brand partners to address their business needs and the challenges. We now have a talent pipeline ready for more opportunities to differentiate our product offerings.
Eric Ya Shen: Omega for VIP shark branded partners.
Eric Ya Shen: To deepen their collaboration with us after they see meaningful sales contribution.
Eric Ya Shen: Currently we have over 150 brand partners in this program.
Eric Ya Shen: They provide a unique supplement to our value offering within the trending category and a certain price range. Giving value is top of mind with almost everyone right now. Being able to deliver an affordable experience every day differentiates us in the market. The key is to better leverage merchandising capability to provide an efficient and cost-effective inventory solution for brand partners.
Eric Ya Shen: Divide the unique separately minutes to our value offering within trending category and the setup of price range.
Eric Ya Shen: Yes.
Eric Ya Shen: Giving value value is a top of mind with most everyone by now being able to deliver affordable experience everyday differentiate us in the market.
Eric Ya Shen: Key to better leverage merchandising capability to provide it.
Eric Ya Shen: Efficient and cost effective inventory solution for brand partners.
Eric Ya Shen: This has been and will continue to be the foundation for us to secure increased supply at competitive prices, especially in unique and customized production. Lastly, we stay true to being customer-centric. We are making shopping easy for customers, taking a simple, clear, and direct way to interact with them. Also, leveraging the first-party model, we are gaining trust from customers who rely on us to bring them great brands and real value, which we continue to enhance. Product Authenticity through Upgraded Supply Chain Management from All Aspects
Eric Ya Shen: This has been and will continue to be the foundation for us to <unk>.
Eric Ya Shen: Pure increased supply at competitive pricing, especially in unique and customized products.
Eric Ya Shen: Lastly, we stay true to being customer centric centric, we are making shopping easy for a customer taking a simple clear and the last week to integrate intact with them.
Eric Ya Shen: Also leveraging the first party model, we are gaining trust from customers, who rely on us to bring them great brands and the real value.
Eric Ya Shen: We continue to enhance.
Eric Ya Shen: Authenticate city through upgrades supply chain management from all aspects. This also differentiate us in our development, where everyone is touting lower pricing we.
Eric Ya Shen: This also differentiates us in an environment where everyone is touting low prices. We are happy to see customers coming back and spending more because of the trust, value, and ease they will enjoy here. There is still a lot of potential in growing customer wallet share, and the loyalty program has been at the heart of it. Last year, Super VIP members renewed at high rates, and they spend a lot more with us, with average spending over eight times as much as non-SVIP members.
Eric Ya Shen: We are happy to see customers coming back and spending more because of trust value and the east we will enjoy here.
Eric Ya Shen: There is still a lot of potential in growing customer wallet share and the loyalty program has been at the heart of late last year Super VIP members renewed at higher rent and they spend a lot of more with us.
Eric Ya Shen: Average spending over eight times as much as non VIP members. When we look at our business today, we now have a more compelling foundation, we believe our business model.
Eric Ya Shen: When we look at our business today, we now have a more compelling foundation. We believe our business model is a bearable one that allows us to reinforce the value propositions that are most relevant to our brand partners and our customers. We will continue to be pragmatic, efficient, and flexible to fuel long-term growth. At this point, let me hand over the call to our CFO, Mark Wang, to go over our financial results. Thank you, Eric, and hello everyone.
Eric Ya Shen: Their logo one.
Eric Ya Shen: There are no one that allows us to reinforce the value propositions that are most rare.
Eric Ya Shen: Our relevance to our brand partners and our customers, we will continue to be pragmatic.
Eric Ya Shen: Efficiency and flexible to fuel long term growth at this point, let me hand over the call to our CFO, Michael Wang to go over our financial results.
Okay, Thanks, Eric and Hello, everyone.
Mark Wang: We delivered another quarter of Kali's financial performance, ending 2023 as the most profitable year in our history. We are very pleased with the progress we have made over the past years in upgrading our platform in all aspects; we're acting faster, pushing forward company priorities, and the Buding Glacier Center. This has been the foundation for us to regain growth momentum while achieving impressive profitability, benefiting from a number of efficiency improvement initiatives. Bill's Margin Improved Quarter-by-Quarter, and on an annual basis reached the highest level since 2017, operating and net profit margin on a non-gap basis with all-time highs both quarterly and annually. With such healthy financial conditions, in addition to the existing buyback program, we are pleased to announce the annual cash dividend policy and approximately $250 million U.S. cash dividend for the fiscal year of 2023.
Michael Wang: We delivered another quarter of solid financial performance ending 2023 at the most profitable year.
Michael Wang: Sure.
Michael Wang: We are very pleased with the progress we have made over the past years upgrading out our platform from all aspects.
We're acting faster pushing forward company priorities and the building greater synergies.
Michael Wang: This has been the foundation for us to regain growth momentum, while achieving impressive profitability.
Michael Wang: Benefiting from a number of efficiency improvement initiatives.
Michael Wang: Gross margin improved quarter by quarter.
Michael Wang: Our annual basis reached the highest level since 2017.
Michael Wang: Operating and net profit margin.
non-GAAP basis.
Michael Wang: At all time highs, both quarterly and annually.
Michael Wang: With such healthy financial conditions.
Michael Wang: The addition to the existing buyback program.
Speaker Change: We're pleased to announce the annual cash dividend policy.
Speaker Change: And approximately.
Speaker Change: 250 million U S dollar cash dividends.
Speaker Change: For the fiscal year of two.
Speaker Change: 2023.
Mark Wang: This reflects our confidence in future growth and earnings, as well as our long-term commitment to delivering returns to shareholders. Looking ahead, we are clear about strategic initiatives, while investing in areas that can better engage with brand partners and customers. We will continue to maintain operating discipline to drive organic and profitable growth. Now moving to our detailed quarterly financial highlights, before the guest starts. I would like to clarify that all the financial numbers presented below are in and all the percentage teams are year-over-year teams. Alive Unless Otherwise Noted.
Speaker Change: This reflects our confidence in.
Speaker Change: Future growth in earnings.
Speaker Change: As well as our long term commitment.
Speaker Change: So delivering returns to shareholders.
Speaker Change: Looking ahead, we are clear about our strategic initiatives.
Speaker Change: While investing in areas that can better engage with brand partners and our customers.
Speaker Change: We will continue to maintain operating discipline.
Speaker Change: To drive organic and profitable growth.
Speaker Change: Now moving to our detailed quarterly financial highlights.
Speaker Change: Before I get start.
I'd like to clarify that all financial numbers.
Speaker Change: Present below.
Speaker Change: B.
Speaker Change: And all the percentage change year over year trends.
Speaker Change: Otherwise noted.
Mark Wang: Total net revenues for the fourth quarter of 2023 increased by 9.2% year-over-year to RMB34.7 billion from RMB31.8 billion in the prior period, mainly attributable to the growth in active customers and spending driven by the recovery in consumption of this questionary category. Cross profit increased by 93% year over year to RMB 8.2 billion from RMB 6.9 billion in the prior period. Gross margin increased to 23.7% from 21.7% in the prior period. www. Vipshop.com. Total operating expenses increased by 4.8% year over year to RMB 4.9 billion from RMB 4.6 billion in the prior period, as a percentage of total net revenue. Total operating expenses decreased to 14.0% from 14.6% in the prior period.
