Q4 2024 Vipshop Holdings Ltd Earnings Call
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Speaker Change: Ladies and gentlemen, good day, everyone and welcome to the VIP shop Holdings limited fourth quarter and full year 'twenty 'twenty four earnings conference call.
Speaker Change: At this time I'd like to turn the call to Ms. Jessie junk VIP shops head of Investor Relations. Please proceed.
Jessie Junk: Thank you operator, Hello, everyone and thank you for joining VIP shop fourth quarter and full year 'twenty 'twenty four earnings conference call with US today are Eric Shen, our co founder Chairman and CEO and Mark Wang our CFO.
Jessie Junk: 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 provision of the U S Private Securities Litigation reform.
Speaker Change: Well, we're looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations.
Speaker Change: 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: Please note that certain financial measures used on this call such as non-GAAP operating income non-GAAP net income attributable to the IPO shareholder non-GAAP net income for Aes are not presented in accordance with.
Speaker Change: I used to refer to our earnings release for details relating to the reconciliation of our non-GAAP measures to get married.
Speaker Change: With that I would now like to turn the call over to Mr. Eric Shen.
Yeah.
Eric Shen: Good morning, and good evening, everyone welcome and thank you for joining our fourth quarter and the full year 'twenty 'twenty four earnings conference call.
Eric Shen: We believe with the statutory results well above our expectations in the fourth quarter to finish the year.
Eric Shen: While consumers still spend cautiously.
Eric Shen: One discrete.
Eric Shen: Christian.
Eric Shen: Categories, our our team has it.
Speaker Change: Hello actively dream changes to address close priorities with a focus on retail fundamentals and.
Eric Shen: Strong execution.
Eric Shen: At the category level, we saw some strength in apparel, which turned into positive flows in the fourth quarter off a high base. Our team moved swiftly to include the more unique off price. She didn't know operating that meet customer needs, especially in sportswear and outerwear.
Eric Shen: All products.
Eric Shen: For the full year Capello category were up 2% from the year ago accounting for 70% of our total <unk> the highest level in our history.
Eric Shen: That's helped us once again clause RMB 200 billion in total annual sales.
Eric Shen: Our non apparel business also clearly not narrowed its last sale.
Eric Shen: Sales in the fourth quarter driven in part by that.
Speaker Change: Ladies and gentlemen, please remain on the line your conference will resume shortly.
Speaker Change: Ladies and gentlemen, please remain on the line your conference will resume shortly.
Speaker Change: Ladies and gentlemen, please remain on the line your conference will resume shortly.
Speaker Change: It would have been 920 to one.
Speaker Change: Hi can you hear me.
Speaker Change: Yes. Please continue.
Speaker Change: Hello.
Speaker Change: Please continue we can hear you.
Speaker Change: Okay.
Ladies and gentlemen, please remain on the line your conference will resume shortly.
Speaker Change: Ladies and gentlemen, please remain on the line you call.
Speaker Change: <unk> will resume shortly.
Speaker Change: Got it okay. Thank you presented the Bakken line. Please continue.
Speaker Change: We will now open.
Speaker Change: Can you remind.
And remind us we always thought.
Speaker Change: You are back on line you can continue from the very the CEO.
Speaker Change: From a yield half okay.
Speaker Change: Okay.
Speaker Change: Good morning, and good evening, everyone welcome and thank you for joining our fourth quarter and full year 2020 full earnings conference call. We believe with that set of results were above our expectations in the fourth quarter to finish to a challenging year, while consumers do spend the cautiously in this century in the category.
Speaker Change: Our our team has built activity driven changes to address closed priority piece with a focus on retail fundamentally and the strong its cushions.
Speaker Change: At the category level, we saw some strength in apparel, which turned into positive close in the first quarter Ultra high base. Our team moved swiftly to include the more unique off price, even though offerings that meet the customer needs, especially in sportswear in outdoor products.
Speaker Change: For the full year, a pillow categories was up 2% from a year ago accounting for 75% of our total <unk> the highest level in our history. So that helped us once again across RMB 200 billion in total.
Speaker Change: New sales.
Speaker Change: Our non apparel business also clearly narrowed it it's loss of sales in the fourth quarter.
