Q2 2026 Vipshop Holdings Ltd Earnings Call

August 25, 2026

Operator: Ladies and gentlemen, good day everyone, and welcome to Vipshop Holdings Limited second quarter 2026 earnings conference call. At this time, all participants are in the listen only mode. I would now like to turn the call over to Miss Jessie Zheng, Vipshop's Head of Investor Relations. Please proceed.

Operator: Ladies and gentlemen, good day everyone, and welcome to Vipshop Holdings Limited Q2 2026 Earnings Conference Call. At this time, all participants are in the listen only mode. I would now like to turn the call over to Miss Jessie Zheng, Vipshop's Head of Investor Relations. Please proceed.

Speaker #1: I would now like to turn the call over to Ms. Jessie Zheng, Vipshop's Head of Investor Relations. Please proceed.

Speaker #2: Thank you, Operator. Hello, everyone, and thank you for joining Vipshop's second quarter 2026 earnings conference call. With us today are Eric Zheng, our Co-Founder, Chairman, and CEO, and Mark Wang, our CFO.

Jessie Zheng: Thank you, operator. Hello everyone, and thank you for joining Vipshop's second quarter 2026 earnings conference call. With us today are Eric Shen, our Co-founder, Chairman, and CEO, and Mark Wang, our CFO. Before management begins their prepared remarks, I would like to remind you that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to those outlined in our safe harbor statements in our earnings release and public filings with the Securities and Exchange Commission, which also applies to this call to the extent any forward-looking statements may be made.

Jessie Zheng: Thank you, operator. Hello everyone, and thank you for joining Vipshop's Q2 2026 Earnings Conference Call. With us today are Eric Shen, our Co-Founder, Chairman, and CEO, and Mark Wang, our CFO. Before management begins their prepared remarks, I would like to remind you that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995.

Speaker #2: 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.

Speaker #2: 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.

Jessie Zheng: Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to those outlined in our Safe Harbor statements in our earnings release and public filings with the Securities and Exchange Commission, which also applies to this call to the extent any forward-looking statements may be made.

Speaker #2: Potential risks and uncertainties include, but are not limited to, those outlined in our Safe Harbor statements in our earnings release and public filings with the Securities and Exchange Commission, which also apply 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 attributable to Vipshop shareholders, and non-GAAP net income per ADS are not presented in accordance with US 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 #2: Please note that certain financial measures used on this call, such as non-GAAP operating income, non-GAAP net income attributable to Vipshop shareholders, and non-GAAP net income per ADS, are not presented in accordance with U.S. GAAP.

Speaker #2: GAAP. Please refer to our earnings release for details relating to the reconciliations of our non-GAAP measures to GAAP measures. With that, I would now like to turn the call over to Mr. Eric Zheng.

Eric Ya Shen: Good morning and good evening everyone. Welcome and thank you for joining our second quarter 2026 earnings conference call. The second quarter presents a challenging retail environment defined by a customer who is not just value conscious, but highly selective across the multimedia promotional landscape. Shoppers was intensely focused on clear utility and real value. Prioritize essentially meet great cautions in discretion categories like apparel, weighing on our near-term top line performance. In this climate, rather than chasing unprofitable

Eric Shen: Good morning and good evening everyone. Welcome and thank you for joining our Q2 2026 Earnings Conference Call. The Q2 presents a challenging retail environment defined by a customer who is not just value conscious, but highly selective across the multimedia promotional landscape. Shoppers was intensely focused on clear utility and real value. Prioritize essentially meet great cautions in discretion categories like apparel, weighing on our near-term top line performance. In this climate, rather than chasing unprofitable—

Speaker #3: Good morning and good evening, everyone. Welcome, and thank you for joining our second quarter 2026 earnings conference call. The second quarter presents a challenging retail environment defined by a customer who is not just value conscious, but highly selective across the multimedia promotional landscape.

Speaker #3: Shoppers were intensely focused on clear utility and real value. Prioritization essentially meets great cautions in discretionary categories like apparel, weighing on our near-term top-line performance.

Speaker #3: In this climate, rather than chasing unprofitable value growth, we stayed true to our core value proposition, delivering a highly curated selection of high-demand, deeply discounted brand products to our loyal customer base.

Jessie Zheng: Unprofitable

Jessie Zheng: Unprofitable.

Eric Ya Shen: Rather than chasing unprofitable value growth, we stayed true to our core value proposition, delivering a highly curated select of high demand, deeply discounted brand products to our loyal customer base. While overall traffic was mute, our SVIP cohort served as a resilient anchor for our business. During the quarter, active SVIP grew by 8% year-over-year, driving 54% of our online spending, showing that as customer budget tightened, high intent shoppers prioritize platforms offering trust, value, quality, and service. At the strategic level, our 1P model gives us a different edge. By leveraging deep category expertise, we built greater trust with brand partners to the point when they actively adjust their merchandise allocations for our platform. For instance, closer collaborations with key partners in fashion apparel has helped buffer against the broader market awareness. This level of brand integration strengthens our mode and protects our core business.

Eric Shen: Rather than chasing unprofitable value growth, we stayed true to our core value proposition, delivering a highly curated select of high demand, deeply discounted brand products to our loyal customer base. While overall traffic was mute, our SVIP cohort served as a resilient anchor for our business. During the quarter, active SVIP grew by 8% year-over-year, driving 54% of our online spending, showing that as customer budget tightened, high intent shoppers prioritize platforms offering trust, value, quality, and service.

Speaker #3: While overall traffic was muted, our SVIP cohort service served as a resilient anchor for our business. During the quarter, active SVIP grew by 8% year over year, driving 54% of our online spending, showing that as customer budgets tightened, high-intent shoppers prioritize platforms offering trust, value, quality, and service.

