Q3 2024 Vipshop Holdings Ltd Earnings Call
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Yeah.
Speaker Change: Ladies and gentlemen, good day, everyone and welcome to the V. I P shop Holdings Limited third quarter 2024 earnings Conference call. At this time I would like to turn the call to Ms. Jessie Zheng VIP shops head of Investor Relations. Please proceed.
Speaker Change: Thank you operator, Hello, everyone and thank you for joining Yankee shop subculture Teeny tiny for earnings conference call.
Speaker Change: Today are Eric Shen, our co founder Chairman and CEO and Mark <unk> our CFO.
Speaker Change: 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 up 1995.
Speaker Change: Forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations.
Speaker Change: 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 any forward looking statements may be made.
Speaker Change: 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.
Speaker Change: According 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.
Speaker Change: Good morning, and good evening, everyone welcome and thank you for joining our third quarter 2010 before earnings conference call.
Eric Shen: Our third quarter results largely meet our expertise.
Speaker Change: Expectations.
Speaker Change: Our steel coaching the customer settlement, we moved quickly to adapt our merchandising and the operational priorities to Kendall challenges and to contribute to.
Speaker Change: To fund the biggest opportunities for improvement.
Speaker Change: Consistent with recent industry trends said of course, the sales decline reflect softer results in our more discretionary categories.
Speaker Change: As consumers are facing blowing headwind, which we've owned the discretionary spend.
Speaker Change: On the positive notes SPX membership flows remain strong.
Speaker Change: At double digits.
In the third quarter active fcap customers grew 11% year over year results in 49% of our online spending.
Speaker Change: This reflects that our value proposition is well appreciated by our most valuable customers through the best combination of merchandize value added services.
Speaker Change: So today, we will remain focused on these loans 10 spending vectors that have made us a reliable places to shop and also have been successful in driving top line growth in the past.
Speaker Change: We are pushing them forward in deeper way.
Speaker Change: Being more relevant in merchandising portfolio.
Speaker Change: <unk>, even more values throughout our assortment and.
Speaker Change: And the increasing customer engagement through our worry free service.
Speaker Change: This area has been critical important to ensure we continue to differentiate our experience from others.
Speaker Change: Among the business highlights we continued to emphasize merchandising capabilities.
Speaker Change: We believe it's the most.
Speaker Change: Most impactful way to drive long term growth.
Speaker Change: Our team.
Speaker Change: Demonstrates that they have the.
Speaker Change: The skew that.
Speaker Change: To respond to changing customer behaviors and translate it into business results.
Speaker Change: Merchandising is a better shape in the third quarter, we built assortment a more relevant to customers lifestyle and the trends right category.
We leaned into categories, we still resilient demand.
Speaker Change: And that will create better mix, our Taylor and the non apparel product for family shoppers.
As a result, we did see strengths in categories like sports and outdoor goods and home aware despite the broad based it basically this weakness.
Speaker Change: And we entered the promotional period, we feel good about the start and deep our supply. We are pleased with the strong inflow or quality branded supply, especially within the deep discount inventory.
So much more unique product offerings.
Speaker Change: Our longtime brand partners achieved record sales with us through our major promotion channels like stupid the end of the day and the steel per category.
Speaker Change: Many more brands recognize us as a partner of choice given.
Speaker Change: Given the generally lower coast to server and higher sales efficiency as well as a growing base.
Speaker Change: Our heart.
Speaker Change: Our core customers.
Speaker Change: Within our merchandising. We are also encouraged by the momentum building in our made for VIP line for customer lives.
Speaker Change: In the third quarter, we work with about 200 brand upon it.
Speaker Change: Adding some well known global brand in women's wear and footwear to the life sales from these customers customer lies the product extend as solid growth from previous quarters.
Speaker Change: We see brand partners increasingly in brief made for VIP, which have proven to be efficient to to attract more quality customers and repeat orders.
Speaker Change: More than half of the Meda for VIP sale came.
Speaker Change: Came from SBA, IP and the other high value customers and the majority of our customer X three came back from more purchases in the broader Palo categories.
Speaker Change: Turning to customers, we see spending behaviors.
Speaker Change: <unk> showing signs of being stretched.
Speaker Change: Most of this backdrop.
Speaker Change: Our team quickly adjust.
Speaker Change: Adjusted to focus on providing really good value for them.
Speaker Change: Perfect.
Alright.
Speaker Change: The low price and the time limit August highlight highlight compelling view for our <unk> members and provide target insensitive for family shoppers, who trended to spend on high frequency categories. Our team is working hard to find more ways.
Speaker Change: To deliver more value for our customers.
Speaker Change: We also see some early results after we upgrade Spi privileges like.