Speaker Change: Total net revenues for the fourth quarter of 2023 increased by nine 2% year over year to RMB $34 7 billion from RMB 31 eight.
Speaker Change: <unk> 8 billion in the prior year period.
Speaker Change: Mainly attributable to the growth in active customers and a spending driven by the recovery in consumption of discretionary categories.
Speaker Change: Okay.
Speaker Change: Alright Ross.
Speaker Change: Gross profit increased by 93.
Speaker Change: <unk>, 3% year over year to RMB, eight 2 billion from RMB six 9 billion in the prior year period.
Speaker Change: Gross margin increased to 23, 7% from.
Speaker Change: From 21, 7%.
Speaker Change: In the prior year period.
Speaker Change: Total operating expense increased by four 8%.
Speaker Change: Year over year to RMB, four 9 billion from RMB, four 6 billion in the prior year period.
Speaker Change: As a percentage of total net revenues.
Speaker Change: Total operating expenses decreased to 14 <unk>.
Speaker Change: From 14, 6% and the <unk>.
Speaker Change: Prior year period.
Okay.
Mark Wang: Fulfillment expenses increased by 17.0% year-over-year to RMB2.5 billion, from RMB 2.2 billion in the prior period, as a percentage of total net revenue. Fulfillment expenses were 7.3%, as compared with 6.8%, in the prior year period. Market expenses decreased by 10.7% year-over-year to RMB1.8 billion. $843.2 million from RMB944.1 million in the prior period, as a percentage of total net revenue. Marketing expenses decreased to 2.4% from 3.0% in the prior period.
Speaker Change: Fulfillment expenses increased by 17.0%.
Speaker Change: Over a year to RMB, two 5 billion from RMB, two 2 billion in the prior year period.
Speaker Change: As a percentage of total net revenues.
Speaker Change: Fulfillment expenses was seven 3%.
Speaker Change: As compared with six 8% in the <unk>.
Speaker Change: Prior year period.
Speaker Change: Marketing expenses decreased by 10, 7% year over year to RMB.
Speaker Change: $843 2 million from RMB $944 1 million in the prior year period.
Speaker Change: As a percentage of total net revenues.
Speaker Change: Marketing expenses decreased to two 4% from three zero percent in the prior year period.
Mark Wang: Technology and the Consequences increased by 21.5% year-over-year to RMB496.4 million, from RMB 400 million in the prior period, as a percentage of total net revenue. Technology and content spends. 1.4%, as compared with 1.3%, in the prior hearing. General and Administrative Expenses decreased by 11.7%, year over year to RMB 1.0 billion from RMB 1.1 billion in the prior period. As a percentage of total net revenue, general and administrative expenses decreased to 2.9%, from 3.6%, in the prior period.
Speaker Change: Technology and content expenses.
Increased by 21, 5%.
Speaker Change: Year over year to RMB $496 4 million.
Speaker Change: From RMB 400 zero $8 5 million in.
Speaker Change: In the prior year period.
Speaker Change: As a percentage of total net revenues.
Speaker Change: Technology and content expenses.
Speaker Change: Was one 4%.
Speaker Change: As compared with one 3%.
Speaker Change: In the prior year period.
Speaker Change: General and administrative expenses.
Decreased by 11, 7%.
Speaker Change: Year over year to RMB 1.0 ability.
Speaker Change: From RMB, one 1 billion.
Speaker Change: In the prior year period.
Speaker Change: As a percentage of total net revenues.
General and administrative expenses.
Speaker Change: Decreased to two 9% from.
Speaker Change: From three 6% and the <unk>.
Speaker Change: PRA.
Speaker Change: Income from operations increased by 46, 2%.
Mark Wang: Income from operations increased by 46.2%, year-over-year, to RMB 3.7 billion from R&B 2.5 vintage in the prior period. Operating margin increased to 10.6% from 7.9% in the prior period. Non-GAAP Income from Operations increased by 42.5% year over year to RMB 4.0 billion from RMB 2.8 billion in the prior period. Non-GAAP Operating Margin increased to 11.4% from 8.7% in the prior period.
Speaker Change: Year over year to RMB, three 7 billion.
Speaker Change: From RMB, two 5 billion.
Speaker Change: In the prior year period.
Speaker Change: Operating margin increased to 10, 6%.
From seven 9%.
Speaker Change: In the prior year period.
Speaker Change: non-GAAP income from operations.
Speaker Change: Increased by 42, 5% year over year to RMB four 1 billion.
Speaker Change: From RMB, two 8 billion.
Speaker Change: In the prior year period.
Speaker Change: non-GAAP operating margin.
Increased to 11, 4%.
Speaker Change: From eight 7% in the <unk>.
Speaker Change: Prior year periods.
Mark Wang: Net income attributable to Vipshop's shareholders, increased by 32.2%, year over year to RMB 3.0 billion, from R&B. 2.2 billion in the prior period. Net Merge is attributable to Vipshop shareholders, increased to 8.5%, from 7.0%, in the prior period, net income attributable to VIP shop shareholders for diluted ADS, increased to RMB 5.35 from RMB 3.66 in the prior period, non-government income attributable to Vipshop shareholders, increased by 43.4%, year over year to RMB 3.2 billion, from RMB 2.2 billion in the prior period, non-gambling margin attributable to VIP shop shareholders, increased to 9.2%, from 7.0%, in the prior period. Non-GovNet income attributable to VIP shop shareholders. Her diluted ADS increased to RMB 5.79 from RMB 3.65 in the prior period. As of December 31, 2023.
Speaker Change: Net income attributable to VIP shops shareholders.
Speaker Change: Increased by 32, 2%.
Speaker Change: Year over year to RMB, three <unk> billion.
Speaker Change: From RMB.
Speaker Change: $2 2 billion in the prior year period.
Speaker Change: Net margin attributable to VIP shelf shareholders.
Speaker Change: <unk> increased to eight 5%.
Speaker Change: 170%.
Speaker Change: In the prior year period.
Speaker Change: Net income attributable to VIP shops shareholders.
Speaker Change: Diluted.
Speaker Change: Increased to RMB 5.35 from RMB 366 in the prior year Gary.
Speaker Change: non-GAAP net income attributable to VIP shops shareholders increased by 43, 4% year over year to RMB three 2 billion.
Speaker Change: From RMB, two 2 billion in the prior year period.
Speaker Change: non-GAAP net margin attributable to VIP shelf scaffold or <unk>.
Speaker Change: Increased to nine 2% from seven zero percent.
Speaker Change: In the prior year period.
Speaker Change: non-GAAP net income attributable to VIP shops shareholder.
Speaker Change: Per diluted.
Speaker Change: Increased to RMB 579 from RMB 365 in the prior year periods.
Speaker Change: As of December 31, 2023.
Mark Wang: We have cash and a cash equivalent, and the restricted cash of RMB 26.3 billion, and short-term investment of RMB 2.0 billion. Now, I will briefly walk through the highlights of our four-year results. Total net revenues for the full year of 2023 increased by 9.4% year-over-year to RMB 112.9 billion from RMB 103.2 billion in the prior year. Gross profit increased by 19.0% year-over-year to RMB25.7 billion from RMB 21.6 billion in the prior year. Gross margin increased to 22.8% from 21.0% in the prior year. Income from operations increased by 46.9% year-over-year to RMB9.1 billion from RMB6.2 billion in the prior year.