Eric Shen: At the strategic level, our 1P model gives us a different edge. By leveraging deep category expertise, we built greater trust with brand partners to the point when they actively adjust their merchandise allocations for our platform. For instance, closer collaborations with key partners in fashion apparel has helped buffer against the broader market awareness. This level of brand integration strengthens our mode and protects our core business.

Speaker #3: At a strategic level, our 1P model gives us a distinct edge by leveraging deep category expertise. We have built greater trust with brand partners, to the point where they actively adjust their merchandise allocations for our platform.

Speaker #3: For instance, closer collaborations with key partners in fashion apparel have helped offset broad market warnings. This level of brand integration strengthens our moat and protects our core business.

Eric Ya Shen: On top of this, our merchandising team has been moving quickly to align our product mix with the more selective customers. We have sharpened our curation along the core apparel and lifestyle essentials, matching our assortment to real life occasions to capture immediate demand. This target approach ensure that we always deliver a clear utility recognized brand and compelling value. Our opportunities sourcing strategy adds another layer of inventory flexibility. As brand partners manage inventory in a softer market, we serve as a reliable off-price partner, locking in unique, high-demand inventory at deep discounts. This reinforces our differentiated merchandise pipeline and fosters deep brand collaborations. At the same time, we continue to advance the repositioning of our exclusive Made for Vipshop line to drive stronger customer mindshare and loyalty.

Eric Shen: On top of this, our merchandising team has been moving quickly to align our product mix with the more selective customers. We have sharpened our curation along the core apparel and lifestyle essentials, matching our assortment to real life occasions to capture immediate demand. This target approach ensure that we always deliver a clear utility recognized brand and compelling value. Our opportunities sourcing strategy adds another layer of inventory flexibility.

Speaker #3: On top of this, our merchandising team has been moving quickly to align our product mix with more selective customers. We have sharpened our curation along the core apparel and lifestyle essentials, matching our assortment to rare life occasions to capture immediate demand.

Speaker #3: This target approach ensures that we always deliver a clearly recognized utility brand and compelling value. Our opportunity sourcing strategy adds another layer of inventory flexibility as brand partners manage inventory in a softer market.

Eric Shen: As brand partners manage inventory in a softer market, we serve as a reliable off-price partner, locking in unique, high-demand inventory at deep discounts. This reinforces our differentiated merchandise pipeline and fosters deep brand collaborations. At the same time, we continue to advance the repositioning of our exclusive Made for Vipshop line to drive stronger customer mindshare and loyalty.

Speaker #3: We serve as a reliable off-price partner, locking in unique, high-demand inventory at deep discounts. This reinforces our differentiated merchandise pipeline and fosters deep brand collaborations.

Speaker #3: At the same time, we continue to advance the repositioning of our exclusive, made-for-VIP-Shop line to drive stronger customer mind share and loyalty.

Eric Ya Shen: By raising product standards and aligning the seasonal launches closely with brand partners, we are seeing high-quality halo products emerging, lifting conversion rates, and supporting overall portfolio stability. As we kick off the upcoming season, we are pleased to see that our SVIP membership has hit the 10 million milestone. To continue the momentum, we are launching an integrated campaign paired with the fall collection and major upgrades to private sales. At the core of this push, we are refreshing our signature slogan, "Dress the best for 70% less," which has long resonated deeply with our loyal base. To ensure we keep evolving alongside the modern Chinese shopper, we are refreshing our campaign reach to both younger and mature demographics, while reinforcing an enduring truth across every market cycle: that shoppers consistently demand great, high-quality fashion at unbeatable prices.

Eric Shen: By raising product standards and aligning the seasonal launches closely with brand partners, we are seeing high-quality halo products emerging, lifting conversion rates, and supporting overall portfolio stability. As we kick off the upcoming season, we are pleased to see that our SVIP membership has hit the 10 million milestone. To continue the momentum, we are launching an integrated campaign paired with the fall collection and major upgrades to private sales.

Speaker #3: By raising product standards and aligning seasonal launches closely with brand partners, we are seeing high-quality halo products emerging, lift in conversion rate, and support for overall portfolio stability.

Speaker #3: As we kick off the upcoming season, we are pleased to see that our SVIP membership has hit the 10 million milestone. To continue the momentum, we are launching integrated campaigns paired with the four collections and the major upgrade to provide sales.

Eric Shen: At the core of this push, we are refreshing our signature slogan, "Dress the best for 70% less," which has long resonated deeply with our loyal base. To ensure we keep evolving alongside the modern Chinese shopper, we are refreshing our campaign reach to both younger and mature demographics, while reinforcing an enduring truth across every market cycle: that shoppers consistently demand great, high-quality fashion at unbeatable prices.

Speaker #3: At the core of this push, we are refreshing our signature slogan, "Dress the best for 70% less," which has long resonated deeply with our loyal base.

Speaker #3: To ensure we keep evolving alongside the modern Chinese shopper, we are refreshing our campaign reach to both younger and mature demographics, while reinforcing enduring trust across every market cycle.

Speaker #3: That shoppers consistently demand and create high-quality fashion at unbeatable prices, grounding our mindset in shared smart value, allows us to double down on our off-price advantage, attract high-value shoppers, and drive high-quality growth.

Eric Ya Shen: Grounding our mindshare in smart value allows us to double down on our off-price advantage, attract higher-value shoppers, and drive high-quality growth. Alongside our branding refresh, our customer engagement strategy focuses on retention and lifetime value. "Real 70% less" powers our core apparel, delivering pleasant surprise affordability that converts new shoppers. Providing a tailored, tiered service model to the SVIP allows us to capture greater wallet share over time, making SVIP loyalty a primary engine of operational stability and profitable growth. Turning to our technology roadmap, we are deepening AI integration across our business. On the customer side, our AI-powered product search is driving tangible results. Virtual try-ons thickness is steadily up. Integrated customer intelligence, intelligent customer service with AI voice interactions and predictive capabilities is lifting conversion rates, and AIGC is enabling faster discovery. Marketing remains our most impactful use case to date.