Speaker Change: Provide sales and special offers.
Speaker Change: <unk> carried on for few quarters.
Through both online access and ground events, they are clean and they are clearly reinforced the trust and loyalty.
Speaker Change: VIP members we.
Speaker Change: Pending these event stay better aligned with customer in customer interest.
Speaker Change: Crop province to best meet the multiple needs.
Speaker Change: Is it related to strengthening our business for the future. We continue to experiment and to deploy technology in the wide range of user base.
Speaker Change: One focus is to improve the relevancy and Eckrich search and recommendations so that custom or the different intended.
Speaker Change: More likely to browse and shop across categories.
Speaker Change: To leverage AI capabilities to ultimate live content.
Speaker Change: All kind of to help customers find and buy what they are looking for we do see opportunities for technology to become important drive both growth and efficiency.
Speaker Change: Literally we start to see some marginal strengths our customer.
Speaker Change: Marginal strengths, our customer demand people have as Chu more pruning.
<unk> needs to spend and our customer continues to shop, along the holidays and the Cedar know momentum.
Speaker Change: Well, we are doing our best to get back to growth with customer spending yet to fully recover in the discrete niello portfolio.
We are laser focused on the long term strategy and debt.
Speaker Change: That are pivotal to our long lasting success that has always been a firm positions in this kind of retail for brands to bring in the best brand. Upon this added to Creat.
Speaker Change: Creates value for customers. We are driving we are driving necessarily changed in the more aggressive way. So that we have all the light building blocks to compete and win.
Speaker Change: And through it all we remain delighted.
Speaker Change: Thank you Jim.
Speaker Change: We will remain diligent on execute the retail fundamental our customers expect from us and the response to that consumption shifts in the timely manner. This Lucas specialize.
Speaker Change: <unk>.
Speaker Change: And to elaborate.
Speaker Change: Both in merchandize extend our strengths we have continued to build on we believe this will help us increase payload our platform and ensure engaging experience that keeps VIP shop top of mind in the very dynamic market.
Speaker Change: At this point, let me hand over the call to our CFO Mark wanted to go over our financial results.
Mark: Okay, Thanks, Eric and Hello, everyone.
Third quarter, we maintained disciplined financial management throughout the organization that delivered solid profitability against the weak top line performance.
Mark: Gross margin of 24.0% was driven by a small benefit from the increased contribution.
Mark: From the higher margin apparel categories.
Mark: As well as other revenues.
Mark: Year over year basis.
Mark: This was more than outside.
Mark: Deleveraging impact of lower revenue and the continued investment in our team.
Mark: As a result.
Mark: On the bottom line non.
Mark: non-GAAP net margin attributable to VIP shops shareholders came in at six 3%.
Mark: Which was lower year over year, but within our expected range.
Mark: Thanks to our teams.
Particular efforts to identify efficiency opportunities.
Mark: Looking at a still challenging environment.
Mark: We are laser focused on our long term roadmap to bring the business back into positive territory.
Mark: We continue to invest in our merchandising capabilities.
Mark: Delve deeper category by category.
Mark: To add quality and value the fastest satisfy customer needs.
Well reallocation resource to maximum maximize impact on <unk>.
Mark: Customer mind share and engagement.
Mark: And we're always capable of moving these.
Mark: Asia teams with a clear picture of their financial implications.
Mark: We believe we are more integrated operations now to create a better balance of our focus on sales and profitability.
Mark: Turning to capital allocation.
Mark: Our priorities have remained consistent.
Mark: In addition to prudently invest in our own business and projects that meet our strategic and financial criteria.
Mark: We'll look to support our shareholder return and build on our track record of consistency.
In the first nine months of 2024, we have repurchased.
Mark: Our total of nearly 500 million dollar.
Mark: With $55 3 million U S dollar left in the existing $1 billion share repurchase program.
Mark: Also we have a new two year buyback program of up to $1 billion in place.
Mark: And as a reminder.
Mark: <unk> hundred 95.
Mark: To meet.
Mark: No less than 75%.
Mark: Our full year non-GAAP net income.
Mark: <unk> shareholder.
Mark: Through discretionary share repurchase and the dividend distributions.
Mark: Now moving to our detailed quarterly financial highlights.
Speaker Change: Before I get started.
Speaker Change: I would like to clarify that all financial numbers.
Speaker Change: Hits below <unk>.
Speaker Change: And all the percentage change year over year trends.
Speaker Change: Our lives otherwise noted.
Speaker Change: Total net revenue for the third quarter of 2020 full for RMB $27 billion.
Speaker Change: Compared with RMB 22 8 billion.
Speaker Change: In the prior year period.
Speaker Change: Gross profit was RMB 510 billion.