Speaker Change: We had cash and cash equivalents and the restricted cash.
Speaker Change: It would be $26 3 billion.
Speaker Change: As short term investment of RMB, two one durability.
Speaker Change: Okay.
Speaker Change: No I will briefly walk through the highlights of our full year results.
Total net revenues for the full year of 2023 increased by nine 4% year over year to RMB $112 9 billion from RMB 100, 031 2 billion in the prior year.
Speaker Change: Gross profit increased by 9% year over year.
Speaker Change: RMB $25 7 billion.
From RMB $21 6 billion in the prior year.
Speaker Change: Gross margin increased to 2022.
Speaker Change: 2020, sorry two.
Speaker Change: <unk> 22, 8% from 21 zero percent in the prior year.
Speaker Change: Income from operations increased by 46, 9% year over year to RMB nine 1 billion from RMB six 2 billion in the prior year.
Mark Wang: Operating margin increased to 8.1% from 6.0%. Cry you.
Speaker Change: Operating margin increased to eight 1%.
Speaker Change: Six zero percent in the prior year.
Mark Wang: Non-GAAP income from operations increased by 43.3% year over year to RMB 10.6 billion from RMB7.4 billion in the prior year. The Non-Gap Operating Margin increased to 9.4% from 7.2% in the prior year. Net income attributable to VIP shop shareholders increased by 28.9% year-over-year to RMB 8.1 billion from RMB 6.3 billion in the prior year. The net margin attributable to VIP shop shareholders increased to 7.2% from 6.1% in the prior year. Net income attributable to VIP shop shareholders, for Deloitte ADF, increased to RMB 14.42 from RMB 9.83 in the prior year; non-government income attributable to VIP shop shareholders increased by 39.1% year over year to RMB 9.5 billion from RMB 6.8 billion in the prior year; non-government margins attributable to VIP shop shareholders increased to 8.4% from 6.6% in the prior year. Non-Gap Net Income Attributable to VIP Shop Shareholders for Diluted ADF increased to RMB 16.90 from RMB 10.67 in the prior year.
Speaker Change: non-GAAP income from operations increased by 43, 3% year over year to RMB 10 6 billion.
Speaker Change: From RMB seven 4 billion in the prior year.
Speaker Change: non-GAAP operating margin increased to nine 4%.
Speaker Change: From seven 2% in the prior year.
Speaker Change: Net income attributable to VIP shelf shareholders increased by two.
Speaker Change: <unk> eight 9% year over year to RMB eight 1 billion.
Speaker Change: From RMB six 3 billion in the prior year.
Speaker Change: Net margin attributable to VIP shops shareholders decreased to seven 2%.
Speaker Change: Six 1% in the prior year.
Speaker Change: Net income attributable to VIP shops shareholder.
Speaker Change: Per diluted ads.
Speaker Change: Increased to RMB.
Speaker Change: 14, 42%.
Speaker Change: From RMB 98, three in the prior year.
Speaker Change: non-GAAP net income attributable to VIP shops shareholders increased by 39, 1%.
Speaker Change: Year over year to RMB nine 5 billion.
Speaker Change: From RMB six eight.
Speaker Change: <unk> 8 billion in the prior year.
non-GAAP net margin attributable to VIP shelf shareholders <unk>.
Speaker Change: <unk> to eight 4%.
Speaker Change: Six 6% in the prior year.
Speaker Change: non-GAAP net income attributable to VIP shop shareholders for <unk>.
Speaker Change: Diluted.
Speaker Change: Increased to RMB 16.
Speaker Change: Nine zero from RMB 10.
Speaker Change: Six seven in the prior year.
Operator: Looking forward to the first quarter of 2024, we expect our total net revenues to be between $27.5 billion and RMB$28.9 billion, representing a year-over-year increase of approximately 0% to 5%. Please note that this forecast reflects our current and preliminary review of the market and Operational Conditions, which are subject to change. With that, I would now like to open the call to Q&A. Thank you. If you wish to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again.
Speaker Change: Looking forward to the first quarter of 2024, we expect our total net revenues to be between the two.
Speaker Change: $77 5 billion and RMB $28 9 billion.
Speaker Change: Representing a year over year increase.
Speaker Change: Of approximately zero percent to 5%.
Speaker Change: Please note that this forecast reflects our current and the preliminary view of the market.
And the operational conditions.
Speaker Change: It is subject to change.
Speaker Change: With that I would now like to open the call to Q&A.
Speaker Change: Thank you if you wish to ask a question you will need to press star.
Speaker Change: One on your telephone.
Speaker Change: Wait for your name to be announced.
Speaker Change: To withdraw your question Please press star one.
Speaker Change: Okay.
Operator: We ask analysts to repeat their questions in Mandarin after asking them in English. Please stand by while we compile the Q&A roster; this will take a few moments. We will take our first question. Your first question comes from the line of... Alicia Yap from Citigroup. Please go ahead, your line is open. Hi, can you hear me?
Speaker Change: We ask analysts to repeat the questions and Mandarin after asking an English.
Speaker Change: Please standby, while we compile the Q&A roster this will take a few moments.
Speaker Change: Okay.
Speaker Change: We will take our first question.
Speaker Change: Your first question comes from the line of.
Speaker Change: Alicia Yapp from Citigroup. Please go ahead your line is open.
Alicia Yap: Hi can you hear me.
Operator: Hello, yes, we can. Can you hear me OK?
Alicia Yap: Hello, Yes.
Can you hear me okay. Okay, alright. Thank you good evening management. Thanks for taking my questions. Congrats on the really strong results.
Alicia Yap: Oh, OK. All right, thank you. Good evening, management. Thanks for taking my questions. Congratulations on the really strong results.
Alicia Yap: I have a couple of questions. First, do you anticipate most of the future growth will come from higher frequency and higher wallet spend by the existing lawyer customer? Given there is some cautiousness about consumer spending in China, are you worried about any potential slowdown of the growth if your lawyer customer base started to shop more, I mean, shop less frequently and spend at a smaller amount? Just wondering if you have any plans, or targets for new user acquisition strategies. I'll translate it for you.
Alicia Yap: I have a couple of questions first is.
Alicia Yap: Do you anticipate most of the future growth will come from the higher frequency and higher wallet spend on the existing loyal customer.
Alicia Yap: Given there is some cautiousness on consumer spending in China.
Alicia Yap: You worry any potential slowdown.
Alicia Yap: The growth.
Alicia Yap: Of the growth if you're a loyal customer base.
Alicia Yap: To shop more.
Alicia Yap: Less frequently and spend at a smaller amount.
Alicia Yap: Just wondering if you have any trends Todd decks for new user acquisition.
Speaker Change: Got it.
Speaker Change: What do you define the ECR to Shanghai.
Alicia Yap: Because we are growing well, but a lot of re-acquisition users are loyal users who brought them to us. I want to ask the management, because against this background, against this macro background, I don't know if the management is worried that our loyal users will be more cautious with spending. If so, will it affect some of our subsequent growth?
