Q1 2024 Vipshop Holdings Ltd Earnings Call
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Operator: Ladies and gentlemen, good day everyone and welcome to Vipshop Holdings Limited's first quarter 2024 earnings conference call. At this time, I would like to turn the call over to Miss Jessie Zheng, Vipshop's Head of Investor Relations. Please proceed.
Speaker Change: Ladies and gentlemen, good day, everyone and welcome to VIP shop Holdings Limited's first quarter 'twenty to 'twenty five earnings conference call. At this time I would like to turn the call to Mr. Jesse Shang VIP shops.
Speaker Change: Please proceed.
Jessie Zheng: Thank you, operator. Hello, everyone, and thank you for joining Vipshop's first quarter 2024 earnings conference call. With us today are Eric Shen, co-founder, chairman, and CEO; Mark Wang, our CFO.
Speaker Change: Thank you operator, Hello, everyone and thank you for joining the I T shop first quarter tonnage Tasteful earnings conference call. We discussed that today are Ericsson called founder Chairman and CEO and Mark Wang our CFO before management begins their prepared remarks.
Jessie Zheng: 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. 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 statement in our earnings release and public filings with the Securities and Exchange Commission, which also applies to this call to the extent that any forward-looking statements may be made.
Speaker Change: I would like to remind you that the discussion today will contain forward looking statements made under the safe Harbor provision of the U S. Private Securities Litigation Reform Act up 1995.
Speaker Change: Forward looking statements are subject to risks and uncertainty that may cause actual results to differ materially from our current expectations.
Speaker Change: Potential risks and uncertainties include but had not limited to those outlined in our safe Harbor statement in our earnings release and public filings with the Securities and Exchange Commission, which also applies to this call to the extent any forward looking statements may be made.
Jessie Zheng: 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 said, I would now like to turn the call over to Mr. Eric Chen. Good morning.
Speaker Change: Please note that certain financial measures that he has done this call such as non-GAAP operating income non-GAAP net income and non-GAAP net income for a T S.
Speaker Change: As 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.
Speaker Change: With that I would now like to turn the call over to Mr. Eric Shen.
Eric Shen: Good morning and good evening, everyone. Welcome and thank you for joining our first quarter 2024 earnings conference. We had a slow quarter in terms of business momentum, but profits grew much faster than sales in the face of the shortfall of the top line with state flexible to operate most effectively while focusing on priorities to enhance long-term strength. In the first quarter, sales closed.
Eric Shen: Good morning, and good evening, everyone welcome and thank you for joining our first quarter 2024 earnings conference call.
Eric Shen: Moderated as the quarter progressed after strong start seasonal demand for spring clothes was softer than expected in March. But for the full quarter, the apparel category continued to stand out with double-digit GNV growth year over year. Custom Spending Proved Resilient. In the first quarter, active Super VIP members increased by 11% from a year ago and accounted for 45% of our online spending. That's a healthy indication of the trust, value, and ease of the shopping we've created for them.
Eric Shen: We had a slow quarter in terminal business momentum.
Eric Shen: But the profit grow much faster than sales.
Eric Shen: In the face of the shortfall over the top line.
Eric Shen: Steve.
Speaker Change: Flexible to operate to most hit.
Speaker Change: Exactly well focusing on.
Speaker Change: Priorities to enhance long term strength.
Speaker Change: In the first quarter sales close.
Speaker Change: Modern repaid as the quarter progressed after a strong start even though demand for screen code.
Speaker Change: It was softer than expected in March.
Speaker Change: For the full quarter Capello category continued to stand out with double digit <unk> growth year over year.
Speaker Change: Customer spending proved the resilience in the first quarter active Super VIP members increased by 11% from a year ago and accounted for 45% of our online spending.
Speaker Change: The healthily indication of the trusts value and the ease of shopping.
Eric Shen: We came into the year by responding to the change in customer behaviors and continuously refining our approach to navigate a still dynamic environment. All that we do centers upon increasing our appeal to customers beyond our existing base; we expand into what customers like and what makes us different. We provide great value that customers are looking for every day. As for merchandise expansion, we continue to see plentiful supply in the industry, and we are happy with our access to quality branded inventory.
Speaker Change: We've created for them.
Speaker Change: We came into the year by responding to the changes in customer behaviors and continuously refining.
Speaker Change: Our approach to navigate a dynamic environment.
Speaker Change: All that we do centrist upon increasing our pillar two customers beyond our existing base, we expanded into what customers like and what make us different.
Speaker Change: We provide greater value that customers are looking for everyday.
Speaker Change: On merchandise expansion, we continue to see.
Speaker Change: Plentiful supply in that in the industry and we are happy with our access to quality brand inventory.
Eric Shen: We are building a wide-ranging assortment based on our broad and deep-rooted relationship. A steady flow of selected national and global brands keeps us up to date to provide a more treasure-hunting deal for our customers. Our team's merchandising expertise really few better brand portfolio with product mix has a range of discount levels will remain dominant in our share of deep discount branded products, even as consumers have to make this print buying choice, our customers continue to welcome an affordable selection.
Speaker Change: We are building a wider range than assortment based on our broad and deep vendor relationships.
Speaker Change: Steadily flow or select the nation note and the global brands keep us up to date.
Speaker Change: To provide more carrier hunting deal.
Speaker Change: Our customers.
Our our team merchandising expertise really feel better branded portfolio with product mix.
Speaker Change: Our discount levels will remain.
Speaker Change: Tommy.
Speaker Change: Dominant in our share our deep discount branded products.
Speaker Change: Even as.
Speaker Change: Even.
Speaker Change: Even as consumers have to make this preneed buying choice our customer continue to welcome.
Speaker Change: Notable selections.