Speaker Change: Compared with RMB, five 4 billion in the prior year period.
Speaker Change: Gross margin increased to 24.0%.
Speaker Change: From 23, 6%.
Speaker Change: In the prior year period.
Speaker Change: Total operating expenses decreased by six 1% year over year to RMB three $1 8 billion from RMB four zero billion in the prior year period.
As a percentage of total net revenues.
Total operating expenses was 82%.
Speaker Change: Compared with 17, 6%.
Speaker Change: In the prior year period.
Fulfillment expenses.
Speaker Change: Increased by 2.0% year over year to RMB, one 7 billion.
Speaker Change: From RMB, one 8 billion in the prior year period.
Speaker Change: As a percentage of total net revenues.
Fulfillment expenses was eight 4%.
Speaker Change: Compared with seven 8%.
Speaker Change: In the prior year period.
Speaker Change: Marketing expenses.
Speaker Change: Decreased by seven 7%.
Speaker Change: Over year to RMB.
Speaker Change: $617 8 million.
Speaker Change: From RMB 600.
Speaker Change: 69, 6 million in the prior year period.
Speaker Change: As a percentage of total net revenues.
Speaker Change: Marketing expenses were 310%.
Speaker Change: Compared with two 9% in the prior year period.
Speaker Change: Technology and content expenses increased by four 3%.
Speaker Change: Year over year to RMB 400.
Speaker Change: Before one too many.
Speaker Change: From RMB $435 3 million in the prior year period.
Speaker Change: As a percentage of total net revenues.
Speaker Change: Technology and content expenses was.
Speaker Change: Was two 2%.
Speaker Change: <unk> was one 9%.
Speaker Change: In the prior year period.
Speaker Change: General and administrative expenses.
Speaker Change: Decreased by 15, 3%.
Speaker Change: Over a year.
Speaker Change: RMB 950.
Speaker Change: <unk> 57 8 million.
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 decreased to four 6%.
Speaker Change: From five zero percent in the prior year period.
Income from operations was RMB, one 3 billion.
Speaker Change: Compared with RMB, one 5 billion.
Speaker Change: In the prior year period.
Speaker Change: Okay.
Speaker Change: Operating margin was six 4%.
Speaker Change: Compared with six 7%.
Speaker Change: In the prior year period.
Speaker Change: non-GAAP income from operations was RMB, one 7 billion.
Speaker Change: Compared with RMB, two 1 billion.
Speaker Change: In the prior year period.
Speaker Change: non-GAAP operating margin.
It was eight 2%.
Speaker Change: Comparable with nine 1%.
Speaker Change: In the prior year period.
Speaker Change: Okay.
Speaker Change: Net income attributable to VIP ctrip shareholders.
Was RMB 110 billion <unk>.
Speaker Change: Compared with RMB, one 2 billion.
Speaker Change: Prior year period.
Speaker Change: Okay.
Speaker Change: Net margin attributable to VIP shifts shareholders was five 1%.
Speaker Change: Compared with five 3%.
Speaker Change: In the prior year period.
Net income attributable to VIP shops shareholders per diluted ads.
Speaker Change: RMB 197.
Speaker Change: Compared with RMB 2.1.
Speaker Change: One nine in the prior year period.
Speaker Change: non-GAAP net income attributable to <unk> shareholders.
Speaker Change: Was RMB, one 3 billion.
Speaker Change: And compared with RMB, one 8 billion in the prior year period.
Speaker Change: non-GAAP net margin attributable to VIP shops shareholders was six 3%.
Speaker Change: Compared with eight 1% in the prior year period.
Speaker Change: non-GAAP net income attributable to VIP show shareholders per diluted EPS was.
It was RMB two four.
Speaker Change: Four seven <unk>.
Speaker Change: Compared with RMB 333 in.
Speaker Change: In the prior year period.
Speaker Change: As of September 32024.
Speaker Change: Company had cash and cash equivalents and.
And our restricted cash.
Speaker Change: Of RMB 22 5 billion.
Speaker Change: And short term investments of RMB, one 6 billion.
Speaker Change: Okay.
Speaker Change: Looking forward to the fourth quarter of 2024.
Speaker Change: We expected our total net revenues.
Speaker Change: To be beaten.
Speaker Change: <unk> 31 42 billion.
Speaker Change: And RMB 32 9 billion.
Speaker Change: Representing a year over year decrease.
Speaker Change: Of our approximately 10% to 5%.
Speaker Change: Please note that this forecast reflects our current and the preliminary view of the market and 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.
Speaker Change: Thank you you ask a question you will need to press star one and one on your telephone and wait for your name to be announced to withdraw your question. Please press star one.