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Eric Ya Shen: Also, this year, in terms of new user growth, do you have any thoughts or ideas on how to grow new users? Thank you. Let me answer this question. Our loyal users are relatively stable. We can see from the recent trends, including our SVIP, the sales ratio is already at 45. We expect the overall sales ratio will increase in 2024. In addition, we will continue to increase the number of SVIP apps.
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Eric Ya Shen: We will also continue to convert many non-VIP apps into SVIP. In addition, as you just asked, we think there is still room for improvement in customer service. In fact, in the past two or three years, overall customer growth has not yet reached our ideal expectations. So this year, we will continue to explore how to better adhere to our brand and special sales positioning and better make users aware of our value. We will continue to expand our customer service. For example, we think there is still a lot of room for improvement in the general media that we used to work with. For example, we will continue to use the so-called accurate customer service. We will also install a lot of mobile phones, and so on.
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Eric Ya Shen: We will continue to use various methods to attract customers. We will also promote our brand, and so on. Similarly, we will continue to work hard to improve our overall customer acquisition in 2024. In addition, we are not too worried about the overall economic environment of our current users. After all, our customer price is not high, right? It's about two or three hundred.
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Eric Ya Shen: We don't think that in 2024, this kind of customer purchase, including customer ratings and their unit prices, will be affected. Okay, first on the loyal customer base. Actually, I think our loyal customer group has been quite resilient in terms of spending. From the trend we have observed in the last couple of years, especially for high-value customers, that is, super VIP members, their contribution in terms of our total spending has been increasing to 45% in 2023. And for 2024, we continue to expect that the VIP contribution will continue to grow very nicely. In addition to driving the contribution of spending, we have also noticed that their output trend has been going quite well. Output is driven mostly by frequency, and we still think there is a lot of potential in driving the frequency of SVIP members.
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Speaker Change: Okay first on the loyal customer base actually I think our loyal customer group.
Speaker Change: Has been quite resilient in terms of the spending.
From trend, we have observed that in Alaska.
Speaker Change: Especially for our high value customer that is super VIP members.
Their contribution in turn to our total spending has been increasing to 45% in 2023 and four Chinese any fall. We continue to expect that at the VIP contribution will continue to grow.
Speaker Change: Very nicely.
Speaker Change: In addition to driving the.
Speaker Change: Hi.
Speaker Change: Contribution of spending.
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Speaker Change: Driven mostly by frequency and we still think there is a lot of potential in driving the frequency of VIP members.
Eric Ya Shen: And we only have 7.6 million annual active SVIP members, and we have a lot more with high potential in terms of spending to be converted into SVIP members. Actually, non-SVIP members, especially those high potential customers, have become the most productive channel for us to acquire super VIP members. And in terms of new customer acquisition, we think we still have a lot of potential. Actually, if you look at our annual active customer base in 2023, it hasn't lived up to our expectations. We think we can do better this year.
Speaker Change: Yeah.
Speaker Change: We only have seven six.
Speaker Change: $6 million.
Speaker Change: Annual active as VIP members.
Speaker Change: Have a lot more with.
Speaker Change: With high potential.
Speaker Change: In terms of spending to be converted into S&P IP members actually a non SBA team members, especially those high potential customers have become the most productive channel for us to acquire.
Speaker Change: Yes.
Speaker Change: Super VIP members.
Speaker Change: And in terms of new customer acquisition.
Speaker Change: We think we still have a lot of potential.
Speaker Change: If you look at our annual active customer base in three Hudson lived up to our expectations.
Speaker Change: Think we can do better this year.
Speaker Change: Tapping the potential.
Eric Ya Shen: We are tapping the potential on many fronts to see whether we have to better leverage our value proposition. Branded Discount Retail to Increase Customer Mindshare of VIPshop We will take a number of initiatives in driving new customer growth. For example, in addition to the traditional channels, we will look at some emerging and new channels that we haven't been working closely with, and we will continue to focus on target marketing, mobile pre-installation, and we will also do some branded advertising. We will just take as many initiatives as possible to see whether we can better drive customer growth. And for the general consumption environment, we are actually not very concerned, especially for our customer base, for those high-value and super VIP members. Because customers come to the VIP shop, the average order size is not that high. It ranges from 200 to 300 RMB.
Speaker Change: Many on many fronts to see whether we how to better leverage our value proposition.
Speaker Change: Branded discount retail to increase customer mind share.
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Speaker Change: The number of initiatives in driving new customer growth.
Speaker Change: For example in addition to the.
Speaker Change: Traditional channels that we will look at.
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Speaker Change: Closely ways and that will continue to focus on targeted marketing.
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Speaker Change: And.
Speaker Change: For general consumption environment, we are actually not very.
Speaker Change: Uh huh.
Speaker Change: Concerned, especially for.
Speaker Change: For our customer base for those high value on the Super VIP members.
Speaker Change: Customers come to VIP shop, the average order size.
Speaker Change: Customers come to VIP shop, the average order size.
It ranges from 200 to 300 or RMB.
Operator: We think that's an affordable range of price, so we are not too concerned on that front. We think as long as we focus on branded discount retail, we can do better in terms of driving customer growth and also customer volition. Netflix. Eddie Wang from Morgan's Family.
Speaker Change: Seeing the vessel and affordable range of price.
Speaker Change: We are not too.
Speaker Change: Concerned on that front.
Speaker Change: We think as long as we focus on the branded discount retail we can do better in terms of driving customer growth and also customer wallet share.
Speaker Change: Thank you.
Speaker Change: We will take our next question please.
Speaker Change: Your next question comes from the line of Eddy Wang from Morgan Stanley. Please go ahead. Your line is open.
Operator: Please go ahead; your line is open. Mr. Shen, Mr. Mark, and Jessie, thank you for accepting my question. First of all, congratulations on a very good performance. Now, I will ask you a question in Chinese, and then I will translate it into English.
Speaker Change: Yes.
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Speaker Change: Sure.
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Operator: I have a few questions to ask. The first one is that I calculated it myself. If you look at product sales per order, in this quarter, I see that the trend is going up at the same rate. In the third quarter, the trend may fall at the same rate. So I don't know if there are any changes in the trend behind this, including whether the user on our platform will see the ASP or customer orders in the fourth quarter, or the long-term trend will see this, and the consumption may be better and more expensive. Because there was a question before, that is to say, overall environmental consumption is declining, but do we see a different trend on our platform? This is the first question. The second question is that if you look at the cost of sales and marketing in this quarter, and I looked at the previous five to six years, it is relatively rare to see that the cost of sales and marketing in the fourth quarter is still lower than the absolute number in the second quarter. I don't know.
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Operator: In this case, the sales and marketing consumption is actually very good. By 2024, I don't know if we can understand that the cost of sales and marketing is not particularly large, but the growth can be maintained. As Mr. Shen said, although we still have a relatively large demand for user growth this year, the absolute number of sales and marketing may not grow very much. This is the second question.
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Operator: The third question is that the gap between GNV and revenue may be bigger. From the perspective of return rates, is there a very obvious difference in this quarter?