Eric Shen: Grounding our mindshare in smart value allows us to double down on our off-price advantage, attract higher-value shoppers, and drive high-quality growth. Alongside our branding refresh, our customer engagement strategy focuses on retention and lifetime value. "Real 70% less" powers our core apparel, delivering pleasant surprise affordability that converts new shoppers. Providing a tailored, tiered service model to the SVIP allows us to capture greater wallet share over time, making SVIP loyalty a primary engine of operational stability and profitable growth.

Speaker #3: Alongside our branding refresh, our customer engagement strictly focuses on retention and lifetime value. Rail is down 70%, saving power. Our core apparel is delivering present supplies, affordability that converts new shoppers.

Speaker #3: Providing a tailored, tiered service model to our SVIP allows us to capture greater wallet share over time, making SVIP loyalty one of the primary engines of operational stability and profitable growth.

Eric Shen: Turning to our technology roadmap, we are deepening AI integration across our business. On the customer side, our AI-powered product search is driving tangible results. Virtual try-ons thickness is steadily up. Integrated customer intelligence, intelligent customer service with AI voice interactions and predictive capabilities is lifting conversion rates, and AIGC is enabling faster discovery. Marketing remains our most impactful use case to date.

Speaker #3: Turning to our technology roadmap, we are deepening AI integration across our business. On the customer side, our AI-powered product suites are driving tangible results.

Speaker #3: Virtual try-on on thickness is steadily up. Integrating custom intelligent customer service with AI voice interactions and predictive capabilities is lifting conversion rate, and AIGC is enabling faster discovery.

Speaker #3: Marketing remains our most impactful use case to date. Our upgraded AI marketing agent now enables optimization from placement planning to AIGC creative matching across the right channels.

Eric Ya Shen: Our upgraded AI marketing agent now enables optimization from placement planning to AIGC creative matching across the right channels. We see clear room for this integrated approach to further drive acquisition efficiency while improving customer quality. Operationally, we are scaling AI beyond individual tools into a unified, secured intelligence layer across the business. We are already seeing early wins in supply chain optimization and daily operational workflows. Overall, we remain focused on disciplined execution today while building towards our long-term vision. While we continue to navigate near-term macro headwinds with caution, I have full confidence in our proven model, solid foundations, and team. As we sharpen our merchandising, elevate the customer experience, and scale technology, we are firmly positioned on our pathway, the path back to sustainable growth. Finally, I would like to briefly cover Shan Shan Outlet, a key part of our omnichannel discount retail strategy.

Eric Shen: Our upgraded AI marketing agent now enables optimization from placement planning to AIGC creative matching across the right channels. We see clear room for this integrated approach to further drive acquisition efficiency while improving customer quality. Operationally, we are scaling AI beyond individual tools into a unified, secured intelligence layer across the business. We are already seeing early wins in supply chain optimization and daily operational workflows.

Speaker #3: We see clear room for this integrated approach to further drive acquisition efficiency while improving customer quality. Operationally, we are scaling AI beyond individual tools into a unified, secure intelligence layer across the business.

Speaker #3: We are already seeing early wins in supply chain optimizations and daily operational workflows. Overall, we remain focused on disciplined execution today while building towards our long-term vision.

Eric Shen: Overall, we remain focused on disciplined execution today while building towards our long-term vision. While we continue to navigate near-term macro headwinds with caution, I have full confidence in our proven model, solid foundations, and team. As we sharpen our merchandising, elevate the customer experience, and scale technology, we are firmly positioned on our pathway, the path back to sustainable growth. Finally, I would like to briefly cover Shan Shan Outlet, a key part of our omnichannel discount retail strategy.

Speaker #3: While we continue to navigate near-term macro headwinds with caution, I have full confidence in our proven model, solid foundations, and team as we sharpen our merchandising, elevate the customer experience, and scale technology.

Speaker #3: We are firmly positioned on our pace way the pace back to the sustainable growth. Finally, I would like the brief cover Shanshan outline a key part of our Omni channel discount retail strategy seeing our acquisitions in 2019.

Eric Ya Shen: Since our acquisition in 2019, we have driven disciplined expansion across emerging Tier 1, Tier 2, and key cities. Today, Shan Shan has scaled from 5 to 22 operational outlets more, becoming China's largest outlet chain by store count and maintaining a top-tier position by total GMV. In H1, Shan Shan Outlet continued its strong scale momentum with over 20% year-over-year growth. Capitalizing on the value-seeking trend and the unique in-person shopping experience of offline retail. Looking ahead, we expect its business contributions to the group to increase steadily. At this point, let me hand over the call to our CFO, Mark Wang, to go over our financial results.

Eric Shen: Since our acquisition in 2019, we have driven disciplined expansion across emerging Tier 1, Tier 2, and key cities. Today, Shan Shan has scaled from 5 to 22 operational outlets more, becoming China's largest outlet chain by store count and maintaining a top-tier position by total GMV. In H1, Shan Shan Outlet continued its strong scale momentum with over 20% year-over-year growth.

Speaker #3: We have driven disciplined expansion across emerging tier-one, tier-two, and key cities. Today, Shanshan has scaled from 5 to 22 operational outlets, becoming China's largest outlet chain by store count and maintaining a top-tier position by total GMV.

Speaker #3: In the first half, Shanshan outlets continue its strong scale momentum with over 20% year over year growth. Capitalizing on the value seeking trend and the unique in-person shopping experience of online of offline retail.

Eric Shen: Capitalizing on the value-seeking trend and the unique in-person shopping experience of offline retail. Looking ahead, we expect its business contributions to the group to increase steadily. At this point, let me hand over the call to our CFO, Mark Wang, to go over our financial results.

Speaker #3: Looking ahead, we expect its business contributions to the globe to increase steadily. At this point, let me hand over the call to our CFO, Mark Wang, to go over our financial results.