Speaker Change: Once again, please press star one and one on your telephone and wait for your name to be announced until we go to your question. Please press star one and one again. Please kindly translate your question in Chinese if you're bilingual thank you.
Speaker Change: We are now going to proceed with our first question.
Speaker Change: So question is come from the line of Thomas Chong from Jefferies. Please ask your question.
Speaker Change: Well I think.
Speaker Change: Please if I may Tom you guys, all while the U S.
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Speaker Change: <unk>.
Speaker Change: Yeah, we're able been yesterday league approval that you don't guide.
Speaker Change: Our guidance.
Yes so.
Speaker Change: So Paul when you say Oh sure Goldman.
Speaker Change: Goldman's that module.
Speaker Change: <unk> Gan module that you got to have box you may come by women.
Speaker Change: GP margin you can see it's all debates oncology.
Speaker Change: Yes.
Joseph Goldman: I'll, let Joseph Goldman.
Joseph Goldman: <unk> also most of you hopefully if we hit our <unk>.
Joseph Goldman: Positive.
Speaker Change: Thanks management for taking my.
Speaker Change: My question. My question is about the recent consumer sentiment after governments.
Speaker Change: Governments porteous measures all can management share about the <unk> trends in Q4 as well as our expectation on finishing at five outlook from the perspective, Paul for GM, we add the margin given our solid margin profile I've seen in Q3 in particular, 24% of the GP.
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Speaker Change: How should we think about the outlook in China.
Speaker Change: And then when should we expect.
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Speaker Change: Typically you'll submit stockpile.
Speaker Change: Okay.
Speaker Change: Okay first of all on the recent business churn.
Speaker Change: Quarter to date, I think we have been into the quarter for over 50 days and October.
Speaker Change: Very good.
Speaker Change: But that was apparently because of the much earlier double 11 promotion.
Speaker Change: We can lead to some frontload off consumption.
Speaker Change: And if we add.
Speaker Change: October and November to date, we are skewed.
Speaker Change: Meeting the guidance.
Speaker Change: In terms of consumer sentiment.
Of course.
Speaker Change: The government sponsored trading programs launched.
Speaker Change: Towards the end of September to give us some.
Speaker Change: Two hour session categories in.
Speaker Change: Hi, electronics and home appliances that testing we are.
Speaker Change: Primarily focused on apparel categories.
Martel Gerri: Martel Gerri.
Martel Gerri: Key beneficiary of such a program.
Martel Gerri: And overall sentiment.
Martel Gerri: May have bottomed out.
Martel Gerri: During the recent stimulus package, but steel is rather a rational environment.
Martel Gerri: We are still seeing.
Martel Gerri: Our customers still.
Martel Gerri: Showing signs of bonding stretch, yes, making tradeoffs in Fannie budgets looking for value.
Martel Gerri: Focusing on these sanctions.
And delaying purchases.
Martel Gerri: Until the needle moment, so we haven't seen.
Martel Gerri: Oh, very meaningful recovery in consumer sentiment as compared to prior quarter.
Martel Gerri: And then lastly.
Speaker Change: Can you 25 outlook.
We do believe that it is.
Speaker Change: <unk>.
Speaker Change: We think its pretty unpredictable.
Speaker Change: We're going to plan, our business cautiously and depends on a number of factors, whether naturally is going to have better recovery or whether consumer confidence picked up and.
Speaker Change: There are a lot of uncertainties.
Speaker Change: So we think properly the trend we're seeing in Q4.
Speaker Change: Yeah.
Speaker Change: Be brought forward into a pothole fall turnaround at <unk>.
Speaker Change: We are doing our best to get back to growth, especially in terms of G&A as compared to a small decline.
Speaker Change: Jamie in tonnage on Q4, and then on margins I think they're not too much to worry about.
Speaker Change: Yes.
Speaker Change: Focused on growing profit dollars.
Speaker Change: In terms of absolute dollar amount and also on the margin side.
Speaker Change: We should be able to.
<unk> maintained a relatively stable levels.
And on costs and expenses, though we are going to be.
Speaker Change: <unk> continue to be very disciplined.
There could be some.
Changes to the assertion.
Speaker Change: Cost and expenses structure.
Speaker Change: It should be not a big swing from what we have John.
Speaker Change: Paul <unk> Paul.
Speaker Change: Okay.
Speaker Change: That's all.
Speaker Change: Thank you.
Speaker Change: We are now going to proceed with our next question.
Speaker Change: Our question is coming from the line of Alicia Yapp from Citigroup. Please ask your question.
Speaker Change: Hi.
Speaker Change: Good evening Glenn anytime.
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Speaker Change: Sure.
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Speaker Change: So my question is just a follow up.
Speaker Change: Overall at the single stage performers and also at the <unk> guidance. So just wondering doing the single stage.