Speaker Change: Driven in part by the outperformance in claim occurrences and vehicle production as we capture growth opportunities from the government to treat the E <unk> program.
Speaker Change: On the customer front Super VIP memberships extend EBIT.
Speaker Change: Double digit growth, which is a strong validation of our team's commitment.
Speaker Change: Commitment.
Speaker Change: 202, delivering a differentiate experienced in the fourth quarter X two super VIP increased by 50% from a year ago and accounted for 51% of our online spending.
Annual basis, we had a total <unk>.
Speaker Change: 8.8 million active SBA P members, who contributed 49% of our online spending last year.
Speaker Change: We are encouraged by these initial improvement after we identified the key near term excellence in each area and moved with urgency.
Speaker Change: In merchandising, we are getting shape has its own brand and the productive to the folio.
Speaker Change: Stay highly relevant to custom needs.
<unk> is on the full display flu asterias, our operational adjustments and the targeted incentive that help our customers shop for holidays and seasonal promotions.
Speaker Change: And we are engaging more with February shoppers with a more balanced assortment of apparel and non apparel products to dream in sentimental gross in potency and the multi category countries with these challenges.
Speaker Change: With these changes we are better positioned going into 2025 importantly will remain valid commitment are committed to our long term strategy in this country retail for brands and the we dedicate our efforts to the longstanding practice that has been.
Speaker Change: <unk> in driving quality growth that includes our unique business model and merchandising approach with no.
Speaker Change: Promo.
Speaker Change: Compromise on quality.
Speaker Change: And authentic a.
Speaker Change: Our strategy focused on value that include a low price and the compelling views and the suits.
Speaker Change: Service that highlights reliability.
Speaker Change: Reliability or these are put together at <unk>.
Speaker Change: <unk> strategy.
Speaker Change: More specifically with the business highlights we continue to invest in our merchandising capabilities could become.
Speaker Change: Even more reliable destinations for our customers following the call.
Speaker Change: <unk> three years initial enhancement program.
Speaker Change: Our team has been reshaped.
Speaker Change: Deep developed for new expertise and the masks how to work in more impactful week.
Speaker Change: We brought in over 1500, new brand last year, including efficiently. Upon this with many high profile global brand, we build deeper relationship with several hundred co branded.
So to greet in demand the value for money operating throughout the year and managing our product portfolio and owner breached agreed to level out bread and the deep.
Speaker Change: Most recently our team has thought in deep dive deeper category by category to seek opportunities piece by.
Speaker Change: Further expanding in the branded supply that we expect customers to truly feel was it purely a function excitement.
Speaker Change: Another area of focus has been adding more unique supply to make our differentiated product offering even better and the bigger the made for VIP line b to become a meaningfully.
Speaker Change: Three the driver for more than 200 brands, who have joined as a program last year.
Speaker Change: We saw.
Speaker Change: Pre <unk> strengths in sale, all year long benefiting from quality customer and a repeat orders as well as clearly better conditions in the compared to the general merchandising within Esa branded categories at a price range with some rent up to 25 up to.
Speaker Change: 20% of their sales.
Speaker Change: Our platform came from via a made for VIP lots of the year.
Speaker Change: Turning to customers remain largely parenthood, but we're willing to spend when they find the right balance of quality products and a compelling price.
Our SBA P customers are clearly more resilient and have a strong response promotions and the <unk> because the real value we provide for them in additions to define that.
Speaker Change: <unk> enticing to get.
Speaker Change: Even better views loser provide skills and special offers.
Speaker Change: We are happy to see that the SBA piece continued to spend much more and more frequency than the regular customer.
Speaker Change: And the vast majority of them have renew their.
Speaker Change: Memberships with us.
Speaker Change: Given how fast things are changing.
Speaker Change: All the more important to put technology to work to try to drive growth and the efficiency we have made.
Speaker Change: Red.
Speaker Change: Brendan.
Speaker Change: Our relentless efforts to optimize search and recommendations, which starts to incrementally improve customer experience and the conditions.
Speaker Change: In addition, we are using the latest the last to general AI model to help our team walk in the mall productivity.
Speaker Change: We enable them to sell brand partners and the customer with greater efficiency. We have made the initial attempts and applications case, such as shop Pier guide marketing contents customer service and analyzed tools for brand upon us.