Mark Wang: Thanks, Eric, and hello, everyone. In Q2, our top line came in at the lower end of our guided range, reflecting broad-based softening in consumer sentiment. Despite ongoing pressures, we maintain disciplined execution, which provides strong visibility into our operational trajectory, enabling us to preserve core operating profitability and margin health. As noted in our earning release, our non-GAAP net income was temporarily impacted by a one-time withholding tax adjustment, which I will elaborate on shortly. Adjusting for this non-recurring item, our underlying non-GAAP net profit remained solid at RMB2.0 billion, with a net margin of 7.9%, demonstrating our underlying profitability and the core cash generation remains fully intact. As Eric mentioned, quality sustainable growth remains our core priority. While micro headwinds persist, we continue to focus on strengthening our competitive moat and strategically reinvesting to fortify our fundamentals for profitable and long-term expansion.

Speaker #2: Thanks, Eric. And hello, everyone. In the second quarter, our top line came in at the lower end of our guided range, reflecting broad-based softening in consumer sentiment.

Speaker #2: Despite ongoing pressure, we maintained disciplined execution, which provided strong visibility into our operational trajectory, enabling us to preserve core operating profitability and margin health. As noted in our earnings release, our non-GAAP net income was temporarily impacted by a one-time withholding tax adjustment.

Speaker #2: Which I will elaborate on shortly. Adjusting for this non-recurring item, our underlying non-GAAP net profit remained solid at RMB 2.0 billion, with a net margin of 7.9%.

Mark Wang: Adjusting for this non-recurring item, our underlying non-GAAP net profit remained solid at RMB2.0 billion, with a net margin of 7.9%, demonstrating our underlying profitability and the core cash generation remains fully intact. As Eric mentioned, quality sustainable growth remains our core priority. While micro headwinds persist, we continue to focus on strengthening our competitive moat and strategically reinvesting to fortify our fundamentals for profitable and long-term expansion.

Speaker #2: Demonstrating our underlying profitability and that core cash generation remains fully intact. As Eric mentioned, quality, sustainable growth remains our core priority. While market headwinds persist, we continue to focus on strengthening our competitive moat and strategically reinvesting to fortify our fundamentals for profitable and long-term expansion.

Speaker #2: During the first half, we distributed approximately $400 million to shareholders through a combination of cash dividends and a share repurchase, reflecting the anticipated utilization of our existing authorization.

Mark Wang: During H1, we distributed approximately $400 million to shareholders through a combination of cash dividends and a share repurchase, reflecting the anticipated utilization of our existing authorization. The board of directors has approved a new $1 billion share repurchase program. This underscores our firm commitment to returning no less than 75% of our full year 2025 non-GAAP net income to shareholders, supported by solid business fundamentals and the resilient underlying cash generation. We remain fully confident in our capacity to achieve this capital return target. In addition, to unlock the value of our high-quality assets and optimize capital efficiency, we successfully launched 2 public REITs backed by 3 mature Shenzhen outlet properties, a consumer infrastructure REIT and a commercial REIT.

Speaker #2: The board of directors has approved a new $1 billion share repurchase program. This underscores our firm commitment to returning no less than 75% of our full-year 2025 non-GAAP net income to shareholders, supported by solid business fundamentals and the resilient underlying cash generation.

Speaker #2: We remain fully confident in our capacity to achieve this capital return target. In addition, to unlock the value of our high-quality assets and optimize capital efficiency, we successfully launched two public releases backed by three mature Shanshan Outlet properties.

Mark Wang: We remain fully confident in our capacity to achieve this capital return target. In addition, to unlock the value of our high-quality assets and optimize capital efficiency, we successfully launched 2 public REITs backed by 3 mature Shenzhen outlet properties, a consumer infrastructure REIT and a commercial REIT.

Speaker #2: A consumer infrastructure rate and a commercial rate. This not only improves the quality of our outlet portfolio and the market valuation, but also creates a capital recycling loop that allows us to reinvest the proceeds from material assets directly into disciplined expansion.

Mark Wang: This not only improves the quality of our outlet portfolio and their market valuation, but also creates a capital recycling loop that allow us to reinvest the proceeds from mature assets directly into disciplined expansion. We believe this model maintains our financial flexibility while supporting the sustainable growth of our outlet business, driving asset revaluation, and creating sustainable value for our shareholders. Now moving to our detailed quarterly financial highlights. Before I get started, I would like to clarify that all financial numbers presented below are in RMB, and all the percentage change are year-over-year change unless otherwise noted. Total net revenues for Q2 2026 were RMB24.7 billion, compared with RMB25.8 billion in the prior year period. Gross profit was RMB5.8 billion, compared with RMB6.1 billion in the prior year period. Gross margin was 23.3%, compared with 23.5% in the prior year period.

Speaker #2: We believe this model maintains our financial flexibility while supporting the sustainable growth of our outlet business, driving asset revaluation, and creating sustainable value for our shareholders.

Speaker #2: Now, moving to our detailed quarterly financial highlights. Before I get started, I would like to clarify that all financial numbers presented below are in Renminbi.

Mark Wang: Now moving to our detailed quarterly financial highlights. Before I get started, I would like to clarify that all financial numbers presented below are in RMB, and all the percentage change are year-over-year change unless otherwise noted. Total net revenues for Q2 2026 were RMB24.7 billion, compared with RMB25.8 billion in the prior year period. Gross profit was RMB5.8 billion, compared with RMB6.1 billion in the prior year period. Gross margin was 23.3%, compared with 23.5% in the prior year period.

Speaker #2: And all the percentage changes are year-over-year changes unless otherwise noted. Total net revenues for the second quarter of 2026 were RMB 24.7 billion, compared with RMB 25.8 billion.