Speaker Change: Net debt plus.
Speaker Change: Plus base.
Speaker Change: Is that accurate.
But to achieve a positive growth doing does Sandra thanks, Pierre It and then in terms of your guidance is that conservative because we want that.
Speaker Change: I'm not too sure about how that December trends, so that's why you're providing that 510% decline because.
Speaker Change: It does dissipate as well in December I'm not sure and then also on the retirement rate.
Ethan Ken.
Comparator return rates for this thing.
Speaker Change: Versus last year I think that's a question.
Speaker Change: Okay. Thank you.
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Speaker Change: Okay first of all as to definitely performance I think on Mt.
Speaker Change: Platforms that can vary.
Speaker Change: A full cycle basis.
Speaker Change: Basically we did 20 8-K.
Speaker Change: Promotions as compared to roughly 20 days last year.
Speaker Change: And.
Speaker Change: Subsequent cycle basis, So we are doing very well.
Speaker Change: We are also doing very well with that journey over 20% growth for sure.
Speaker Change: And also customer and <unk>.
Speaker Change: Avenue matrix.
Speaker Change: Uh huh.
Speaker Change: Exceeding all expectations.
Speaker Change: But if we look at it.
Speaker Change: Tom on Apple to Apple basis.
Speaker Change: Just comparing the <unk> <unk>.
Speaker Change: The promotional campaign Akshay just to in line with our expectations.
Speaker Change: We think Q4 is.
Speaker Change: Steel a challenging quarter.
Speaker Change: We gave our guidance.
Speaker Change: Rather it is a conservative basis.
Speaker Change: One factor is also is about whether we do have a very high base.
Speaker Change: Sure.
All of it.
Speaker Change: Actually in last Q4, we had actually extended periods of co Duane.
Speaker Change: <unk> our business.
Speaker Change: Factor Tonight.
Speaker Change: So this year, apparently is not going to be as cold as last year and so we baked.
Speaker Change: Matt.
Speaker Change: Quite.
This weather factor into our guide for Q4 guidance as well and Thats why we think Q4 is going to be a little bit challenging.
Speaker Change: And lastly on return rate.
Speaker Change: Because we have a very stable return policy and also a service is a phone call or a 5% to six years.
I'll reiterate has been chosen.
Speaker Change: In our case multi structural factors like apparel contribution and Thats VIP contribution et cetera.
Speaker Change: So basically our return rate during the double 11 is actually.
Speaker Change: Trending in line with our expectation just adding two percentage points in terms of return right.
Speaker Change: Or not.
Speaker Change: Not liking the case also on other platforms who had.
Speaker Change: Southern changing their return policy, which led to extremely high on retirement.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Youre welcome.
Speaker Change: We are now going to proceed with our next question.
Speaker Change: A question is come from the line of Ronald Cohen from Goldman Sachs. Please ask your question.
Speaker Change: Hey.
Mark Hey: Mark Hey, Jesse.
Sheldon: Sheldon <unk> Jordan J J, Thank you to Alicia angle.
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Speaker Change: Michelle.
Speaker Change: Yeah.
Speaker Change: We all know the <unk> G suite op key net profit to offering.
Speaker Change: GM financial.
Speaker Change: So at <unk>, you see it kind of issue.
Speaker Change: Tax expense yoga Labatt and essentially.
Speaker Change: Sure Yes.
Speaker Change: Sure.
<unk> total shareholder return not only not so much Sean.
Speaker Change: Great outlook.
Speaker Change: <unk> expense to women.
Speaker Change: Okay.
Speaker Change: Well I mean, you can show the returns.
Speaker Change: Now, let me add something shorter.
Speaker Change: Tax expense in Chicago.
Speaker Change: Thank you management just two questions. One is your gross margins reached record high in third quarter last year.
Speaker Change: Margins were even higher.
Speaker Change: How should we think about the apparel mix, which usually is good for gross margin in the.
Speaker Change: Outlook for gross margins for Q.
Speaker Change: Second is your profit decline was wider than operating profit and seemingly increasing tax expenses.
Speaker Change: That related to our.
Speaker Change: Transfer of cash.
Speaker Change: Onshore to offshore to final shareholder returns how should we think about this.
Speaker Change: Line.
Speaker Change: Thank you.
Speaker Change: No worsening with Opdivo, and <unk> with Opdivo, and <unk>, who Amanda <expletive>, Molly do numerous quality gear patrol and <unk>.
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Speaker Change: <unk> Ses is on the kit, Switzerland is Q2 the model leader.
Speaker Change: The majority of the market that can be done.
Speaker Change: So in terms of our cheeky margin outlook I think for Q3.