Speaker Change: Despite ongoing uncertainty we are confident in our long term development of our business.
Speaker Change: Giving that continually.
Our strategy the merchandising strengths we are building upon.
Speaker Change: And the growth initiatives weight.
Speaker Change: In merchandise expansion and deepen engagement with different customer cohorts.
Speaker Change: Most importantly, we have a few small black flexibility.
Speaker Change: Flexibility into our business to compete and win in that environment to where our customers are focused on volume.
Speaker Change: We are confident we are confident in our ability to move beyond the current situations and a return to sustainable and profitable.
Profitable growth in a long time at <unk>.
Speaker Change: This pump, let me hand over the call to our CFO Mark Wang to go over our financial results.
Speaker Change: Okay.
Eric Shen: Eric and Hello, everyone.
Speaker Change: In the first quarter, we achieved a better balance in our business.
Eric Shen: We took swift and disciplined actions.
Speaker Change: We reallocated resources.
Speaker Change: To maximize growth, while preserving solid profitability.
Speaker Change: Top line came in better than our guidance.
Speaker Change: As our team has made every endeavor to seize growth opportunities in both apparel and non apparel business.
Speaker Change: Leaning into categories, where we know customers, we're trying to get ready for holidays.
Speaker Change: Our family meals.
Speaker Change: Gross margin decreased year over year, but remained at a decent level of 23%.
Speaker Change: Reflecting our stepped up investments in customer incentives.
Speaker Change: To drive quality growth.
A full year basis.
Gross margin Peter eight year high of 23, 5%.
Speaker Change: Benefiting from the all time high contribution.
Speaker Change: From our apparel business.
Speaker Change: We they improve <unk> scale.
Speaker Change: And a consistent execution.
Speaker Change: Our operating efficiency.
Speaker Change: Our bottom line held up pretty well.
Speaker Change: In both absolute profit and margin in the quarter.
Speaker Change: Yes.
Speaker Change: This helped US report over 9 billion RMB, if full year non-GAAP net profit attributable to VIP shops shareholder.
Speaker Change: At a solid margin of eight 3%.
Speaker Change: Which was largely comparable to a year ago.
Speaker Change: As a weak consumer discretionary spending.
Speaker Change: To normalize overtime.
Speaker Change: We believe we.
Speaker Change: We are on the right track.
To returning to health healthy growth in the foreseeable future.
Speaker Change: We continue to move.
Speaker Change: That piece.
Speaker Change: Aligned.
Speaker Change: I'll focus around merchandising.
Speaker Change: Four categories.
Speaker Change: Value offering.
Speaker Change: Customer impact.
Speaker Change: This growth initiatives are well supported by the spill.
And our cash generation capability.
Speaker Change: Turning to capital allocation.
Speaker Change: In 2800 <unk>.
Speaker Change: We returned a total of approximately $770 million to our shareholders.
Speaker Change: Through our new dividend and the buyback.
Speaker Change: But 2025.
Speaker Change: We consistently communicated.
Speaker Change: We will return the lessons 75%.
Speaker Change: Of our full year 2024, non-GAAP net income.
Speaker Change: Attributable to bear these ships shareholder yes.
Speaker Change: Elimination of annual dividend and buyback.
Speaker Change: This reinforced our commitment to shareholder value creation in the long term.
Speaker Change: Now moving to our detailed quarterly financial highlights.
Speaker Change: Before I get started.
Speaker Change: I would like to clarify that.
Speaker Change: That all financial numbers.
Speaker Change: Presented below <unk>.
Speaker Change: And all of our affiliate teams a year over year trends.
Speaker Change: The life otherwise noted.
Speaker Change: Total net revenues for the fourth quarter of 2024.
Speaker Change: RMB 30 312 billion.
Speaker Change: Compared with RMB 34, 7 billion in the prior year period.
Speaker Change: Gross profit was RMB seven 6 billion.
Speaker Change: Compared with RMB eight 2 billion.
Speaker Change: In the prior year period.
Speaker Change: Gross margin was 23.0%.
Speaker Change: Compared with 23, 7%.
Speaker Change: In the prior year period.
Total operating.