Speaker #2: In the prior year period. Gross profit was RMB 5.8 billion compared with RMB 6.1 billion in the prior year period. Gross margin was 23.3% compared with 23.5% in the prior year period.

Mark Wang: Total operating expenses decreased by 2.4% year-over-year to RMB4.5 billion from RMB4.6 billion in the prior year period. As a percentage of total net revenues, total operating expenses were 18.0%, compared with 17.7% in the prior year period. Fulfillment expenses were RMB2.14 billion, compared with RMB2.11 billion in the prior year period. As a percentage of total net revenues, fulfillment expenses were 8.7%, compared with 8.2% in the prior year period. Marketing expenses were RMB760.3 million, compared with RMB715.9 million in the prior year period. As a percentage of total net revenues, marketing expenses were 3.1%, compared with 2.8% in the prior year period. Technology and content expenses were RMB486.2 million, compared with RMB442.0 million in the prior year period. As a percentage of total net revenues, technology and content expenses were 2.0%, compared with 1.7% in the prior year period.

Speaker #2: Total operating expenses decreased by 2.4% year over year to RMB 4.5 billion from RMB 4.6 billion. As a percentage of total net revenues, total operating expenses were 18.0%, compared with 17.7% in the prior year period.

Speaker #2: Fulfillment expenses were RMB 2.14 billion, compared with RMB 2.11 billion in the prior-year period. As a percentage of total net revenues, fulfillment expenses were 8.7%, compared with 8.2% in the prior-year period.

Mark Wang: Marketing expenses were RMB760.3 million, compared with RMB715.9 million in the prior year period. As a percentage of total net revenues, marketing expenses were 3.1%, compared with 2.8% in the prior year period. Technology and content expenses were RMB486.2 million, compared with RMB442.0 million in the prior year period. As a percentage of total net revenues, technology and content expenses were 2.0%, compared with 1.7% in the prior year period.

Speaker #2: Marketing expenses were RMB 760.3 million, compared with RMB 715.9 million in the prior year period. As a percentage of total net revenues, marketing expenses were 3.1%, compared with 2.8% in the prior year period.

Speaker #2: Technology and content expenses were RMB 486.2 million, compared with RMB 442.0 million in the prior year period. As a percentage of total net revenues, technology and content expenses were 2.0%, compared with 1.7% in the prior year period.

Mark Wang: General and administrative expenses decreased by 17.5% year-over-year to RMB1.1 billion, compared with RMB1.3 billion in the prior year period, primarily due to higher share-based compensation expenses for Shan Shan Outlet reported in the prior year period. As a percentage of total net revenues, general and administrative expenses decreased to 4.3% from 5.0% in the prior year period. Income from operations was RMB1.5 billion, compared with RMB1.7 billion in the prior year period. Operating margin was 6.2%, compared with 6.6% in the prior year period. Non-GAAP income from operations was RMB2.0 billion, compared with RMB2.4 billion in the prior year period. Non-GAAP operating margin was 8.1%, compared with 9.3% in the prior year period. Income tax expenses were RMB3.3 billion, compared with RMB407.2 million in the prior year period. The increase was primarily driven by two items.

Speaker #2: General administrative expenses decreased by 17.5% year over year to RMB 1.1 billion, compared with RMB 1.3 billion in the prior year period. This was primarily due to higher share-based compensation expenses for Shanshan Outlets recorded in the prior year period.

Speaker #2: As a percentage of total net revenues, general and administrative expenses decreased to 4.3% from 5.0% in the prior year period. Income from operations was RMB 1.5 billion, compared with RMB 1.7 billion in the prior year period.

Mark Wang: Operating margin was 6.2%, compared with 6.6% in the prior year period. Non-GAAP income from operations was RMB2.0 billion, compared with RMB2.4 billion in the prior year period. Non-GAAP operating margin was 8.1%, compared with 9.3% in the prior year period. Income tax expenses were RMB3.3 billion, compared with RMB407.2 million in the prior year period. The increase was primarily driven by two items.

Speaker #2: Operating margin was 6.2%, compared with 6.6% in the prior year period. Non-GAAP income from operations was RMB 2.0 billion, compared with RMB 2.4 billion in the prior year period.

Speaker #2: Non-GAAP operating margin was 8.1%, compared with 9.3% in the prior year period. Income tax expenses were RMB 3.3 billion, compared with RMB 407.2 million in the prior year period.

Speaker #2: The increase was primarily driven by two items. The first one is an income tax increase of RMB 1.63 billion, relating to the one-off investment gain recognized by Shanshan Commercial Group.

Mark Wang: The first one is an income tax expense of RMB1.63 billion relating to the one-off investment gain recognized by Shan Shan Commercial Group, the original holder of the underlying assets on the issuance of a commercial REIT. The second one is an accrued withholding tax expenses of RMB1.56 billion, reflecting the withholding tax payments of historical dividend distributions from mainland China to Hong Kong regarding applicable policies on tax treaty benefits. Excluding the tax impact of this dispute and non-operating items, the company's normalized effective tax rate for Q2 2026 remained stable year-over-year. Here, I would like to emphasize that our company has always operated and it continues to operate in full compliance with applicable tax laws and regulatory guidelines. The withholding tax adjustment reflects adjustment of historical dividend distributions and expected to be settled in Q3.

Speaker #2: The original holder of the underlying assets. On the issuance of commercial rates, and the second one is an accrued withholding tax expense of RMB 1.56 billion, reflecting the withholding tax treatments of historical dividend distributions from Mainland China to Hong Kong regarding ethical policies on tax treaty benefits. Excluding the tax impact of this discretion and non-operating items, the company's normalized effective tax rate for the second quarter of 2026 remains stable year over year.

Mark Wang: Excluding the tax impact of this dispute and non-operating items, the company's normalized effective tax rate for Q2 2026 remained stable year-over-year. Here, I would like to emphasize that our company has always operated and it continues to operate in full compliance with applicable tax laws and regulatory guidelines. The withholding tax adjustment reflects adjustment of historical dividend distributions and expected to be settled in Q3.