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Operator: Thank you, management, for taking my question. I have three questions. The first one is that if you look at product sales per order, we find that in the fourth quarter last year, we saw a year-over-year increase. This trend actually is a little bit different from the first three quarters last year, when we saw a decline in the trend. What's the reason behind that, especially given the overall consumption background is more focused on the consumption downgrade?
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Operator: My second question is, if you look at the sales and marketing expense in the fourth quarter last year, actually, the absolute dollar term is lower than that in the second quarter of last year. This is quite sudden if you look at the history of the company. I'm wondering what the expectation is for sales and marketing spending in 2024? The last question is, if you look at the growth gap between GMV and revenue, in the fourth quarter, actually, the gap is widening if you compare it with the first three quarters. I just wonder if there is a significant change in terms of the return rates, or is there any other reason behind that? Thank you.
Speaker Change: What would you define your shot.
Speaker Change: Thank you management for taking my question I have two questions. The first one yes.
Speaker Change: If you look at.
Speaker Change: Product sales per order.
Speaker Change: Find out in the fourth quarter last year actually we see a year over year increase this trend actually yes, a little bit different from the first quarter in last year, which we see it declining.
Speaker Change: Trend so whats the reason behind that.
Speaker Change: Especially given the overall.
Speaker Change: Consumption baccarat, yes.
Speaker Change: There are some more focus on the concept of a downgrade.
Speaker Change: And my second question is if you look at the sales and marketing expense in the fourth quarter last year.
Speaker Change: Actually I was sort of a dollar churn is lower than that in.
Eric Ya Shen: I will answer the questions one by one. The first question is about our customer price. We see that the customer price is relatively stable overall. This year's Q4 customer price is higher than last year. Last year's Q4 customer price was higher than the previous year. We are thinking that it may be because of the winter.
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Speaker Change: Expectations for sales and marketing.
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Eric Ya Shen: If the weather is colder, people will buy more expensive down jackets. Many people have asked us if there is a decrease in consumer prices. We see that our customer price, including our upcharge, has not changed much. In addition, there will be an increase. So we don't see any significant decrease in consumer prices overall.
Speaker Change: If a compound with the first three quarters, so Jeff Swander, yes, yes, sorry.
Jeff Swander: If we can change in terms of the return rates or any other reason.
Behind that thank you.
Jeff Swander: Sure.
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Eric Ya Shen: The second question is about the market cost. As Q4 sales are relatively large, the market cost is relatively small. Overall, the market cost of our entire company is relatively stable. We have strict LTV control, such as how much does a new customer pay, how much does an old customer pay, and how much is the return on investment. So the overall cost is relatively stable. In 2024, we will increase the market cost a little bit. We hope to continue to attract customers, but the overall proportion is very limited, so you don't have to worry about the overall cost of the market.
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Eric Ya Shen: If there is a good channel, we can spend more money, including LTV return on investment, which is in line with our expectations. The third question is about return on investment. We look at return on investment over the past 23 years.
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Eric Ya Shen: We've seen a lot of growth in the past four to two years, and you can see it in the GMV and income ratio. We've seen an increase of three to four points, which is the return on investment. Although it doesn't affect our net profit because our expenses have all gone, including the return on investment and sales, we see a few main reasons. First, the price of our clothing is constantly increasing because the return on investment in clothing is quite high. For example, in the cold weather last year, clothes sold more and were better. We see that the quality of our clothing in recent years is constantly increasing. Second, it is possible that our consumers now think that they can buy a piece of clothing and try it on and treat it as a wardrobe or a fitting room.
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Eric Ya Shen: This is a normal behavior for Chinese e-commerce services, so we think it's okay. If the platform can provide this kind of service, they will continue to try on the size, style, and effect. As far as I know, e-commerce is improving. The third point is that we do not have accurate information. It is possible that the user thinks that the money should be saved. If it is not appropriate, do not force it.
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Eric Ya Shen: But we have not verified this point yet. We are just guessing. It is possible that there is a little bit of such a reason.
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Eric Ya Shen: Okay, on your question about average order size, actually, average order size has been relatively stable, and in Q4 we did see a slight increase on a year-over-year basis, primarily because we sold more winter clothing, which has a higher ticket size, especially when a lot of people are in cold weather, they would buy a higher ticket size down jacket. So that's the primary reason behind the increase in average order size. And this also reflects that actually, on our platform, there is not a very significant sign that we have increased the order size, the so-called consumption downgrade. At least the loyal and highly engaged customers on our platform, we have seen their average ticket size, they're actually stable or quite resilient, and Apple has been growing very nicely. So that's how we benefit from the very resilient consumption trend among our customer cohort. In terms of sales and marketing, in Q4, because we did much better than expected in terms of sales, that brought the sales and marketing expense ratio down a little bit. Actually, for this line, sales and marketing spend will continue to be relatively stable.
Speaker Change: Okay.
Speaker Change: About the average order size.
Speaker Change: Actually average order size has been relatively stable and in Q4, we did see a slight increase on a year.
Speaker Change: Over a year basis.
Speaker Change: Primarily because we sold more linked to closing which.
Speaker Change: Higher ticket size, especially when a lot of people in code, whether they would buy a higher ticket size.
Speaker Change: Don Jackets et cetera.
So that's the primary reason behind the increase in average order size.
Speaker Change: And does this also reflect that actually on our platform there is not very significant.
Speaker Change: Signs that we have.
Speaker Change: So call it a consumption downgrades at least.
Speaker Change: Loyal and highly engaged customers with our platform.
Speaker Change: We have seen their average ticket size youre actually stable quite resilient and Apple has been growing very nicely.
Speaker Change: So.
Speaker Change: How we benefit from very resilient consumption trend among our customer cohorts.
Speaker Change: In terms of sales and marketing spend.
Speaker Change: In Q4, because we had we did much better than expected in terms of sales.
Speaker Change: Dodge broad sales and marketing expense ratio down a little bit.
Speaker Change: Actually for this line sales and marketing spend will be continued to be relatively stable.
Eric Ya Shen: Of course, we want to spend prudently, especially to acquire more high-quality customers in 2024. But we will continue to look at the effectiveness and the efficiency of customer acquisition from a number of perspectives, including LTV, ROI, payback period, et cetera. So the sales and marketing expense ratio will continue to be very manageable, and we will continue to spend in a rational way to spend on those channels that can provide the best ROI.
Speaker Change: Of course, we want to spend prudently, especially.
Speaker Change: To acquire more high quality customers.
Speaker Change: Anytime it fall, but we will continue to look at.
Speaker Change: Effectiveness and efficiency of customer acquisition from a number of perspectives, including LTV payback.
Speaker Change: Payback period of Accenture, so sales and marketing expense ratio will continue to be very manageable.
Speaker Change: And we although we will continue to spend in a rational way to spend those channels, who can provide the best all ROI.
Eric Ya Shen: So basically, we don't worry too much about sales and marketing spend, and it's going to be very limited as a percentage of total revenue. As for return rates, for the last year, return rates have been growing on a year-over-year basis. We think we did see a three to four percentage point growth in return rates, but, you know, we have mentioned this before about the return and exchange service. It is a part of our value proposition to provide the best-in-class services to our customers, and it's built into our profitability model. It hasn't been impacting our profitability levels for the past several quarters. However, the return rates are trending a little bit higher because of a number of factors. One is the apparel contribution.