Eric Shen: The Made for VIP shop line further gives us the ability to meet the needs of customers who are more style and price conscious. Through 180 well-known brand partners, we have managed to more than double the supply of customized products from a year ago. We are pleased to see that made-for-Vipshop products are more preferred by high-quality customers, who tend to place more repeat orders in a parallel category across geography. We see people are closely looking for value.
Speaker Change: A major for VIP shop line further giving us the ability.
Speaker Change: <unk> to meet the needs of our customers, who are more style and price.
Speaker Change: Yes.
Speaker Change: <unk> 180, well known brand partner, we managed to more than double the supplier our customized product from a year ago. We.
Speaker Change: We are pleased to see that made for VIP shop products are more preferred by high quality customers.
Speaker Change: Who tend to place more repeat orders in our apparel categories.
Speaker Change: Across geographies.
Speaker Change: The people are closely looking for value we were caught a good chance to grow our share of value of spending we continue to drive value for our customers beyond compelling price.
Eric Shen: We got a good chance to grow our share of value spending. We continue to drive value for our customers beyond the compelling price. In addition to promotion, customers buy our brand offerings because they receive the combination of price, quality, and service. They are, they are conscious of production.
Speaker Change: In addition to promotion customer by our brand offerings, because we really see the combination of price quality and service.
Speaker Change: Yes.
Speaker Change: We are conscious of product.
Eric Shen: Authenticity, so they rely on our offering. They like simplified promotions and seamless returns and exchange. All these things make it easy in the shopping experience, which leads to great repeat purchases. That's how we're different from others.
Speaker Change: Authenticity.
Speaker Change: Rely our offerings.
Speaker Change: The life simplified promotions and seamless returns and.
Speaker Change: It changes.
Speaker Change: These things make it easy in the shopping experience, which lead to great repeat purchase this how we are different from others.
Eric Shen: We are also taking initiatives to enhance the loyalty program. In the first quarter, we launched product sales and the special offering for super VIP members to enjoy additional privileges. It's a good start to building more online and offline connections to our loyal customers, and initial results are encouraged. Within the company, we continue to reinforce our efforts to gain efficiencies. We are working to design better progress and Deepology, the latest technology in our business.
Speaker Change: We are also taking initiatives to enhance the loyalty program in the first quarter, we launched.
Speaker Change: So we launched Colgate to Phil.
Speaker Change: And the special offering for our Super VIP members to enjoy additional privileges.
Speaker Change: It's a good start to building more online and offline connection to our loyal customers.
Speaker Change: Initial results.
Speaker Change: Encouraging.
Speaker Change: Within the company, we continue to reinforce our efforts to gain efficiencies we are working to design better progress.
Speaker Change: The departing the latest technology in our business.
Eric Shen: For example, we are applying AI-generated model photos and product videos to optimize our marketing efforts and help brand partners engage with their customers more effectively, with the potential to improve engagement and cohesion. We expect to drive further adoption of this solution over the course of the year. While we are cautious in our near-term outlook, we remain confident in our ability to generate long-term results. Our unique value proposition allows us to serve in the best interest of brand partners and grow high quality customers across age and income cohorts.
Example.
Speaker Change: AI generally model.
Speaker Change: <unk> had a productive videos to optimize our marketing efforts and help brand partners engage with their customers more effectively.
Speaker Change: Has the potential to improve agreement and the commission.
Speaker Change: We expect to drive further.
Speaker Change: Adoption of this solution over the course of the year.
Speaker Change: While we are cautious in our near term look outlook, we remain confident in our ability to generate long term result.
Speaker Change: Our unique value proposition allow us to <unk> in the best interest of our brand partners and grew high quality.
Speaker Change: Customers across age and income cohorts, we believe we have the solid foundations to capture the opportunity we see to grow our business in the years ahead.
Eric Shen: We believe we have the solid foundations to capture the opportunity we see to grow our business in the years ahead. At this point, I will hand over the call to our CFO, Mark Wang, to go over our financial results.
Speaker Change: At this point, let me hand over the call to our CFO Mark Wang to go over our financial results.
Mark Wang: Okay, thanks Eric and hello everyone. We are pleased to report another quarter of strong profit growth. Is bad, the tap is on top line performance. In the first quarter, our team executed well, moving quickly in response to the dynamic operating environment to drive efficiency, and as a result, margins all remain very healthy. More specifically, consolidated gross margin increased to 23.7%, from 21.4% a year ago, primarily with the help of higher-margin category mix from Apparel Sales. Non-cabinet margin attributable to Vipshop's shareholders is pending another record high of As consumers, we embody functions in a value-driven way.
Mark Wang: Okay, Thanks, Eric and Hello, everyone.
Mark Wang: We are pleased to report another quarter of strong profit growth.
Speaker Change: Rather tepid topline performance.
Speaker Change: In the first quarter, our team executed well moving quickly in response to a dynamic operating environment.
Speaker Change: To drive efficiency gains.
As a result.
Speaker Change: Margins remain very healthy.
Speaker Change: More specifically.
Speaker Change: Consolidated gross margin increased to 23, 7%.
Speaker Change: From 21, 4% a year ago.
Speaker Change: Primarily with the help of higher margin category mix.
Speaker Change: From apparel sales.
Speaker Change: non-GAAP net margin attributable to VIP shops shareholders antitrust.
Speaker Change: And if another record high of nine 3% from.
Speaker Change: From seven 5% a year ago.
Speaker Change: Aided by our ongoing efforts to maintain operating discipline.
Speaker Change: As consumers remain budget punctures and a value driver.