Speaker #2: Here, I would like to emphasize that our company has always operated, and continues to operate, in full compliance with applicable tax laws and regulatory guidelines.

Speaker #2: The withholding tax adjustments reflect adjustments on historical dividend distributions and are expected to be cycled in the third quarter. Going forward, the company will continue to accrue dividend withholding tax at the statutory rate for any unshared earnings allocated while shared repatriation.

Mark Wang: Going forward, the company will continue to accrue dividend withholding tax at a statutory rate for any onshore earnings allocated for offshore repatriation. While this will increase the cost of direct onshore to offshore equity remittance, we view tax repatriation as one tool in our broader capital structure toolkit. Net income attributable to Vipshop shareholders increased by 189.1% year-over-year to RMB4.3 billion from RMB1.6 billion in the prior year period, primarily due to a one-off investment gain of RMB5.79 billion from the listing of a commercial REIT. Net margin attributable to Vipshop shareholders increased to 17.4%, from 5.8% in the prior year period. Net income attributable to Vipshop shareholders per diluted ADS increased to RMB8.82 from RMB2.91 in the prior year period. Non-GAAP net income attributable to Vipshop shareholders was RMB392.2 million, compared with RMB2.1 billion in the prior year period.

Speaker #2: While this will increase the cost of direct, unshared, offshore equity remittance, we view cash repatriation as one tool in our broader capital structure toolkit. Net income attributable to Vipshop shareholders increased by 189.1% year over year to RMB 4.3 billion from RMB 1.5 billion in the prior year period.

Speaker #2: Primarily due to a one-off investment gain of RMB 5.79 billion from the listing, commercial rate net margin attributable to Vipshop shareholders increased to 17.4% from 5.8% in the prior year period.

Mark Wang: Net margin attributable to Vipshop shareholders increased to 17.4%, from 5.8% in the prior year period. Net income attributable to Vipshop shareholders per diluted ADS increased to RMB8.82 from RMB2.91 in the prior year period. Non-GAAP net income attributable to Vipshop shareholders was RMB392.2 million, compared with RMB2.1 billion in the prior year period.

Speaker #2: Net income attributable to Vipshop shareholders per diluted ADS increased to RMB 8.82 from RMB 2.91 in the prior year period. Non-GAAP net income attributable to Vipshop shareholders was RMB 392.2 million, compared with RMB 2.1 billion in the prior year period.

Mark Wang: Non-GAAP net margin attributable to Vipshop shareholders was 1.6%, compared with 8.0% in the prior year period. Non-GAAP net income attributable to Vipshop shareholders per diluted ADS was RMB0.80, compared with RMB4.06 in the prior year period. As of 30 June 2026, the company had cash and cash equivalents and restricted cash of RMB29.9 billion and short-term investments of RMB3.6 billion. Looking forward to Q3 2026, we expect our total net revenues to be between RMB20.3 billion and RMB21.4 billion, representing a year-over-year decrease of approximately 5% to 0%. Please note that this forecast reflects our current and preliminary view of the market and our operational conditions, which is subject to change. With that, I would now like to open the call to Q&A.

Speaker #2: Non-GAAP net margin attributable to Vipshop shareholders was 1.6%, compared with 8.0% in the prior year period. Non-GAAP net income attributable to Vipshop shareholders per diluted ADS was RMB 0.80, compared with RMB 4.06 in the prior year period.

Speaker #2: As of June 30, 2026, the company had cash and cash equivalents and restricted cash of RMB 29.9 billion, and short-term investments of RMB 3.6 billion.

Speaker #2: Looking forward to the third quarter of 2026, we expect our total net revenues to be between RMB 20.3 billion and RMB 21.4 billion, representing a year-over-year decrease of approximately 5% to 0%.

Mark Wang: Looking forward to Q3 2026, we expect our total net revenues to be between RMB20.3 billion and RMB21.4 billion, representing a year-over-year decrease of approximately 5% to 0%. Please note that this forecast reflects our current and preliminary view of the market and our operational conditions, which is subject to change. With that, I would now like to open the call to Q&A.

Speaker #2: Please note that this forecast reflects our current and preliminary view of the market and operational conditions, which is subject to change. With that, I would now like to open the call to Q&A.

Speaker #1: Thank you. We will now begin the question-and-answer session. To ask a question, please press star one one and wait for your name to be announced.

Operator: Thank you. We will now begin the question and answer session. To ask a question, please press *11 and wait for your name to be announced. If you wish to ask the management your questions in English, kindly translate them in Chinese. One moment for our first question. The first questions will come from the line of Thomas Chong of Jefferies. Please go ahead.

Speaker #1: If you wish to ask the management your questions in English, kindly translate them into Chinese. One moment for our first question. The first questions will come from the line of Thomas Chung of Jefferies.

Speaker #1: Please go ahead.

Thomas Chong: Hi. Good evening. Thanks management for taking my question. My question is about the consumer sentiment. Can management comment about how we are seeing the sentiment so far? On that front, can you comment about the monthly revenue trend that we are seeing since April till now? Given that we are already two months in the quarter, are we actually seeing our revenue hitting the low end or the high end of the guidance? Finally, can management comment about the H2 outlook? Thank you.

Speaker #3: Hi, good evening. Thanks, management, for taking my question. My question is about consumer sentiment. Can management comment on how we are seeing sentiment so far? And on that front, can you comment on the monthly revenue trend that we are seeing since April until now?

Speaker #3: Given that we are already about two months into the quarter, are we actually seeing our revenue hitting the low end or the high end of the guidance?