Speaker Change: <unk> expenses was RMB five 1 billion.
Speaker Change: Compared with RMB four 9 billion.
Speaker Change: In the prior year period.
Speaker Change: As a percentage of total net revenues.
Speaker Change: Total operating expenses.
Speaker Change: It was 15, 2%.
Speaker Change: <unk>.
<unk> one <unk>.
Speaker Change: In the prior year period.
Speaker Change: Procurement expenses.
Speaker Change: Creased by two 5%.
Year over year to RMB 2.46 billion from.
From RMB two five.
<unk> 3 billion.
Speaker Change: In the prior year period.
Speaker Change: Okay.
Speaker Change: As a percentage of total net revenues.
Speaker Change: Procurement expenses was seven 4%.
Speaker Change: Comparable with seven 3%.
Speaker Change: In the prior year period.
Speaker Change: Okay.
Speaker Change: Marketing expenses incurred.
Speaker Change: <unk> increased by 10, 3% year over year to RMB $933 million.
Speaker Change: From RMB $843 2 million in.
Speaker Change: In the prior year period.
Speaker Change: As a percentage of total net revenues.
Speaker Change: Consensus was two 8%.
Speaker Change: Comparable with two 4%.
Speaker Change: Prior year period.
Speaker Change: Technology and content expenses.
Speaker Change: Decreased by five 5% year over year.
Speaker Change: To RMB 400.
Speaker Change: $69 2 million from RMB.
Speaker Change: Will hindered.
Speaker Change: Six 4 million in the prior year period.
As a percentage of total net revenues.
Speaker Change: Technology and content expenses.
Speaker Change: One 4%.
Speaker Change: With state flight.
Speaker Change: Is comparable with that in the prior year period.
Speaker Change: General and administrative expenses.
Speaker Change: Increased by 20 points steel percent year over year to RMB, one 2 billion from RMB 110 visit.
Speaker Change: In the prior year period.
Speaker Change: As a percentage of total net revenues.
Speaker Change: General and administrative expenses.
Speaker Change: Three 6%.
Speaker Change: Compared with two 9%.
Speaker Change: In the prior year period.
Speaker Change: Income from operations was.
Speaker Change: Was RMB two 9 billion.
Speaker Change: Comparable reached RMB three 7 billion.
Speaker Change: In the prior year period.
Speaker Change: Operating margin was eight 6%.
Speaker Change: Comparable with pinpoint and 6%.
Speaker Change: The prior year period.
Speaker Change: non-GAAP income from operations was RMB three 4 billion.
Speaker Change: Compared with RMB 4.0 buildings.
Speaker Change: In the prior year period.
Speaker Change: Okay.
Speaker Change: non-GAAP operating margins.
Speaker Change: It was 10, 2%.
Speaker Change: In Paraguay 11, 4%.
Speaker Change: In the prior year period.
Net income attributable to rocky shops shareholders.
Speaker Change: Was RMB two 4 billion.
Compared with RMB 310 ability.
Speaker Change: In the prior year period.
Speaker Change: And margin attributable to VIP shops shareholders.
Speaker Change: Was seven 4%.
Compared with eight 5% in the prior year period.
Net income attributable to betting shops shareholders.
Speaker Change: Per diluted EPS.
Speaker Change: Was RMB six.
Speaker Change: Six nine.
Speaker Change: Comparable with RMB 5.35.
Speaker Change: In the prior year period.
Speaker Change: non-GAAP net income attributable to VIP shops shareholders.
Speaker Change: Was RMB 3.0 ability.
Speaker Change: Compared with RMB, three 2 billion in the prior year period.
Speaker Change: non-GAAP net margin attributable to VIP shops shareholders.
Speaker Change: Was 9.0%.
Speaker Change: Compared with nine 2%.
Speaker Change: In the prior year period.
Speaker Change: non-GAAP net income attributable to VIP shop shareholders.
Speaker Change: Per diluted ads.
Speaker Change: Was RMB 570.
Speaker Change: Compared with RMB 579 in the prior year period.
Speaker Change: As of December 31, 2024.
Speaker Change: We had cash and cash equivalents.
Speaker Change: And our restricted cash of RMB.
Speaker Change: 77 zero billion.
Speaker Change: Short term investments of RMB, one 9 billion.