Mark Wang: We are reinforcing our value proposition, of course, our merchandise offering to deliver the affordability that better fits into consumer preference, and we will focus on priority to capture the growth of punity we see with brand partners and customers. We believe with solid business fundamentals and a great financial position, we are able to deliver quality growth, good profitability, as well as consistent shareholder return for the long term. Looking to 2025, for the benefit of our shareholders, we plan to commit no less than 75% of our full-year 2024 non-GAAP net income, attributable to Vipshop shareholders, in discretionary share repurchase and for Dividend Distribution. Now moving to our detailed quarterly financial highlights. Before I get started,
Speaker Change: We were reinforced reinforcing our value proposition.
Speaker Change: Our merchandize offering to deliver both portability that better fits into consumer preference.
Speaker Change: And we will focus on priorities that.
Speaker Change: To capture the growth opportunity.
Speaker Change: We see with the brand partners and our customers.
We believe with a solid business fundamentals and a great financial position.
Speaker Change: We're able to deliver quality growth.
Good profitability.
Speaker Change: We'll add consistent shareholder return for the long term.
Speaker Change: Looking into 2025.
Speaker Change: For the benefit of our shareholders.
Speaker Change: We plan to commit.
Speaker Change: No less than 75%.
Speaker Change: Our full year 2024, non-GAAP net income.
Speaker Change: Attributable to VIP shops shareholders.
In discretionary share repurchase.
Speaker Change: Or dividend distributions.
Speaker Change: Now moving to our detailed quarterly financial highlights.
Speaker Change: Before I get started I would.
Mark Wang: I would like to clarify that all financial numbers presented below are in and all the percentage changes are a year over year change. Alive Otherwise Noted, Total net revenues for the first quarter of 2024 increased by 0.4% year over year to RMB 27.6 billion from RMB 27.5 billion in the prior period. Gross profit increased by 10.9%, year over year, to RMB 6.5 billion from RMB 5.9 billion in the prior year period. Gross margin increased to 23.7% from 21.4% in the prior period.
Mark Wang: Total Operating Expenses increased by 0.6% year over year to RMB 4.09 billion from RMB 4.06 billion in the prior period, as a percentage of total net revenue. Total operating expenses for the first quarter of 2024 were 14.8%, compared with 14.7% in the prior year period. Perfume and expenses increased by 11.3% year over year to RMB 2.0 billion from RMB 1.8 billion in the prior year period as a percentage of total net revenue.
Speaker Change: I'd like to clarify.
Speaker Change: That all financial numbers present, the lull in renminbi.
Speaker Change: And all the percentage of films a year over year.
Speaker Change: Otherwise noted.
Total net revenues for the first quarter of 2024 increased by <unk>, 4% year.
Speaker Change: Year over year to RMB 27, 6 billion from RMB 27, 5 billion in the prior year period.
Speaker Change: Gross profit increased by 10, 9%.
Speaker Change: Year over year to RMB, six 5 billion from RMB, five 9 billion in the prior year period.
Speaker Change: Gross margin increased to 23, 7%.
Speaker Change: From 21, 4%.
In the prior year period.
Speaker Change: Okay.
Total operating expenses increased.
Speaker Change: <unk> increased by <unk>, 6% year.
Speaker Change: Year over year to RMB 409 billion from RMB, four 6 billion.
Speaker Change: The prior year period.
Speaker Change: As a percentage of total net revenues.
Speaker Change: Total operating expenses for the first quarter of 2024 was 14, 8%.
Compared with 14.7%.
Speaker Change: In the prior year period.
Fulfillment expenses.
Speaker Change: <unk> increased by 11, 3%.
Speaker Change: Year over year to RMB.
Speaker Change: 2.0 billion from RMB, one 8 billion in the prior year period.
Speaker Change: As a percentage of total net revenues.
Speaker Change: Fulfillment expenses was seven 2%.
Speaker Change: Compared with six 5% in the prior year period.
Mark Wang: Fulfillment Expenses were 7.2%, compared with 6.5% in the prior period. Marking Pencils decreased by 17.4% year over year to RMB 690.9 million from RMB 836.9 million in the prior year period, as a percentage of total net revenue.
Speaker Change: Marketing expenses.
Speaker Change: <unk> decreased by 17, 4% year over year to RMB 699 million from.
Speaker Change: From RMB $836 9 million in the prior year period.
As a percentage of total net revenues.
Mark Wang: Marking expenses decreased to 2.5%, from 3.0%, in the prior period. Technology and the content of the website increased by 22.7% year-over-year to RMB 481.9 million from RMB 392.8 million in the prior period, as a percentage of total net revenue. Technology and content expenses were 1.7%, compared with 1.4% in the prior period. General and Administrative Expenses decreased by 11.3% over a year, to RMB 929.1 million from RMB 1.0 billion in the prior period, as a percentage of total net revenue. General and Administrative expenses decreased to 3.4% from 3.8% in the prior year period.
Speaker Change: Marketing expenses decreased to two 5% from.
Speaker Change: From 310%.
Speaker Change: Prior year periods.
Speaker Change: Technology and content expenses increased by 22, 7% year over year to RMB $481 nine.
Speaker Change: <unk> 9 million.
Speaker Change: From RMB 392.8.
Speaker Change: $8 million in the prior year periods.
Speaker Change: Sure.
Speaker Change: As a percentage of total net revenues.
Speaker Change: Technology and content expenses was one 7%.
Speaker Change: Compared with one 4%.
Speaker Change: In the prior year period.
Speaker Change: Okay.
Speaker Change: General and administrative expenses.
Speaker Change: <unk> decreased by 11, 3% year over year.
Speaker Change: To RMB $929 1 million from RMB, one zero billing and.
Speaker Change: In the prior year period.
As a percentage of total net revenues.
Speaker Change: General and administrative expenses.
Speaker Change: Decreased to three 4% from.
Speaker Change: From three 8% in.
Speaker Change: In the prior year period.