Speaker #3: And finally, could management comment about the second half outlook? Thank you. 谢谢管理层接收我的提问。我的问题是关于最近一段时间我们看到整体的消费情势有没有发生什么很大的改变。另外的话，我们从7月份到现在差不多已经有两个月的时间。想问一下，我们看我们的收入指引大概会是在低端还是高端的区间？然后最后的话，我想问一下我们怎么看整体下半年的展望。谢谢。

Speaker #2: 好。我来回答就是第一个就是整体我们看消费的整体的情绪。那么消费者的整体的消费情绪不算高涨。那么我们现在也觉得其实中国的消费者也不是当年什么都买乱买一通的。那么就是有价值的他就买，没价值的就不买。那么能少一点花钱，能少一点花钱。所以说这个是目前我们看到的整个消费的现状。那么另外就是关于如果看我们Q3的话，七八月份那么那个我们看到七八月的情况比6月份会稍微好一些。那么但也没有好到哪里去。那么所以说我们其实看那个我们预计在七八月包括下半年我们认为其实整体的消费跟过去会差不了很多。那么所以说我们自己对我们自己的整个全年的包括下半年的整体的预估我们认为我们估计不会比跟去年比应该会微微跌一点吧。

Speaker #4: Okay. In terms of the general consumer sentiment, we find consumers are not particularly enthusiastic. They are actually not buying into everything. They are very value-seeking and they are very budget-conscious.

Jessie Zheng: Okay. In terms of the general consumer sentiment, we find consumers are not particularly enthusiastic. They are actually not buying into everything. They are very value-seeking, and they are very budget-conscious, and they are very selective. As we enter into Q3, across our sector, we continue to observe pressure. Quarter to date from July to August, we do see some recovery in terms of sales momentum, but it is only slightly better. It is far from being good. That is why we think that for the H2 and for the full year, we may see a similar consumer sentiment as we have seen in the H1. That will bring our total revenue for the full year to be slightly negative from last year.

Speaker #4: And they're very selective. So, as we enter into Q3, across our sector, we continue to observe pressure. Quarter-to-date, from July to August, we do see some recovery in terms of sales momentum.

Jessie Zheng: Quarter to date from July to August, we do see some recovery in terms of sales momentum, but it is only slightly better. It is far from being good. That is why we think that for the H2 and for the full year, we may see a similar consumer sentiment as we have seen in the H1. That will bring our total revenue for the full year to be slightly negative from last year.

Speaker #4: But it's only slightly better—it's far from being good. So that's why we think that for the second half, and for the full year, we may see similar consumer sentiment as we have seen in the first half.

Speaker #4: That will bring our total revenue for the full year to be slightly negative compared to last year.

Speaker #3: 谢谢。

Speaker #1: Questions. Please hold for our next question. Our next questions will come from the line of Alicia Yap of Citigroup. Please go ahead.

Operator: Please hold for our next question. Our next questions will come from the line of Alicia Yap of Citigroup. Please go ahead.

Alicia Yap: Hello, thank you. 王禹诚, 晚上好, 谢谢接受我的提问. 我先用中文问一下. 我想请教一下, 因为我看到我们二季度整体的营业利润率是否从一个同比有一个下降的趋势. 我们应该如何看待第三季度跟第四季度的毛利率, 运营的支出, 还有营业利润率的趋势? 能够跟我们量化一下吗? 我自己翻译一下. Thanks management for taking my questions. I have a question on the operating income. We notice that it seems that the operating margin seems to be declining on a year-over-year trend. How should we be thinking about the gross margins, operating expenses, and also operating margin trend for the Q3 and the Q4? Thank you.

Speaker #5: Hello. Thank you. 管理层晚上好。谢谢接受我的提问。我先用中文问一下。我想请教一下因为我看到我们二季度其实整体的这个营业利润率是否从一个同比其实有一个下降的这个趋势。我们应该如何看待第三季度跟四季度的这个毛利率运营的支出还有这个营业利润率的这个趋势。能够跟我们量化一下吗？我自己翻译一下。 Thanks, management, for taking my questions. I have a questions on the operating income. We noticed that it seems that there is a you know the operating margin seems to be declining on a year over year trend.

[Translator]: Thanks management for taking my questions. I have a question on the operating income. We notice that it seems that the operating margin seems to be declining on a year-over-year trend. How should we be thinking about the gross margins, operating expenses, and also operating margin trend for the Q3 and the Q4? Thank you.

Speaker #5: How should we be thinking about the gross margins, operating expenses, and also the operating margin trend for the third quarter and the fourth quarter? Thank you.

Speaker #2: 那个我回答一下就是看到Q2的经营利润利润率其实比去年会少了一些。那么我们其实主要是因为退聚率我说每年会持续上升嘛。那么导致我们的仓储费用会比过去会增加一些。那么整体我们自己在前端没有做没有太大的变化。比如说我们的毛利率其实应该跟过去持平甚至可以微增的。那么另外就是有可能是包括我们的生意如果是负了。那么我们的那个所有的什么人员费用 total 这些其实会我们说的这个会占消耗会比较大。所以说总体我们认为运营的利润率那么目前等于没有就是说没有什么意外。只是说是这两个方面的影响。那么另外最另外在整体我们说的在未来的Q3期Q4的利润方面我们其实还是有信心的。包括我们其实这么外面其实搞补贴搞了很多。那么我们其实从来也不补贴。那么我们认为说那个我们说的就是说还是把健康的利润做好。那么包括企业要健康的发展。那么所以说我们自己认为在Q3 Q4我们说那么能跟过去的这种叫每个季度的净利润率那个我们认为其实会做的都会差不多。不会有什么太大的变化。