Speaker Change: No I will briefly walk through the highlights of our full year results.
Speaker Change: Total net revenues were RMB 100 zero eight point full billing.
Speaker Change: Compared with RMB $112 9 billion in the prior year.
Speaker Change: Gross profit was RMB 20 515 billion.
Speaker Change: Comparable with RMB 20 517 billion.
Speaker Change: In the prior year.
Gross margin increased to 12.
Speaker Change: <unk> thousand 315%.
Speaker Change: From 22, 8%.
Speaker Change: Price.
Speaker Change: Yes.
Speaker Change: Sure.
Speaker Change: Income from operations.
Speaker Change: Increased by 0.8%.
Speaker Change: Year over year.
Two RMB nine 2 billion.
Speaker Change: From RMB.
Speaker Change: $9 1 billion in the prior year.
Speaker Change: Okay.
Speaker Change: Operating margin increased to 8.5%.
Speaker Change: From eight 1%.
Speaker Change: In the prior year.
Speaker Change: non-GAAP income from operations.
Speaker Change: Increased by 0.9%.
Speaker Change: Year over year to.
Speaker Change: To RMB.
Speaker Change: $10 7 billion.
Speaker Change: From RMB 10, 6 billion in the prior year.
Speaker Change: non-GAAP operating margin.
Speaker Change: Increased to nine 9%.
Speaker Change: From nine 4%.
Speaker Change: The prior year.
Speaker Change: Two.
Speaker Change: Net income attributable to VIP shops shareholders.
Speaker Change: Was RMB seven 7 billion.
Speaker Change: Compared with RMB eight 1 billion in.
Speaker Change: In the prior year.
Speaker Change: No.
Net margin attributable to VIP shops shareholder was seven 1%.
Speaker Change: Compared with seven 2% in the prior year.
Speaker Change: Net income attributable to VIP shops shareholders.
Speaker Change: Our diluted EPS.
Speaker Change: Was RMB 14 135.
Speaker Change: Compared with RMB 41.
Speaker Change: <unk> in the prior year.
Speaker Change: non-GAAP net income attributable to <unk> shareholders.
Speaker Change: Was RMB 9.0 benefit.
Speaker Change: Compared with RMB nine 5 billion in the prior year.
Speaker Change: non-GAAP net margin attributable to VIP shops shareholders.
Speaker Change: Was eight 3%.
Compared with eight 4% in the prior year.
Speaker Change: non-GAAP net income attributable to <unk> shareholders.
Our diluted EPS.
Speaker Change: Was RMB 16 point of 75.
Speaker Change: Compared with RMB 16.90 in the prior year.
Speaker Change: Looking forward to the first quarter of 2025.
Speaker Change: We expect our total net revenues to.
Speaker Change: To be between.
Speaker Change: RMB.
Speaker Change: $26 3 billion.
Speaker Change: And RMB 27 six.
Speaker Change: Billion.
Speaker Change: We presented a year over year decrease.
Speaker Change: Of.
Speaker Change: Approximately 5% to.
Speaker Change: To zero percent.
Speaker Change: Please note.
That this forecast reflects our current and preliminary review of the markets.
Speaker Change: And the operational conditions.
Speaker Change: Which is subject to change.
Speaker Change: With that.
Speaker Change: I would now like to open the call for <unk>.
Speaker Change: <unk>.
Speaker Change: Thank you we will now begin the question and answer session to ask a question. Please press star one one on your telephone keypad.
Speaker Change: You may now the Meda message advising Yohan is raised to withdraw your question. Please press star one again for.
Speaker Change: For the benefit of all participants on today's call. If you wish to ask your question to management in Chinese. Please repeat your question in English right up there. Please.
Speaker Change: Please standby, while we compile the Q&A roster.
Speaker Change: We will now take our first question from the line of Thomas Chong from Jefferies. Please ask your question Thomas.
Speaker Change: Hi, Good evening, Thanks management for taking my questions and congratulations on a really solid such possibly south.
My first question is about our Q1 revenue guidance can management comment about our year to date performance soap box.
Actually seeing we are more towards the low end.
Speaker Change: While the high end of the guidance and the Prime management also comments about <unk>.