Speaker Change: So basically.
Speaker Change: We don't worry too much about the sales and marketing spend.
Speaker Change: It's going to be very limited as a percentage of.
Speaker Change: Total revenue.
Speaker Change: Retail rates.
Speaker Change: For the last year.
Speaker Change: Churn rates have been growing.
Speaker Change: Year over year basis.
Speaker Change: We think we did see three to four percentage points growth in return rates, but.
Speaker Change: We have mentioned this before returning exchange services.
Speaker Change: Is a part of our value proposition to provide that.
Speaker Change: Best in class services to our customers and this building.
Speaker Change: In our profitability model.
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Speaker Change: Impacting our profitability level for the past several quarters.
Speaker Change: Return rates.
Speaker Change: Trending a little bit higher because of.
Speaker Change: A number of.
Speaker Change: Factors one is the apparel contribution in the last couple of years. So we have seen apparel contribution growing our platform.
Eric Ya Shen: In the last couple of years, we have seen apparel contribution growing on our platform, and apparel, as you know, naturally has higher returns. And second, return and exchange has become a standardized practice within the industry, and a lot of customers are using Vipshop as a fitting room. And the more they try, the actually the more likely they will buy. So it's not only us, as far as we know, the return rate within the industry is actually growing. That's the reality.
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Speaker Change: Naturally have higher return rate and second I'll return and exchange has become a standardized standardized practices within the industry and a lot of customers are taking VIP shop.
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Speaker Change: It's not only us.
Speaker Change: As far as we know the return rate.
Speaker Change: We think that industry is actually growing.
That's the reality and lastly, although we don't have accurate information about that it's just oil and gas.
Eric Ya Shen: And lastly, although we don't have accurate information about that, it's just our guess. We think that consumers are becoming more cautious and selective in terms of their spending; they want to spend money only on those essential pieces that they need. So that might be one of the reasons that the return rate is going down. Thank you.
Speaker Change: We think that consumers are becoming more cautious and selective in terms of their spending they want to spend money only those.
Speaker Change: Essential pieces that they need so that might be.
Speaker Change: One of the reasons that return rate is.
Speaker Change: Higher.
Speaker Change: Thank you.
Operator: We will take our next question. Your next question comes from the line of Ronald Keung from Goldman Sachs. Please go ahead.
We will take our next question.
Speaker Change: Your next question comes from the line of Ronald Keung from Goldman Sachs. Please go ahead. Your line is open.
Operator: Your line is open. Thank you, Shendong. Bye.
Ronald Keung: Thank you.
Ronald Keung: Hi, Ken and team.
Ronald Keung: I have two questions, and I'll ask them in Chinese first. First, I'd like to hear about the revenue guidance for the first quarter. Especially, I want to know what the trend will look like in February and March. Then, I'd like to know what consumption will look like in March, especially after the Spring Festival.
Ronald Keung: Two questions.
Ronald Keung: When Joe Limber.
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Ronald Keung: Then, I'd like to know if the GME and revenue gap will be narrowed in 2024. The second question I want to ask is about the return to shareholders. In 2023, we had a free cash flow of about $11, which was very, very good. But in the past two quarters, we didn't make too many buybacks, and now we have announced a $215 regular dividend. I would like to know if, in the future, free cash flow will be deducted from these regular dividends and if there are any ideas on whether there will be room for an increase in dividends or buybacks. Can you explain that for me?
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Ronald Keung: Thank you, management. I have two questions. One is, how have our trends been for the first quarter so far, January and February as a whole, and how has demand tracked since Chinese New Year, and how should we think about the gap between GMV and revenue? 4, compared with the big gap in 2020.
Speaker Change: Thank you management I have two questions. One is I wanted to hear how trends have been for the first quarter. So far.
Sean Boyd: January and February as a whole and how do we see demand tracking since Chinese new year, and how should we think about the gap between <unk> and revenue for 2024 compared with the big gap in 2023.
Ronald Keung: I've seen a $1 billion U.S. dollar pre-cash flow. We haven't done too many buybacks in the past two quarters. Now we have $250 million... U.S. dollars of regular dividends. So what is the plan for, let's say, the remaining free cash flow? Is there any room for further shareholder return? My first question is about Q1, the business as of now. Q1 is in January; business is doing well due to the weather. Spring Festival will resume after that. Also, due to the weather, it will be cold in a while. It's not the right time for Spring Festival.
Speaker Change: I can assure to return and I've seen a $1 billion U S. Dollar free cash flow, we haven't done too much buybacks in the past two quarters now we have a $250 million.
Speaker Change: U S dollars of regular dividend. So what is the plan for let's say the remaining free cash flow is there any room for further shareholder return. Thank you.
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Eric Ya Shen: The business is still in the process of recovery. Overall, the business in Q1 is doing well. The second question is about return on investment. We estimate that the overall return on investment will continue to increase, but the overall increase will be limited in 2024. We estimate that the return on investment will increase from 1 point to 1.5 points in 2023. That's about it.
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Eric Ya Shen: So we don't think there will be any abnormalities in sales in the next 24 years. Next, we will have Jeff to answer your second big question. Okay, first on your Q1 guidance, actually quarter to date, we have seen business have decent business momentum in January actually benefiting from very favorable weather because, at that time, it was still quite cold. So our business performance was really quite good. And we continue to see recovery following the spring festival.
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Speaker Change: Okay first on your Q1 guidance actually quarter to date.
Speaker Change: Have seen business.
Speaker Change: I would say decent business momentum.
Speaker Change: In January actually benefiting from a very favorable weather because at that time.
Speaker Change: It was still quite code. So our business performance was really quite well quite good.
Speaker Change: We continue to see a recovery following the spring festival.
Eric Ya Shen: Until recently, we've seen that our sales had been ramping up relatively slower than expected because of the unexpected weather conditions, sometimes code, which actually delayed, to some extent, the seasonal shift to spring apparel. But overall, we think Q1 will continue to be another relatively stable quarter. And in terms of revenue and the GMV growth gap, for this year, we continue to expect a slightly higher return rate because of the still higher apparel contribution as well as the SVIP contribution. However, the return rate is not going to be significantly higher as we saw for 2023. We expect, at most, it's going to be 1 to 1.5 percentage points higher, which means that there is a chance that we can narrow the revenue and the GMV growth gap. Okay, well, it's an excellent question. Let me answer your question.
Speaker Change: So recently, we've seen that.
Speaker Change: Our sales have been ramping up relatively slower than expected because of the expected.
Speaker Change: Weather conditions, sometimes vary.
Speaker Change: Code.
Speaker Change: Which actually.
Speaker Change: Delay.
Speaker Change: To some extent the seasons are shipped to spring apparel, but overall, we think Q1 will continue to be not a culture for relatively stable growth.
Speaker Change: And in terms of the revenue and <unk> growth gap.
Speaker Change: For for this year, we continue to expect slightly higher return rate.
Speaker Change: Because of the still higher.
Speaker Change: <unk> contribution as well as VIP contribution.
Speaker Change: Our return rate is not going to be significantly higher.