Mark Wang: Income from operations increased by 39.0% year over year to RMB 2.8 billion from RMB 2.0 billion in the prior period. Operating Margin Increase. 10.0%, from 7.2% in the prior period. Non-GAAP income from operations increased by 33.4% year-over-year to RMB 3.1 billion from RMB 2.3 billion in the prior period. Non-Gap Operating Margin increased to 11.1% from 8.3% in the prior year period. Net income attributable to VIP shop shareholders increased by 24.6% year-over-year to RMB 2.3 billion from RMB 1.9 billion in the prior period.
Income from operations increased by 39% year over year to RMB, two 8 billion from RMB to durability in the prior year period.
Speaker Change: Operating margin increased to.
Speaker Change: 10 zero percent from.
Speaker Change: From seven 2% in the prior year period.
Speaker Change: non-GAAP income from operations increased by 33, 4% year over year to RMB, three 1 billion from RMB, two 3 billion in the prior year period.
Speaker Change: non-GAAP operating margin increased to 11, 1%.
Speaker Change: From eight 3% in the prior year period.
Speaker Change: Net income attributable to VIP shops shareholders increased by 24, 6% year over year.
Speaker Change: So RMB two 3 billion from.
From RMB, one 9 billion in the prior year period.
Mark Wang: Net Margin Attributable to Vipshop Shareholders increased to 8.4% from 6.8% in the prior period. Net income attributable to VIP shop shareholders per diluted ADF increased to RMB 4.18 from RMB 3.16 in the prior period. Non-government income attributable to Vipshop shareholders increased by 24.8% year over year to RMB 2.6 billion from RMB 2.1 billion in the prior period; non-government margin attributable to Vipshop shareholders increased to 9.3% from 7.5% in the prior year period; non-government income attributable to VIP Shop shareholders, for Diluted ADS, increased to RMB 4.66 from RMB 3.52 in the prior period. As of March 31st, 2024.
Speaker Change: Net margin attributable to VIP shops shareholders.
Speaker Change: Increased to eight 4%.
Speaker Change: From six 8% in the prior year period.
Net income attributable to VIP shop shareholders per diluted ABS.
Speaker Change: Increased to RMB four point.
Speaker Change: One eight from RMB 316 in the prior year period.
Speaker Change: non-GAAP net income attributable to VIP shops shareholders.
Speaker Change: <unk> increased by 24, 8% year over year to RMB, two 6 billion.
Speaker Change: From RMB, two 1 billion in the prior year period.
Speaker Change: non-GAAP net margin attributable to VIP shops shareholders incur.
Speaker Change: <unk> increased to nine 3%.
Speaker Change: From seven 5%.
Speaker Change: In the prior year period.
Speaker Change: non-GAAP net income attributable to VIP shops shareholders.
Speaker Change: Our diluted avs.
Speaker Change: Increased to RMB 466 from RMB three.
Slide two in the prior year period.
Speaker Change: As of March 31, 2024.
Mark Wang: The company had cash and the cash equivalent, and the respective cast of RMB 24.6 billion, and short-term investments of RMB 2.9 billion. Looking forward to the second quarter of 2024, we expected our total net revenues to be between RMB 26. 0.5 billion and RMB 27.9 billion, representing a year-over-year decrease of approximately 5% to 10% to 1% to 0%. Please note that this forecast is based on our current and preliminary view of the market and Operational Conditions, which are subject to change. With that, I would now like to open the call to Q&A.
Speaker Change: Company had cash cash equivalents and the restricted cash of RMB $24 6 billion.
Speaker Change: As short term investments of RMB, two 9 billion.
Speaker Change: Looking forward to the second quarter of 2024.
Speaker Change: We expected our total net revenues.
Speaker Change: To be between RMB 26.
Speaker Change: <unk> 5 billion and RMB 27 9 billion.
Representing a year over year decrease.
Speaker Change: Of approximately 5% to 10% up to one 2%.
Speaker Change: Please note.
This forecast.
Speaker Change: Reflects our current and preliminary view of the markets.
On the operational conditions.
Speaker Change: Which is subject to change.
Speaker Change: With that.
Speaker Change: I would now like to open the call to Q&A.
Operator: Thank you, dear participants. If you wish to ask a question, please press star 11 on the telephone keypad and wait for a name to be announced. To withdraw a question, please press star 11 again. If you are bilingual, please ask your question in both languages. Thank you so much for your consideration.
Speaker Change: Thank you Dear participants if you wish to ask a question. Please press star one bond telephone keypad and wait for a name to be announced to withdraw your question. Please press star one again.
Speaker Change: If you are bilingual please ask your question in both languages. Thank you. So much for your consideration. Please Tim Bob will compile the Q&A roster. This will take a few moments.
Operator: Please stand by, we'll compile the Q&A row, so this will take a few moments. And now we're going to take our first question. And it comes from the line of Alicia Yap from Citigroup. Your line is open, please ask your question.
Speaker Change: And now we'll go and take our first question.
Speaker Change: And it comes from the line of Alicia Yapp from Citigroup. Your line is open. Please ask your question.
Alicia Yap: Hi, good morning, good evening, management. Thanks for taking my questions.
Speaker Change: Hi.
Alicia Yap: Good morning, Good evening management, Thanks for taking my questions.
Alicia Yap: Have a question regarding.
Alicia Yap: The guidance so just curious in terms of what's.
Speaker Change: The drivers of JAKKS does that you have been factored into your latest second quarter revenue guidance.
Alicia Yap: I have a question regarding the guidance. So, just curious in terms of what, you know, the drivers and factors that you have factored into your latest second quarter revenue guidance. Is that related to demand being a little bit sluggish, or do you actually factor in a higher return rate? So any color you can provide in terms of how you see the second quarter trends and demand would be helpful. Thank you.