Speaker Change: <unk> consumer sentiment.
Speaker Change: That's my first question and my second question is about the China Chinese five outlook.
Speaker Change: Yes, I think he is a bit early right now, but it would be great. If management can comment about how we should think about the <unk>.
Speaker Change: Aneel and the margin trend for the rest of the year. Thank you fish upon each let me touch on what the key links.
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Speaker Change: <unk>, Jim wait the one that you had some chicken down the Thunder.
Speaker Change: Okay asphalt Q1 revenue guidance in terms of the year to date churn.
Because of the different timing of the Spring Festival.
Speaker Change: I'll add to that.
Speaker Change: Idea to look at a single amount in January or February.
Speaker Change: If we look out to January February to date.
Speaker Change: I think thats.
Speaker Change: Today, our business is on.
Speaker Change: Chad.
Speaker Change: Within our guidance.
Speaker Change: <unk>.
Speaker Change: When we assess the consumer sentiment.
Speaker Change: We believe it's actually slightly.
Speaker Change: Better than expected although steel.
Speaker Change: We observed do takes time too.
Speaker Change: To be fully back.
Speaker Change: The recovery Cheng.
Speaker Change: Apparently it was missing is marginally better.
Speaker Change: Prior quarters.
Speaker Change: Thank you.
Speaker Change: Into the quarter and we have upcoming.
Speaker Change: Promotions in March when we started to say our spring apparel and until then we may have a clear picture of how the quarter is going to end, whether it's lower or higher end of <unk>.
Speaker Change: Sure.
Speaker Change: Okay for now.
Speaker Change: For the full year of 2025.
Speaker Change: We think everything should get back to the positive trajectory, that's what we help whether it's <unk>.
Speaker Change: Revenue loss.
Speaker Change: Last year, we did.
Speaker Change: Not that <unk> just done.
Speaker Change: Slightly up.
Speaker Change: And because of the return rate there is steel.
Speaker Change: GAAP <unk> Jimmy in the revenues so revenue is slightly down but.
Speaker Change: We believe this year we will.
Speaker Change: Make every endeavor to operating the business back.
Speaker Change: From every in terms of every operating metric.
Speaker Change: We're going to pursue high quality.
Speaker Change: Uh huh.
Speaker Change: Our growth strategy a strategy that can be.
Speaker Change: John consistently.
Speaker Change: We will.
Speaker Change: Mexican try to.
Speaker Change: Make efforts to Mexican mines are growth opportunities in terms of top chiller under revenue.
Speaker Change: Under the condition that we will maintain a solid profitability.
Speaker Change: We have an option takes that you map that posted an operating loss.
Speaker Change: Sure.
Speaker Change: Growth opportunities that will lead to that.
Speaker Change: Overall, we will.
Speaker Change: Try to make sure we maintain solid profitability.
Speaker Change: Maximize our growth.
Speaker Change: J J.
Speaker Change: Thank you.
Speaker Change: We will now take our next question from the line of Alicia Yap from Citigroup. Please ask your question Alicia.
Alicia Yap: Okay. Thank you.
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Glenda: What does your filings that.
Speaker Change: So two quick questions first is that regarding your four key outperformers just wanted to know a little bit more to the drivers. So is that mainly because of Easter.
Glenda: His practice marketing promotion.
Glenda: Or is that also benefiting from some improvement of the macro environment and then second question is.
Glenda: In Europe for Q T and B, how much of that is actually benefiting.
Glenda: Benefiting or related to the trading benefits. Thank you.
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Speaker Change: First a question on Q4 turns out to be.
Glenda: We are ahead of expectations due to a couple of them.
Speaker Change: A few factors.
Speaker Change: First I think.
Speaker Change: It helps a little bit.
Speaker Change: Because we got to see consumers became a bit more <unk>.
The end of November into December.
Speaker Change: The normalized weather condition that helped.
Speaker Change: Joe in closing sales and.
Speaker Change: Oh well.
Speaker Change: Consumer sentiment is working.
Speaker Change: Now to address.
Speaker Change: And as we have thought.
Speaker Change: To turn slightly better than prior quarters.
Speaker Change: Of course.
Speaker Change: <unk>.
Speaker Change: A lot of proactive actions.
Speaker Change: In terms of the.