Speaker Change: We saw it in.
Speaker Change: With thoughtful photon geochemistry, we expect at mode is going to be one to one five percentage points higher.
Speaker Change: Which means that there is a challenge for a weekend narrowed our revenue and <unk> growth GAAP to some extent.
Speaker Change: Okay second question.
Mark Wang: And thanks for your question regarding cash dividends and also, Sure, bye-bye, Paul Williams. And actually, we have been focusing on long-term capital policy, and the combination of the annual dividend and buyback reflects our confidence in long-term growth and profitability, as well as our long-term commitment to create value for our shareholders. Regarding the total amount of the dividend, we considered multiple factors, such as Working Capital for Business Development.
Speaker Change: Let me answer your question and thanks for your question regarding the cash dividends and also the share buyback programs.
Speaker Change: And actually we have been focusing on long term.
Speaker Change: Capital policy and the combination of that.
Speaker Change: Dividends and buyback reflects our conflict our confidence in long term growth and the profitability.
Speaker Change: As well our long term mainland to create value.
Speaker Change: Shareholders.
Speaker Change: Regarding the total amount of the dividend.
Speaker Change: We consider multiple factors.
Speaker Change: Such as working capital for.
Mark Wang: CapEx. Profitability and Cash Flow. The dividend amount will be reviewed and determined annually.
Speaker Change: For business development.
Capex.
Speaker Change: Profitability and cash flow.
Speaker Change: The dividend amount to won't be reviewed and determined annually.
Mark Wang: Well, as to buyback, we have repurchased a total of nearly $2 billion from April 2021 to the end of 2023. The existing U.S. $1 billion buyback program, which is effective through March 2025, has been utilized. 400.452 million U.S. dollars as of December 31, 2023, and the remaining parts will be executed from time to time, taking into account factors.
Speaker Change: Well as to buyback.
Speaker Change: We have repurchased a total of nearly $2 billion from April 2021 to the end of 2023.
Speaker Change: The existing U S. Dollar 1 billion buyback program, which is effective through March 2025.
Speaker Change: Been utilized.
Speaker Change: 400.
Speaker Change: 452 million U S dollar as of December 31, 2023.
Speaker Change: And the remaining.
Speaker Change: Paris will be execute from time to time.
Speaker Change: Looking into account factors.
Mark Wang: Such as Price, federation, and marketing fluctuation. So therefore, the cash dividends and the share buyback, I think that's the two ways we would like to provide a return to our shareholders, and these two ways, or two regimes, will be implemented in parallel.
Speaker Change: Such as price.
Speaker Change: <unk> and marketing fluctuations.
Speaker Change: So therefore, the cash dividends and the share buyback I think vessel to waste we would like to.
Speaker Change: Return to our shareholders at least to lease or two regimes well.
Speaker Change: Implements.
Speaker Change: Yes. Thank you.
Speaker Change: Yes.
Speaker Change: Okay.
Operator: Thank you. We will take our next question. Your next question comes from the line of Andre Chang from J.P. Morgan. Please go ahead; your line is open.
Speaker Change: Thank you.
Speaker Change: We will take our next question.
Speaker Change: Your next question comes from the line of Andre Chang from Jpmorgan. Please go ahead. Your line is open.
Andre Chang: Good evening, Mr. Shen, Mr. Mark, and Jessie. I have three follow-up questions. First of all, we hope to continue to invest in the acquisition of new users this year. Last year, we probably didn't achieve that. I'd like to ask about the growth of new users. What is the source?
Andre Chang: Single Mark to Ohio Jesse.
Andre Chang: No what's it been signed up all afterwards.
Andre Chang: But can you guys just diamond sourcing you Aman <unk> digest in total.
Andre Chang: No.
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Speaker Change: Nobody wants to sell itself.
Andre Chang: What is the specific market, what kind of user group? Can you give us a brief introduction? The second point is that we feel that there is room for improvement in R2. But last year, it may have been because of the rebound of user spending after the epidemic. There may be other factors involved,
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Andre Chang: We feel that R2 will continue to improve in the next 24 years. It is because we can give our users more different choices, or there are other drivers. The last point is about the shareholder return. I would like to ask you, our cash flow is very strong. The cash flow at the end of last year will continue to improve. But if our buyback, according to what Mark said just now, is based on this kind of valuation and market situation, then it may not necessarily be implemented. Then our excess cash will not necessarily go back to the shareholders, right? Hi, I have three questions for the management. First, we talked about the node.
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Speaker Change: Okay.
Speaker Change: Hi, I have three questions for the management first.
Speaker Change: <unk> talked about the adult we will focus more on the user growth. This year can we elaborate more bulk.
Eric Ya Shen: We will focus more on user growth this year. Can you elaborate more on where we can find new users to acquire? Second, we also talk about further improvement on the R pool. With no rebounding spending from our loyal users last year, which was easy, what are the drivers for our users to spend more on our platform in 2024? And lastly, we talked about, say, the share buyback hinges on the market condition and valuation. It seems that with our cash flow continuing to be strong, the cash balance increased by the end of last year versus the end of 2022. Does that mean that it's not necessary for us to use our strong cash flow to return to the shareholders? How do we think about that? Thank you., are still old, for example, the so-called natural newcomers.
Speaker Change: The area that we can find a user to acquire.
Speaker Change: Second we also talk about a further improvement on the all too weak.
Speaker Change: No rebounding spending from our loyal user loss of which it was.
Speaker Change: What are the drivers for our user to spend more on our platform in two types of 24, and then lastly.
Speaker Change: We talk about the share.
Share buybacks will hinges on the multi competition solution.
Speaker Change: No.
Speaker Change: Cash flow positive strong cash balance increased by the end of last year versus the end of 2022.
Speaker Change: Does that mean that it's not necessary, we will use our.
Speaker Change: Strong cash flow to return to the shareholder how do we think about that thank you.
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Eric Ya Shen: We will put them on Tik Tok, TikTok, Tencent, and other media platforms. In addition, we also have the so-called pre-installed mobile phones, etc. In the next 20 years, we will continue to expand our brand image, positioning, and let more people know about us. For example, some users knew about VIPSHOP, but they didn't use it.
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Eric Ya Shen: Or they had a different impression of us, so we will strengthen our brand image. In addition, we will continue to expand our brand image, positioning, and let more people know about us. We think that the new clients, including the overall flow of new clients, are still OK. The overall quality is still relatively healthy, so we think that there is no problem in spending money here. The second question is about ARP.
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Eric Ya Shen: In ARP, we think that there was a reason for the increase in ARP last year due to the weather, but there is also a reason for the increase in ARP this year due to the weather, which is that we hope that we will be able to do clothing. We are making more and more special products. For example, ladies can buy them for their husbands, for their children, for their parents.
Speaker Change: Women searches and we didn't see the machines and reduce the bulk hauck <unk> <unk>.
Speaker Change: Okay.
Peter: Go ahead, Peter Kern County seasonal womens.
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Speaker Change: Then there are other than to say when you think.
Speaker Change: Accordingly up opportunity may enrollment, so that you don't wait.
Speaker Change: So Julian the after the T cell <unk> investment in <unk>.