Speaker Change: Is that related to the demand has been a little bit flattish or are you actually factor in a higher return rates. So any color you can provide in terms of how you see the second quarter.
Speaker Change: <unk> would be helpful. Thank you.
Unknown Executive: Alicia's question is about what factors should be considered when considering our guidance. Whether it is the delay in demand or a higher return rate; any of these factors are acceptable. Yes, that's right.
Speaker Change: Alicia Lindsay Josh available guidance, we'll comment on that.
Speaker Change: Sure.
Speaker Change: Please go.
Unknown Executive: Yes, our Q2 estimates will be relatively low. Let's consider a few aspects. One is that because of the weather in March, the sales window of the village is relatively short. So we said that there was no chance of sales in Q2.
Luca: Go ahead Luca.
Luca: Okay.
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Unknown Executive: Secondly, considering last year's Q2, our performance has improved quite a lot. In other words, overall, our performance is relatively high. Thirdly, we are actually... [inaudible] Fourth, we consider the overall return rate. We have been thinking about it over the past few years, especially as our SVIP continues to increase. The return rate is high. In addition, the user's habit of shopping online, the return rate is relatively simple and convenient. So, in general, we think that these are the reasons.
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Unknown Executive: Okay, for the Q2 guidance, we actually have factored in a number of considerations. First, we had extended winter and also early summer, which actually shortened the window for apparel sales for spring closing. And apparel sales, you know, it really depends on the right timing, especially during the seasonal shift. And second, we face a tough comp, a high base from the same quarter last year, which we really did very well. That does not favor us.
Speaker Change: Okay.
Speaker Change: The Q2 guidance, we actually have factored a number.
Speaker Change: Considerably operation.
Speaker Change: First we had.
Speaker Change: The extended winter and also early summer, which actually shorten the window for apparel sales.
Speaker Change: <unk> spring closing.
Speaker Change: <unk>.
Speaker Change: The parallel.
Speaker Change: It depends on the right timing.
Speaker Change: Especially during this please in Russia.
Speaker Change: Second.
Speaker Change: Telecom high base from the same quarter last year.
Speaker Change: We really did very well on that.
Speaker Change: This call today Barra and shared.
Unknown Executive: And third, you know, we still have a very, you know, very dynamic industry. So we focus on stabilizing our core business to maintain solid profitability. We did not, and we have not invested in large scale subsidies and market spend to acquire customers very aggressively. This has resulted in some loss of sales from customers who swing among different platforms. And lastly, the return rate you mentioned, yes, it's been up. It's primarily because of the higher contribution from our SBIP members, who are still growing very nicely. It also ties in with a customer's, you know, behavior, who are used to, who likes to, you know, return an exchange when they shop among different e-commerce platforms.
Speaker Change: Got it.
Speaker Change: We still have a very very dynamic industry.
Speaker Change: We focus on stabilizing our core business to maintain solid profitability.
Speaker Change: We have not invested in large scale subsea center market has been to acquire customers that very aggressively.
Speaker Change: This has resulted in some loss of sales from customers.
Speaker Change: Among different platforms.
Speaker Change: And lastly.
Speaker Change: The return ratio mentioned, yes.
Speaker Change: Primarily because of the higher.
Speaker Change: Contribution from all <unk> members.
Speaker Change: Still growing very nicely.
Speaker Change: It also ties to customer behavior, who are used to.
Speaker Change: Who likes to.
Speaker Change: <unk> reached the next change when they shop among different e-commerce platforms.
Alicia Yap: Okay, thank you so much.
Speaker Change: Okay. Thank you so much.
Speaker Change: Thank you.
Operator: Dear participants, as a reminder, if you wish to ask a question over the phone, please press star 1 1 on your telephone keypad and wait for your name to be announced. Now we're going to take our next question. And the question comes to the line of Ronald Keung from Goldman Sachs. Your line is open, please ask your question.
Speaker Change: Yeah participants as a reminder, if you wish to ask a question over the phone. Please press star one on your telephone keypad and wait for a name to be announced.
Speaker Change: Now we will take our next question.
Speaker Change: And the question comes from the line of Ronald Korn from Goldman Sachs. Your line is open. Please ask your question.
Speaker Change: Alright, Hey, CJ Standalone Mike.
Ronald Keung: I have two questions. First, we should see some softness in March, but our guidance for the second quarter is because of the April run rate. We are still considering the May-June group base. We want to see if we have any expectations for the 6.16 annual festival.
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Speaker Change: And then they go ahead.
Speaker Change: I know that you passed before.
Ronald Keung: The second question is about the share return. We may have a share return of less than 12 million dollars in the first quarter. But the management said it would spend 500 million dollars in the first quarter. Do we expect a bigger return in the next three quarters?
Speaker Change: Thank you Keith.
Speaker Change: Article Dr that helix Doescher, Scotland shareholder return J, Bette Jo kind of what maybe <unk> E. Chen.
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Speaker Change: Dan.
Speaker Change: Great.
Speaker Change: Nick.
Speaker Change: Our baby.
Speaker Change: While I expect to grow with us.
Speaker Change: We'll take our Quaker lethal quick data.
Ronald Keung: Thank you, management, for taking my question. My first question is, have we seen the first quarter softness mainly due to March? And then, as we guide this zero to minus five, are we facing this on an April trend? Or are we expecting it's a base issue mostly for May and June, particularly the shopping festival, June 16th festival, that would have happened last year?
Speaker Change: Hi, Thank you management for taking my question. My first question I just want to ask are we seeing.
Speaker Change: Was the first quarter kind of softness mainly due to March.
Speaker Change: And then as we guide this year.
Speaker Change: Zero to minus five.
Speaker Change: Facing based on April trends or are we expecting it as a base issue most mostly for May and June.
The shopping festival.
June 16th Festival into.