Speaker Change: Our merchandising portfolio.
Speaker Change: The more in demand the value for money.
Speaker Change: To offerings and also we did some different promotions and a subsea tieback to our high value customers reach.
Speaker Change: <unk>.
Speaker Change: What additional growth opportunities.
Speaker Change: And the second question.
Speaker Change: The related category benefiting from the trading program.
Speaker Change: Hop on a little bit because we manage the to narrow the loss of sales in our non apparel businesses.
Speaker Change: But in terms of the absolute.
Speaker Change: GM V if deal.
Speaker Change: Not that meaningful around $300 million to $400 million in terms of incremental Jeremy from home appliances, and the digital products in Q4.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you.
Speaker Change: We will take question from the line of way shown from UBS. Please ask your question way.
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Rachel: <unk> with Citibank.
Speaker Change: Thank you management for taking my question.
Rachel: First I wanted to ask about the gross margin trend in 2035.
Rachel: We are seeing further room to improve year on year on the base of a very good result for your 24. If there is what are the drivers behind and also just to follow up on the net profit margin of 425% of given that we are trying to.
Rachel: Pursue the goal of of GSV and revenue turning positive as soon as possible.
Rachel: Expecting stable in that margin year on year or are we seeing further room to improve.
Rachel: And also with our ladies gentlemen on the long term sustainable margin level for the company. Thank you.
Rachel: Yes.
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Speaker Change: Okay.
Speaker Change: In terms of the margin trend kicks in March.
Speaker Change: Remember, we have eight year high GP margin opportunities three 5% in taken fall. So we actually think that's a very good level and we can afford to invest a portion of the profits.
Speaker Change: For example to our brand partners too.
Speaker Change: Two incentive side by some to bringing more merchandising and a more deep discount England's fee. So that we can grow together. So we are thinking about.
Speaker Change: Uh huh.
Speaker Change: Prudently.
Speaker Change: <unk> the take rate levels with Brent Honduras.
Speaker Change: Allow them to have more opportunities for growing the business all platform instead of just maintaining.
Speaker Change: Thanks, Tim.
Speaker Change: J P margin up on the platform.
Speaker Change: Turning to MP margin.
Speaker Change: Pretty good command of.
Speaker Change: Managing the call center expense items, So we think.
Speaker Change: And some of the <unk> margin.
Speaker Change: Pretty confident we can achieve a flattish level as compared to.
Speaker Change: Yeah.
Speaker Change: I was on a path to two years.
Speaker Change: And in terms of the profit dollars reached try to thrill our profit dollars.
Speaker Change: As much as we can if we can.
Speaker Change: <unk> grow into a better scale and depth.
Speaker Change: Apparently we will enter that would take a lot of pressure on the operating deleverage.
Speaker Change: Then we can achieve.
Speaker Change: Greater MP margin as well as a much better profit dollar level.
Speaker Change: So.
Speaker Change: So in terms of the margin profile.
Speaker Change: We had.
Speaker Change: We have no concern on that actually we had a pretty good amount of that.
Speaker Change: Both GP margin in MP margins.
Speaker Change: Okay very clear thank you management.
Speaker Change: Thank you.
Speaker Change: Next question comes from the line of Joe <unk> from Nomura. Please go ahead Joel.
Joel: Hi, Ben.
Joel: Shanghai is on March <unk> haul crude contract he takes over there to get to or tend to introduce Sean Nguyen our shuttling, yes.
Joel: <unk> alone.
Joel: Thank you.
Joel: Again, no agile shaken all AI.
Joel: Yes.
Joel: Sure Hi, Andy Fisher on dwell.
Joel: Take a constantly you hop volatile.
Speaker Change: I got the quantity of tissue Silicon Tam to continue which is <unk> Joshi of Shanghai Zon Joseph Zachmann boutique.
Joel: Great.
Joel:
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Speaker Change: <expletive> Super VIP member to the timeline talented and shelf, that's eager article shelf either Philippines.
Speaker Change: Alright, easyjet or Sega something beyond that you've got a tissue.
Speaker Change: The device.
Speaker Change: I have two questions first question is about generating AI Shelby AI has become a popular trend as days. So just wondering if there are any.