Eric Ya Shen: We can buy more of each type of product, such as clothes, shoes, bags, etc. In addition, we will also expand our products in the next 24 years. We will make more valuable products so that our customers can buy them. So the third question? Mark can answer that.
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Speaker Change: So the current yield curve than the bulk will come and say here's okay, Cleveland <unk> analog format.
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Eric Ya Shen: So on your first question on new customer acquisition, in the last year, actually, we invested in a lot of channels to acquire new customers to drive the organic growth of new customers, such as targeted marketing on a number of platforms like Douyin, Toutiao, and Tencent, as well as mobile pre-installation. This year we would like to do better in terms of adding new channels, especially to elevate the company's brand image through more brand advertising, especially targeting those customers who are not familiar with VIPshop or who have heard of VIPshop but have never used it. Basically, we want to leverage branding to increase customer mindshare of the VIP shop as the best place, the shop floor, including some emerging and younger canoes. Hongshu, Bilibili, etc., etc., where we think there is still quite a lot of potential there. For the new customers we have acquired on our platform, we have actually seen the retention rate is pretty good, which means that customers we acquired are relatively higher. So we think our current, our customer acquisition strategy, doesn't work, or rather it doesn't work for us. In terms of apple growth, last year we did benefit from favorable weather conditions in some of the seasons.
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Speaker Change: Meanwhile, there are scenarios look towards items here Bill.
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Speaker Change: Good.
Speaker Change: The app.
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Speaker Change: So my first question.
Speaker Change: New customer acquisition.
Speaker Change: In Alaska.
Speaker Change: Actually we are we invested a lot of channels too.
Speaker Change: New customers.
Speaker Change: To drive the organic growth and new customers.
Speaker Change: Such as.
Speaker Change: Martin.
Speaker Change: Hum.
Speaker Change: <unk> powered phones lifestyle, leading telecom Townsend.
Speaker Change: Mobile pre installation.
Speaker Change: <unk>.
Speaker Change: This year, we would like to do better in terms of adding new channels, especially to elevate the company brand image.
Speaker Change: True.
Speaker Change: More.
Speaker Change: Brent.
Speaker Change: Rising, especially.
Targeting those customers.
Speaker Change: Im not familiar with.
Speaker Change: VIP shop.
Speaker Change: You have heard of VIP shopper have never used.
Speaker Change: Basically we want to leverage.
Speaker Change: Branding to increase customer mindshare of VIP shop at a better place.
Speaker Change: Shuffle apparel.
Speaker Change: Some emerging and emerging in a younger channels like <unk>.
Eric Ya Shen: But we also think that customers have increasingly recognized the value proposition of and Viva La Romance. Thank you, by Brandon. And especially through our best-in-class services, we find this is a great place to shop for apparel, especially for women. They tend to not only shop for themselves but also shop for the whole family, including children, parents, et cetera.
Speaker Change: Sure Billy Billy recession, et cetera, where we think there is still quite a lot of potential there.
Speaker Change: For the new customers, we have a client.
Speaker Change: So I'll pass along.
Speaker Change: <unk> actually seen the retention retention is pretty good which means that the.
Speaker Change: Customers we.
Speaker Change: Acquired a relatively higher quality, so wisdom wissink.
Speaker Change: Within our current.
Speaker Change: Customer acquisition strategy.
Speaker Change: Does it work.
Speaker Change: Congrats on the well.
Speaker Change: In terms of us for growth.
Speaker Change: Last year, we did benefit from favorable weather conditions.
Speaker Change: And in some of the season.
Speaker Change: But we also think that customers have become increasingly recognize the value proposition of VIP shop.
Eric Ya Shen: They also shop not only for apparel but also for other categories like. I just want to say thank you so much. Thank you. We have seen increasing cross-category purchases among other cultures.
Speaker Change: This platform for branded products.
Speaker Change: Especially through our best in class services.
Speaker Change: This is a great place to shop for apparel, especially useful for women.
Speaker Change: I tend to not only shelf for themselves, but also for the whole family, including children patterns et cetera.
Speaker Change: They also shop, not only apparel, but also other cat.
Speaker Change: Categories like standardized.
Speaker Change: Items.
Speaker Change: See increasing cross category in particular.
Speaker Change: Changes among our customers.
Speaker Change: And.
Eric Ya Shen: And this year, we are also, in addition to driving growth of parallel categories, we also want to build a stronger platform for standardized, so that we can increase the cross-sale opportunities for our high-value companies. Okay, regarding the third question for share buyback, I think the track records which we have already shown systems to return value to our shareholders. And for the buyback program, we will definitely evaluate the share price and also whether the market is experiencing fluctuations. For example, if in the future the share price is lower than our expectation, lower than our..., normal value. Okay, so we will definitely do the share buyback continuously from time to time. But that depends on the price and also depends on other factors.
Speaker Change: And.
Speaker Change: This year. We are also in addition to driving the growth of apparel categories. We also want to.
Speaker Change: Abused.
Speaker Change: Stronger.
Speaker Change: Our platform for standardized items.
Speaker Change: So that we can increase.
Speaker Change: Cross sell opportunities for our high value customers, especially Super VIP members.
Speaker Change: Okay regarding the third question for share buyback and I think the track records, which is.
Speaker Change: As already shoring systems to return value to our shareholders.
Speaker Change: And for the better program, we will definitely evaluate the share price and also whether the market is in.
Speaker Change: Fluctuations okay.
Speaker Change: If we then believe in the future share prices lower than our expectation lower than our.
Speaker Change: Normal value. Okay. So it will definitely we'll do share buyback continuously from time to time.
Speaker Change: But that depends on the price and also depends on other factors.
Mark Wang: So I think the cash dividends regime is a way to give you more predictable value back to the shareholders. So in the future, we will have the annual Cash Dividends Policy, and of course, WeWork will evaluate our cash position and also our profitability and also our capex, et cetera, to make sure to determine how much money we will distribute to our shareholders. So I think the cash.
Speaker Change: So I think the cash dividends regime.
Speaker Change: Wait to give you a more predictable.
Speaker Change: Sure value back to our value back to the shareholders. Okay. So in the future we will have to add new.
Speaker Change: Cash dividends policy and the.
Speaker Change: Of course level.
Speaker Change: Evaluate our cash position and also our profitability and also our capex etcetera to make sure to determine how much money will look.
Speaker Change: Distribute to our shareholders.
Speaker Change: So I think the cash.
Mark Wang: Dividend Policies, Ways to Compensate, our return to our shareholders. See you soon. Due to time constraints, that concludes today's Q&A session. At this time, I will turn the conference back to Jessie for any closing remarks. Thank you for taking the time to join us today. If you have any questions, please don't hesitate to contact our RR team. We look forward to speaking with you next quarter. This concludes today's conference call. Thank you for participating. You may now disconnect. Thanks for watching!
Speaker Change: Dividend policy is a weight complement.
Speaker Change: Our return to our shareholders policy. Thank you.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Thank you due to time constraints that concludes today's Q&A session. At this time I will turn the conference back to Jesse for any closing remarks.
Speaker Change: Okay.
Jessie Fan: Thank you for taking the time to join US today. If you have any questions. Please don't hesitate to contact our IR team will look forward to speaking with you next quarter.
Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].