Ronald Keung: The second is on share return. We've seen that we brought back around 11.9 million worth of shares in the first quarter. But then the announcement says we're committed to up to 500 million by the end of this year. Does that imply a significant step up in the share buybacks in the remaining three quarters? Thank you.
Speaker Change: That would last year second as I'm sure you wouldn't return we've seen now with broad background at $11 9 million of shares worth of shares in the first quarter.
Speaker Change: Di announcements as we can.
Speaker Change: To up to $500 million by the end of this year does that imply.
Speaker Change: A significant step up in <unk>.
Speaker Change: Share buybacks and the remaining three quarters. Thank you.
Unknown Executive: I will answer the first question first. From April to now, we have seen that overall sales did not meet our expectations, so we think we need to make some adjustments.,...
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Unknown Executive: On your first question, actually, I wanted to say...
Speaker Change: Yes, the warranty market equinox.
Speaker Change: What's the question actually reported to date.
Speaker Change: Sales momentum has been softer than expected and we are.
The two types of Jackson's business and try to execute right.
Speaker Change: Given our lens.
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Speaker Change: Promotional season has started.
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Speaker Change: Situation with Asa last year, so we try to.
Speaker Change: We remain cautious about the sales momentum going forward.
Speaker Change: Any ups and downs.
Speaker Change: We will be.
Speaker Change: Try to be conservative.
Speaker Change: Terms of.
Speaker Change: The outlook and also we will continue to be quite disciplined.
Unknown Executive: Okay. Thanks for your question regarding the second question regarding shareholders returns.
Speaker Change: Please.
Speaker Change: Okay.
Speaker Change: Thanks for your question for the second question regarding the shareholders' returns. Okay. Let me answer you in this way okay.
Unknown Executive: Let me answer you in this way. Okay, we are committed to a long-term shareholder return policy, and it will continue to use the combination of five backs and the dividend to provide shareholders with a relatively stable and consistent annual return. We have returned over 2.2 billion US dollars to share folders since April 2021 in the form of buyback and dividend. For 2024, we have adopted an annual dividend policy, and then now.
Speaker Change: We're committed to a long term shareholder return policy.
Speaker Change: And it will continue to use the combination of buyback and the dividend to provide shareholders with a relatively stable.
Speaker Change: And the consistent annual returns.
Speaker Change: We have returned over $2 2 billion U S dollars.
Speaker Change: Shareholders since.
Speaker Change: Since April 2021.
Speaker Change: In the form of buybacks and dividends.
Speaker Change: For 2024.
Speaker Change: Have adopted <unk>.
Speaker Change: No dividend.
Speaker Change: Policy and announced.
Unknown Executive: $250 million US dollar dividend. In addition, we are steadily buying back shares, and we are committed to repurchasing approximately 500 million US dollars by December 31, 2024. This implies that we will almost utilize the remaining amounts of the existing $1 billion US dollar two-year buyback program by year-end. For the Mall, looking into 2025, for the benefit of our shareholders. We plan to commit no less than 75% of our full year 2024 non-gap net income, attributable to Vipshop shareholders, in discretionary share with her, or dividend distribution. All I mentioned regarding the history records and the future planning shows our determination and insistence to return value to our shareholders in a long-term, stable, and consistent way. I hope this answers your question. Thank you.
Speaker Change: 250 million U S dollar dividends.
Speaker Change: In addition, while steadily buying back shares.
Speaker Change: And are committed.
Speaker Change: To repurchased repurchasing approximately 500 million U S dollar by December 31st 2024.
Speaker Change: This implies.
Speaker Change: That we will almost utilized.
The remaining months of the existing 1 billion U S. Dollar two year buyback program by year end.
Speaker Change: Furthermore.
Speaker Change: Looking into 2025.
For the benefit of our shareholders. We plan so can meet no less than 75% of our full year 2024, non-GAAP net income.
Speaker Change: <unk> two VIP shops shareholders.
Speaker Change: In discretionary share repurchase.
Speaker Change: And our dividend distributions.
Speaker Change: Oh, I mentioned above regarding the three speed records.
Speaker Change: And our future planning.
Speaker Change: Shows our determination and assist in systems.
Speaker Change: To return value to our shareholder long term stable and consistent way.
Speaker Change: I Hope this answer your question. Thank you.
Speaker Change: Okay.
Ronald Keung: Yes, thank you, gentlemen and Mark.
Speaker Change: Thank you Kim Taylor and Michael.
Speaker Change: Thank you.
Operator: Now we're going to take our next question, and the next question comes from the line of Eddy Wang from Morgan Stanley. Your line is open. Please ask your question.
Speaker Change: Now we're going to take over next question.
Speaker Change: And the next question comes from the line of Eddy Wang from Morgan Stanley. Your line is open. Please ask your question.
Eddy Wang: Hello, Mr. Shen, Mark, and Jessie. Thank you for accepting my question. I have a few questions. First, Mr. Shen mentioned competition. I believe that in the short term, as Mr. Shen said, competition may affect us in some way. But we see that some major e-commerce platforms may implement this, including subsidies, as a means of competition for a long time. From a long-term perspective, Mr. Shen, in terms of our strategy, do you think that we will stick to our current focus on positioning and better service in terms of SVIP and increase their repurchase, etc.? This is my first question. The second question is also related to the first question. In the first quarter, the number of users decreased in comparison.
Speaker Change: Hey, Hey, guys since all Mark Jessica.
Eddy Wang: As Mr. Shen mentioned, this is related to competition. I don't know. As Mr. Shen said, we still have some demand for the growth of our customers. I don't know if we will have more measures to attract more customers. The third question is a follow-up question.
Speaker Change: Hey, guys Hey, this is all of the Q1.