Speaker Change: We had 24% which was driven by a small benefit from apparel contribution and also higher other revenue.
Speaker Change: But looking into Q4.
Speaker Change: As you know we continue to invest to grow.
Speaker Change: Especially given the current competitive environment.
Speaker Change: We see an opportunity to invest a portion of our current profit margin.
Speaker Change: Two to gain sustainable growth in dollars. So we would do that so for a GP margin in Q4, we expect it.
Speaker Change: To be marginally lower than Q3, but it should be well.
Speaker Change: Within the range of 23%.
Speaker Change: Okay. Okay. Thanks for our question and regarding the first question you talk about the gross margin.
Speaker Change: Let me give you some supplementary comments.
Speaker Change: For the third quarter the.
Speaker Change: Gross margin expansion.
Speaker Change: It was primarily driven by the following reasons.
Speaker Change: One is the higher margin apparel categories, which had higher contribution year over year.
Speaker Change: The second way is we have many cost saving initiatives.
Speaker Change: We improved gross margin, including optimized merchandising portfolio.
Speaker Change: While many of the customer and Cindy.
Speaker Change: Hello.
Speaker Change: The third is higher contribution from higher margin other revenues.
Because the other revenues, we also put some of the like furniture or less revenue.
Speaker Change: As recognized as net.
Speaker Change: Revenue approach that means we recognized a net recognized the rental income for the session are less income so that means the gross margin is higher which was booked in the other revenues. Okay. So that the ministry of reasons for the gross revenue higher than before.
Speaker Change: And for your second question, that's very good question. This regarding the.
Speaker Change: <unk>.
Speaker Change: Regarding the.
Speaker Change: The effective tax rate.
Speaker Change: GAAP expenses.
Speaker Change: Just you mentioned that you know.
Speaker Change: We distribute some of the dividends from the entities in the China lend to the entities in Hong Kong.
Speaker Change: The reason is that we need to do the share buyback as we mentioned before okay. This quarter, we remit around $3 5 billion RMB to them as we have.
Speaker Change: One.
Speaker Change: We have $175 million.
Speaker Change: Withholding income tax expenses.
Speaker Change: So exclude the factor I mean, the withholding tax expenses, the ETR would have been around 17% to 18% I think.
Speaker Change: For the long term.
Speaker Change: Exclusive of withholding income taxes in fact impact the ECR could be steel around 17% to 18%.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: We are now going to proceed with our next question.
Speaker Change: So question is come from the line of Roger Duan from Barclays. Please ask your question.
Speaker Change: It's just it was just over.
Speaker Change: The Q1, otherwise I'll call, what do you think <unk>, Michelle Cheng jealous answers first eagle.
Speaker Change: Women's and Glenn is open in Germany.
Speaker Change: Tom <unk> <unk> coming from the NPL shampoo.
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Speaker Change: John Jamie and as John Cusack.
Speaker Change: Cusack toward at the <unk> Houston Luminance and go ahead, some franchise element because U S. IPO continue pushing away on the Ocean Zelman.
Speaker Change: Michelle available at home shopping and we apologize for that.
Got it.
Speaker Change: I'm going to stress myself. Thank you management for taking my question I have two questions first for <unk>.
Speaker Change: Third quarter can management share in terms of different product categories.
Speaker Change: Do we see any.
Speaker Change: Is there any difference in terms of.
Speaker Change: Performance.
Speaker Change: It looks like apparel have grown in terms of JV contribution in third quarter and my second question is on <unk>.
Speaker Change: IP users can management share, whether we have seen any changes in consumer behavior during the quarter in terms of shopping frequency.
Speaker Change: Average size. Thank you.
Speaker Change: Paul will then currently the <unk> to the.
Speaker Change: Tusa women <unk> wheat beer.
Speaker Change: The other <unk> 5 billion.
Speaker Change: <unk>, we'd be at the Moon and back to social mutual woman chooses des <unk> <unk> <unk> Moe will mature at that building from Johan we geared towards the institutional 13 year, Greg touch on <unk>.
Speaker Change: And that <unk> shipped with currencies.
Speaker Change: <unk>, we are not happy at the moment <unk> synergies.
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Speaker Change: <unk> <unk>.
Speaker Change: Okay first.
Speaker Change: Q3 category wise.
Speaker Change: We see apparel.
Speaker Change: More decline in terms of Jimmy while standardized item.
Speaker Change: I had a bigger decline, but its not worsening as compared to prior quarters.
Speaker Change: And steel.
Speaker Change: It's because of the competitive competition.
Speaker Change: <unk>.
Speaker Change: On price advantage by auto platforms and.
Speaker Change: With that we are making a series of adjustments.
Speaker Change: And.