Speaker Change: Susan if there are any areas.
Speaker Change: Getting this business we are.
Speaker Change: AI may help either improve profitability or reduce our costs.
Speaker Change: Just wondering if management can provide some colors and the second question is.
Speaker Change: Is wondering what is the trend for Apple in the shopping frequency of Super VIP members. Thank you.
Speaker Change: Needlewoman cases say Nick.
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Speaker Change: No wonder to attribute to just go back through.
Speaker Change: So this is basically the fleet.
Speaker Change: Okay.
Speaker Change: In terms of the AI application actually in China, we are.
We are very focused it to investing too.
Speaker Change: Uh huh.
Speaker Change: AI applications, including.
Speaker Change: Chris.
Speaker Change: <unk> Q&A generation and.
Speaker Change: Product recommendation and et cetera.
Speaker Change: On a number of visa application casing.
Speaker Change: Specifically actually.
Speaker Change: We are.
Speaker Change: Deploying a deep seated.
Speaker Change: Internally as well.
Speaker Change: The immediate focus is of course to try to find opportunities to improve productivity as well as efficiency.
Speaker Change: Customer surveys, though with a we're trying to.
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Speaker Change: Our self developed motto.
Speaker Change: The.
Speaker Change: The analysis on the reasoning for that.
Speaker Change: Many dialogues.
Speaker Change: That are taking place.
Speaker Change: Customer service every day and we're trying to find if there.
Speaker Change: Areas of improvement.
Speaker Change: And.
Speaker Change: Two rent com is the only <unk>.
Speaker Change: So launching new analytical churros.
Speaker Change: To try to help them.
Speaker Change: Optimize their merchandising our portfolio to promote their sales.
Speaker Change: Our campaigns.
Speaker Change: <unk>.
Speaker Change: Kind of action, they should take to maximize business and opportunities on our platform.
Speaker Change: Although we are not.
Speaker Change: Rolling out adding to see application.
Speaker Change: Publicly but we are.
Speaker Change: Deploying AI.
Speaker Change: The latest adjourn AI models.
Speaker Change: Two our internal business cases on a broad basis.
Speaker Change: And then on the customer from so we are also trying to see whether we can leverage the latest data and AI models to improve.
Speaker Change: The generation of Q&A.
Speaker Change: We are constantly upgrading the motto and it's tied to May Carlo our recommendation to customers.
Speaker Change: Even better and.
Speaker Change: And.
Speaker Change: <unk> hundred mall to the year.
Speaker Change: To their needs.
Speaker Change: So so we're.
Speaker Change: Using.
Speaker Change: AI applications.
Speaker Change: In our internal business cases, and we're tracking the developments.
Speaker Change: We look to.
Speaker Change: Leverage AI.
Speaker Change: On a constant basis to find opportunities.
Speaker Change: To drive both growth and efficiency.
Speaker Change: Second question on S VIP customer.
Speaker Change: Last year in terms of the annual pool, we did see a slight decline.
Speaker Change: Okay.
Speaker Change: Slight decline, but that's a more diluted.
Speaker Change: No impact from <unk>.
Speaker Change: 16% increase in the annual <unk> Super VIP customers.
It may.
Speaker Change: May take some.
Speaker Change: Time for U S VIP member it to run heavy spending.
Speaker Change: If we look at the park pool, two year customer cohorts of our SBC IP.
Speaker Change: Customer base actually.
Speaker Change: We remain very vigilant.
Speaker Change: Only see a slight dip.
Speaker Change: In terms of annual whatsoever.
Speaker Change: Thank god that the Oracle as VIP.
The customer base is still there.
There is housing.
Speaker Change: Lately.
Speaker Change: Expand at VIP membership.
Speaker Change: Lee.
Speaker Change: And protect the horror lighthouse health of the consumer groups.
Speaker Change: Okay.
Speaker Change: Alright. Thank you due to time constraints that concludes today's question and answer session. At this time I will turn the conference back to Jesse for any closing remarks.
Speaker Change: Thank you for taking the time to join US today. If you have any questions. Please don't hesitate to contact our IR team. We look forward to speaking with you next quarter.
Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
Speaker Change: Okay.
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Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Sure.
Speaker Change: Yes.
Speaker Change: Okay.