Eddy Wang: The increase in AOV, or GMV per order, is still increasing. Is this because the SVIP ratio is increasing, and their customer orders are still higher, or due to other reasons? I would like to know.
Speaker Change: Dan could you go back to that.
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Eddy Wang: Let me translate for you. Thank you for taking my question. My first question is about competition. As Mr. Shen mentioned, we have seen more intense competition from peers, especially in terms of the subsidy they grant. I understand that in the short term, we may stick to our current strategy, but if you take a relatively long-term view, will we also follow suit and be more aggressive like the subsidy strategy, or will we continue to stick to our current strategy?
Speaker Change: Alright.
Speaker Change: <unk> <unk> you can think of it at some point you just kind of your thoughts.
Eddy Wang: The second is the user side. We recorded a UOV decline for users in the first quarter of this year. Just to hear your view on your user growth strategy for this year and in the longer term. The third one is about AOV. We see that AOV in this quarter actually increased on a quarterly basis. This is because of the proportion of the SVIP users coming up, so their AOV is higher, or any other reasons actually led to a higher AOV in this quarter. Thank you.
Speaker Change: You too.
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Unknown Executive: I would like to answer these questions. First, I would like to ask about our next direction. For us, since we are doing brand special sales, we will continue to do brand special sales. Because there is a lot of e-commerce now, competition is fierce, and each brand has different characteristics.
Speaker Change: Yes.
Speaker Change: Sarcoma to Gabon hazard similar to EMEA at $2, two Jason I'm kinda fill open sides or saw.
Unknown Executive: But the more we understand, the more we have to insist on doing our own brand special sales. Also, we need more good products, more good-priced products for our users. This is also the reason why our users have not left us. This is our next direction. We will continue to work with a lot of brands.
Unknown Executive: We will bring better products. This is our first question. The second question is, when we were doing Q1, we were a bit strict on LTV when it came to bidding. We did not bid if the price was higher than a certain amount.
Shlomo: So gentlemen, yes, Shlomo This award but to each of the cohorts.
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Speaker Change: Hi, Jake.
Speaker Change: Could I ask a quick call yet.
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Speaker Change: Hello. Thank you for taking my question. So my first question is about the competition.
Unknown Executive: As a result, a lot of people did not bid. In addition to the competition, some users who are sensitive to price did not receive or leave. However, our FVIP and core users are still very stable, so we will adjust some strategies in Q2. We will relax some of our LTV bidding standards. For us, we still hope to get more users, but our requirements are high quality. I forgot to answer the first question.
Speaker Change: Central mentioned that.
Speaker Change: You have some more intense competition.
Speaker Change: Cheers.
Speaker Change: Especially in terms of the subsidy they.
Speaker Change: Granted so I understand in the short term, we may pick through our current strategy, but if youll take a relatively long term view.
Speaker Change: We also followed suit.
Speaker Change: More.
Speaker Change: Like the subsidy strategy, while we will continue to do through our current strategy.
Speaker Change: The year.
Speaker Change: Our user sites.
Speaker Change: We record yoga decline for the user in the first quarter of this year. So just a long view.
Speaker Change: Your user growth strategy this year and in the longer term and the third one you asked about the Ob.
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Speaker Change: This quarter. Thank you.
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Unknown Executive: I forgot because you asked if we also subsidize. But we don't think we need to. For us, when others subsidize, we don't subsidize. We haven't subsidized for a long time. But when it comes to customers, we may provide some funds in the future. It's not random.
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Unknown Executive: That's my second question. The third question is about GMV. For DMV, you can see that the number of users is increasing. The overall number of users is increasing. But we can see that the overall number of users of our SVIP is much higher than that of ordinary users. So we actually responded to the first question, which is that we will serve our SVIP better in the future. After all, our SVIP accounts for half of our business.
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Speaker Change #103: That's unique.
Speaker Change #104: Gili Mannkind doctors, who are in the S. VIP that the merchant Peter Appert neighborhoods and the B portfolio comment.
Speaker Change #104: <unk> closed June one.
Speaker Change #104: Hi.
Speaker Change #104: Our VIP members.
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Unknown Executive: So we will continue to serve well. In addition, we will continue to expand our SVIP. Although our user base is not as large as that of other platforms, we believe that these long-term loyal users can also create great value for us.
Speaker Change #105: <unk>, one <unk> two <unk> pessoa.
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Unknown Executive: So on the first question, competition, actually, our strategy has been and will continue to be laser focused on this branded discount retail. There are many e-commerce platforms nowadays, but each has its unique value proposition, and our uniqueness lies in our ability and capability to serve in the best interest of our brand partners and to deliver better value to our customers.
Speaker Change #106: So on the first question on competition.
Speaker Change #106: Our strategy has been and will continue to be laser focused on branded discount retail.
Speaker Change #106: <unk> E Commerce platform now today.
Speaker Change #106:
Speaker Change #106: Has this unique value proposition.
Speaker Change #106: Our unique mode.
Speaker Change #106: <unk>, Inc, our ability and capability to serve in the best interest from partners.
Speaker Change #106: To deliver better value to our customers. That's why we have so many loyal customers.
Unknown Executive: That's why we have so many loyal customers on our platform who have never seldom left us. And we will continue to broaden and deepen our relationships with more brand partners to bring in a steady flow of the right merchandise offerings to deliver value to our customers who are looking at brand quality and product authenticity, et cetera. And in terms of subsidies, we wouldn't want to follow our industry peers to blindly invest in large-scale subsidies.
Speaker Change #106: We'll have NIM.
Speaker Change #106: Seldom lever.
Speaker Change #106: And.
Speaker Change #106: We will continue to.
Speaker Change #106: Broaden and deepen our relationships believes more brand Palmer Sir.
Speaker Change #106: Bringing steady flow.
Speaker Change #106: Otherwise merchandise offerings.