Especially we are giving out some limited and the targeted incentive.
Speaker Change: For example for family of shoppers to increase the chances of that.
Speaker Change: Of that increase is there chance of.
Speaker Change: Shopping across different categories, especially in daily Essentials, and we are seeing some early results from that.
We hope that we would gradually narrow the loss from standardized items.
Speaker Change: And SP IP.
Speaker Change: Hi.
Speaker Change: We are seeing very solid momentum, we had a seven 5 million active super VIP customers in Q3.
Speaker Change: <unk>, which accounted for roughly 49% of our online spending.
Speaker Change: Yes.
Speaker Change: In terms of our customer base.
Speaker Change: It was 11% growth year over year.
Speaker Change: And.
Apparently new many new SME customers for the quarter. It takes time for them to ramp up their frequency.
Speaker Change: Therefore.
Speaker Change: They have.
Speaker Change: To some extent a diluted effect.
Speaker Change: The home SBC IP base.
Speaker Change: If we look at the same cohorts for example, the two year <unk>.
Customer.
Speaker Change: We see their performance are actually relatively stable.
Speaker Change: You see a small decline in offer but that was primarily driven by.
Speaker Change: Frequency less frequency.
Speaker Change: The average ticket size.
Speaker Change: <unk> Stifel.
Speaker Change: Apart from that we actually don't see any additional loss of consumer health.
Speaker Change: S VIP customers.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: We are now going to proceed with our next question.
Speaker Change: Our question comes from the line of Jonathan <unk> from Nomura. Please ask your question.
Speaker Change: Hey, Sanjay <unk> or excuse me turning to Sean follow ups after <unk> two.
Speaker Change: Sure I'll take the S. VIP member to a comment that particular gentleman say beyond that.
Speaker Change: Yes, thats the SDI team member some definitive spending Columbia shale Jake.
Speaker Change: South log on the HR <unk> Telco mentioned Youll shutdowns, so any join Shawn Lynch element in April J, Dan. Thank you Charlotte.
So sure Taggart Penza shot John thought out endorsing <unk>, Georgia shelf Ags <unk>.
Speaker Change: <unk> sorry.
Speaker Change: The agenda potential Nathan Sheila Downhaul woman Jpl's Laotian nowadays here.
Speaker Change: Sure to what Joel with hydrogen shelf options.
Speaker Change: <unk> heard a lot of unnecessary Charlotte location, Joe and John.
Speaker Change: Sure. So you talk ask Michel <unk>, SUV <unk> touch element, Patrick Vishal Philippians hotel search on Comex.
Speaker Change: <unk> needs to go what Joel sequential of diesel when Donald Lindsay it'll hydrogen Shalin Shah.
Speaker Change: John E.
Speaker Change: <unk>, finishing enrollment for that is just trying to nail those elements. So you put all that she will amend the option you mentioned she'll Ishares shopping again.
Speaker Change: The home I always change I'd like to go online.
Speaker Change: When he shared social then take away you can play it safe in that mill.
Speaker Change: Social total Charlotte mentioned Chinese <unk> plants shameful cater to this horse again will yield $10 short single quite agile plan chance it could push it for them in your head count, which should just to me, it's all equal to other gas onshore thought Youll mail cut on your.
Speaker Change: <unk>.
Speaker Change: So I have two follow up questions. The first question is about the.
Speaker Change: The decline in India, our portfolio VIP member just try to get more color from managed Milwaukee or its a possible reason for the decline.
Speaker Change: India up for our average of spending for the full for Spi and remember the second question is about the trading and subsidies.
Speaker Change: Funded by the government just wandering if NFC ip's vps business.
Speaker Change: Half benefit at all like that did benefit from this trading subsidy scheme. Thank you.
Speaker Change: Our fleet is good news.
Speaker Change: <unk> mentioned that the S VIP the leak.
Speaker Change: Sophie <unk> sarcoma, <unk> thought through them tissue, Chelsea <unk> VIP <unk> women's switching it's a complete building towards.
Speaker Change: <unk> <unk> <unk> <unk> Spi Pizza element City, then Youll clinic coach <unk> bulk with higher.
Speaker Change: Is the bulk of <unk> cotton is a woman.
Speaker Change: When mcqueen to sit on the chunky jewellery <unk> the <unk>, the <unk> and <unk> switching gear women, but ICT modular animal Kingdom of <unk> Awards.
Speaker Change: Youll week at <unk> could be that some key the more <unk> than we are.
Speaker Change: Bulk question is unchanged Charlotte condo corridor, the Moa Machista, just as a woman the SVP.
Speaker Change: Just sort of going towards the younger <unk>, the mobile and there's so much other piece I just want to.
Speaker Change: What did you change as opposed to Ocado.
So as a woman to 18 years.
Speaker Change: <unk> <unk> to <unk>.
Speaker Change: <unk> <unk> <unk>.
Speaker Change: This year you include the Sinfonia.
And from here.
Speaker Change: Bulk autonomous hi, cream items, <unk> and <unk> S. VIP unit attaching <unk> the more it shouldn't be accreted Amit.
Speaker Change: How much of that <unk> somebody is helping the <unk> e-commerce account deep either.
Speaker Change: Our key goals of the Nielsen <unk>.
Speaker Change: <unk> had a fluffy and suites and we also talked to you.
Speaker Change: <unk> Philippine ITW charts.
Speaker Change: So you saw <unk> VIP <unk> do you want to find yourself at.
Speaker Change: At the moment.
Speaker Change: <unk>.
Speaker Change: The <unk> <unk>.
Speaker Change: <unk> suites, which is at the center of all of the insurance equal male and they've got two banks with Yahoo Mail them a woman <unk> sung <unk>, just as a woman <unk> a woman.
Speaker Change: It will immediately <unk>.
Speaker Change: Conan Womens <unk> Nick.
Speaker Change: One woman.
Speaker Change: <unk> seen that.
Speaker Change: He'll Amanda familiar to Televisa Veeva <unk> lead I mean, b cell woman, that's a good thing the shelf either currently make assemblies, but at the moment.
Speaker Change: Good woman didn't put changyou once you ought to show up into the <unk> number with me at <unk> <unk>.
Speaker Change: <unk> with accordingly person once you have it.
Speaker Change: So it will be a day shot shuang.
Speaker Change: <unk> Nikko <unk> outpacing the dose keep at the shelf.
Speaker Change: So SB IP customers, we do realize that they have a small decline in frequency.
Speaker Change: <unk> for the same cohort of customers.
Speaker Change: And making a lot of efforts.
Speaker Change: To increase engagement, we set the VIP customers operate Pollo, we are planning to lower the bar for.
Speaker Change: As VIP customers in terms of membership.
Speaker Change: Jan.
I'll follow a renewal and for new customers will first.
Speaker Change: Who will become as VIP.
Speaker Change: S. VIP members for the first time and we are also planning to cover the additional 5% off discount to more brands and more.
Speaker Change: Barton we have.
Speaker Change: <unk> a lot of.
Speaker Change: Online and also ground events.
Speaker Change: Such as the private sales and special offers to reinforce their trust and loyalty from our customers.
Speaker Change: And I think the essence of this at the VIP enhancement program is intended to one is to increase.
Speaker Change: Our retention and also repeat orders.
<unk>.
Second.
Is too.
Speaker Change: Find more opportunities for cross category purchases, especially full family shopping.
Speaker Change: Most a majority most of that VIP customers actually do.
Speaker Change: You have very strong.
Speaker Change: Trust and loyalty in VIP shop.
Speaker Change: And if we provide.
Speaker Change: A great combined.
Speaker Change: A combination.
Speaker Change: Product value and series.
Speaker Change: Good.
Speaker Change: I hesitate to shop with us.
Speaker Change: Often.
Speaker Change: And.
Speaker Change: Therefore, SCID customers and for trading programs.
Speaker Change: For offline outlets actually Lee.
Speaker Change: Hum.
Speaker Change: The primary business too.
Speaker Change: Apparel categories, So we barely benefit.
From the trading program.
Speaker Change: <unk> online.
Speaker Change: <unk> business that we expect there should be.
Speaker Change: A few million dollars.
Speaker Change: The $100 million.
Speaker Change: Ranging from 400 to 500 million RMB additional sales from.
Speaker Change: Trading programs.
Speaker Change: This is not meaningful enough to drive all of our <unk> revenue.
Speaker Change: It could be that our platform is.
S deal.
Speaker Change: More recognized by customers as well.
Speaker Change: Great place to shop for apparel and accessories.
Speaker Change: <unk>.
Speaker Change: Electronics and home appliances.
Speaker Change: Having said that we are moving we are.
Speaker Change: Trying to Oh offerings Luisa government departments.
Speaker Change: Whether they would be willing to extend their training programs to other categories.
Speaker Change: Of course it hasn't.
Speaker Change: It's been hit to apparel category for mall, but we do.
Speaker Change: See our opportunities.
Speaker Change: If their training program extend to additional categories listed.
Speaker Change: Be benefiting from that.
Speaker Change: Due to time constraint. This concludes today's Q&A session. At this time I will turn the call back to Jesse for any closing remarks.
Jesse: 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.
Jesse: Okay.
Speaker Change: This concludes today's conference call. Thank you all for participating you may now disconnect your lines.
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