Speaker Change #106: To deliver value to our customers who are looking ahead.
Speaker Change #106: Brand quality and the product to open policy et cetera.
Speaker Change #106: And in terms of subsidy.
Speaker Change #106: What I want to follow our industry peers.
Speaker Change #106: To blindly.
Speaker Change #106: Investing in large scale.
Unknown Executive: Of course, we will be prudently aggressive in customer acquisition, but we will continue to focus on acquiring high-quality customers. On your second question, in terms of marketing spend, in Q1, we had a slight decline in active customers. That's because we have very strict requirements for LTV.
Speaker Change #106: Of course, we will be prudently.
Speaker Change #106: It'd be prudently aggressive in customer acquisition that we will continue to focus on.
Speaker Change #106: I'll call them high quality customers.
Speaker Change #106: On your second question in terms of the marketing spend in Q1, our we had a slight decline in active customers that because we have very good.
Unknown Executive: As long as it's higher than a certain level, we would stop investing in marketing spend. We realize that in the face of competition, and especially in price competition, there are some customers who are more driven by subsidy or more price-sensitive. They actually have to run to other platforms.
Speaker Change #106: <unk>.
Speaker Change #106: LTV as long as it's higher.
Speaker Change #106: Then.
Speaker Change #106: A certain level.
Speaker Change #106: I would stop.
Speaker Change #106: Investing in marketing spend.
Speaker Change #106: We realize that in the face of competition.
Speaker Change #106: Especially in price competition.
Speaker Change #106: There are some customers who are more driven by subsidy or more price sensitive.
So we actually have one to other platforms.
Unknown Executive: But on the other hand, SBIP, the core customer base, has been quite resilient. They're still growing at double digits in terms of their customer base, and their output is still, you know, going up faster than the average customer. Having said that, entering into Q2, we will be a little bit more aggressive in terms of acquiring customers. After all, we want to bring more new customers to our platform, but only those who are high quality.
Speaker Change #106: But on other hand.
Speaker Change #106: S VIP the core customer base has been quite vigilant there.
Speaker Change #106: It's still growing at double digit in terms of customer base.
Speaker Change #106: Apple is due.
Speaker Change #106: Going up faster than the average customer.
Speaker Change #106: Having said that our entre into the sector Q2 will be.
Speaker Change #106: A little bit more aggressive in terms of our current customers.
Speaker Change #106: We wanted to operating.
Speaker Change #106: More new customers to our platform.
Unknown Executive: So we will cautiously relax our restrictions in terms of LTV to make sure we continue to acquire customers in an effective and efficient way. And lastly, on the GME per customer, the trend, actually, if we look at the Apple trend, that's more representative of customer momentum. FBIP members are still gaining very good traction. As I mentioned earlier, their Apple sales are growing faster than the average customers. And it demonstrated that as long as we serve in the best interest of our FBIP members, providing them with the right merchandise offerings, as well as the best in class services, they will continue to shop with us, and they will shop more and come back more.
Speaker Change #106: <unk> high quality, so where we are.
Speaker Change #106: Al.
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Speaker Change #106: Cautiously relax, our all risk fiction.
Alex: Alex do you need to make sure we continue to acquire customers.
Speaker Change #108: Effective may session Huang.
Speaker Change #108: And lastly on the journey for customers the trend actually if it related with Kathy the awkward Sean.
Speaker Change #108: That's more representative of that.
Speaker Change #108: Okay.
Speaker Change #108: Customer momentum.
Speaker Change #109: Spi team members all steel gaining very good traction.
Speaker Change #109: As I mentioned earlier.
Speaker Change #109: Sure.
Speaker Change #109: Theyre all four are growing faster than the average customers.
Speaker Change #109: And.
Speaker Change #109: We've demonstrated that as long as Louise Sir Investor interest Togo, VIP members, providing famagusta.
Speaker Change #109: On the right merchandise offerings as well as.
Speaker Change #109: Investing in cloud services and will continue to shop with us.
Unknown Executive: So in the future, we will continue to drive the expansion of our FBIP customer base. We believe that our core customer cohorts are a very strong foundation for us to maintain quality growth as well as good profitability.
Speaker Change #109: More to come more so.
Speaker Change #109: In the future we will continue to drive.
Speaker Change #109: The expansion of our SB IP customer base.
Speaker Change #109: We believe that our core customer cohort.
Speaker Change #109: A very strong foundation for us to manage.
Speaker Change #109: Heng quality growth.
Speaker Change #109: Good profitability.
Speaker Change #109: Sure.
Speaker Change #109: Okay.
Speaker Change #109: Okay.
Eddy Wang: Excuse me, Eddy, do you have any further questions? No, thank you.
Speaker Change #109: Excuse me I did you have any further questions.
Eddy Wang: Uh, no, thank you. Thank you.
Speaker Change #110: No. Thank you.
Speaker Change #110: Thank you.
Operator: Dear speakers, there are no further questions for today. I would now like to hand the conference over to our speaker, Jessie Zheng, for any closing remarks.
Speaker Change #110: Alright.
Speaker Change #111: Dear speakers there are no further questions for today I would now like to hand, the conference over to Speaker, Jesse Shen for any closing remarks.
Jessie Zheng: Thank you for taking the time to join us today. If you have any questions, please don't hesitate to contact our investor relations team. We look forward to speaking with you next quarter.
Jesse Shen: 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.
Operator: That does conclude our conference for today. Thank you for participating. You may now all disconnect. Have a nice day.
Speaker Change #113: That does conclude our conference for today. Thank you for participating you may now all disconnect have a nice day.
Speaker Change #113: Okay.
Speaker Change #113: Okay.
Speaker Change #113: [music].
Speaker Change #113: Okay.
Speaker Change #113: Okay.
Speaker Change #113: [music].