Eric Ya Shen: 我回答一下，看到Q2的经营利润率其实比去年会少了一些。我们主要是因为退货率，我说每年会持续上升，导致我们的仓储费用会比过去增加一些。整体我们自己在前端没有太大的变化，比如说我们的毛利率其实应该跟过去持平，甚至可以微增的。另外有可能是包括我们的生意如果是负了，我们的所有的人员费用，这些，我们说的这个消耗会比较大。所以总体我们认为运营的利润率目前等于没有什么意外，只是说是这两个方面的影响。另外，在整体我们说的在未来的Q3及Q4的利润方面，我们其实还是有信心的，包括外面其实搞补贴搞了很多，我们其实从来也不补贴。我们认为还是把健康的利润做好，包括企业要健康地发展。所以我们自己认为在Q3、Q4，能跟过去的这种叫每个季度的净利润率，我们认为其实做的都会差不多，不会有什么太大的变化。

Eric Shen: 我回答一下，看到Q2的经营利润率其实比去年会少了一些。我们主要是因为退货率，我说每年会持续上升，导致我们的仓储费用会比过去增加一些。整体我们自己在前端没有太大的变化，比如说我们的毛利率其实应该跟过去持平，甚至可以微增的。另外有可能是包括我们的生意如果是负了，我们的所有的人员费用，这些，我们说的这个消耗会比较大。所以总体我们认为运营的利润率目前等于没有什么意外，只是说是这两个方面的影响。另外，在整体我们说的在未来的Q3及Q4的利润方面，我们其实还是有信心的，包括外面其实搞补贴搞了很多，我们其实从来也不补贴。我们认为还是把健康的利润做好，包括企业要健康地发展。所以我们自己认为在Q3、Q4，能跟过去的这种叫每个季度的净利润率，我们认为其实做的都会差不多，不会有什么太大的变化。

Speaker #4: On margins, in terms of operating margin, we do see a slight decline year over year for Q2. That's primarily because we see a certain level of deleverage from fulfillment expenses.

Jessie Zheng: Margins, in terms of operating margin, we do see a slight decline year over year for Q2. That is primarily because we see a certain level of deleverage from fulfillment expenses, which is increasing proportionally as return rate are still going up. Actually, when we look at our GP margin, it is flattish and it is even growing, which implies that we have a strong management on managing the growth margins and the growth profits. In addition, we do see a certain operating leverage from fixed cost and expenses as the revenue scale becomes smaller due to macro pressure. But overall, we expect operating margin will continue to be quite resilient given our structural cost and expense discipline. For the H2, for Q3 and Q4, we are pretty confident in managing the structural health of our business.

[Translator]: Margins, in terms of operating margin, we do see a slight decline year over year for Q2. That is primarily because we see a certain level of deleverage from fulfillment expenses, which is increasing proportionally as return rate are still going up. Actually, when we look at our GP margin, it is flattish and it is even growing, which implies that we have a strong management on managing the growth margins and the growth profits.

Speaker #4: Which is increasing proportionally as return rates are still going up. Actually, when we look at our GP margin, it's flattish and it's even growing.

Speaker #4: Which implies that we have strong management of our gross margin and gross profit. In addition, we are seeing some operating deleverage from fixed costs and expenses.

[Translator]: In addition, we do see a certain operating leverage from fixed cost and expenses as the revenue scale becomes smaller due to macro pressure. But overall, we expect operating margin will continue to be quite resilient given our structural cost and expense discipline. For the H2, for Q3 and Q4, we are pretty confident in managing the structural health of our business.

Speaker #4: As the revenue scale becomes smaller due to macro pressure, overall, we expect operating margin will continue to be quite resilient given our structural cost and expense discipline.

Speaker #4: So for the second half, for Q3 and Q4, we are pretty confident in managing the structural health of our business, and as you look externally, you see a lot of industry players actually investing in unprofitable subsidies. That's not what we are going to do.

Jessie Zheng: And as you look externally, you see a lot of industry players actually investing in unprofitable subsidies. That's not what we are going to do. Our focus remains steadfastly on maintaining a healthy level of profitability and margin. So we do expect our margins, especially the NP margins, will remain relatively stable for H2.

[Translator]: And as you look externally, you see a lot of industry players actually investing in unprofitable subsidies. That's not what we are going to do. Our focus remains steadfastly on maintaining a healthy level of profitability and margin. So we do expect our margins, especially the NP margins, will remain relatively stable for H2.

Speaker #4: Our focus remains steadfastly on maintaining a healthy level of profitability and margins. So we do expect our margins, especially the MP margins, will remain relatively stable for the second half.

Alicia Yap: Thank you.

Speaker #5: Thank you.

Speaker #1: Questions. Please hold for our next question. The next questions will come from the line of Vicki Wu of CICC. Your line is open.

Operator: Please hold for our next question. The next questions will come from the line of Vicky Wu of CICC. Your line is open.

Speaker #5: 感谢管理层接受我的提问。看到这次 withholding tax 也稍微解释了一下。我这边想再问一下这个更具体的一些原因。这是否涉及到类似税务机关对于公司的处罚？长期来看，对公司未来净利润率的预测会有什么影响？以及对于股份回购或不同计划会有什么影响吗？那我自己来翻译一下：We've noticed an adjustment regarding the withholding tax this quarter. Could management elaborate more on the reasons for this, and is this a result of a penalty imposed by the tax authority?

Vicky Wu: 感谢管理层接受我的提问。看到这次withholding tax其实有一个比较大的调整项，刚刚其实Mark也稍微解释了一下，这边想再问一下更具体的一些原因，是否涉及到一些类似税务机关对于公司的处罚？然后长期来看的话，对公司未来的经营利润率的预测会有一些什么影响？以及对于股份回购以及分红计划会有一些什么影响吗？那我自己来翻译一下。We've noticed an adjustment regarding the withholding tax this quarter.

[Translator]: We've noticed an adjustment regarding the withholding tax this quarter. Could management elaborate more on the reasons for this and is this a result of a penalty imposed by the tax authority? Looking ahead, will this affect your plans for share buybacks and dividend payouts? Thank you.

Vicky Wu: Could management elaborate more on the reasons for this and is this a result of a penalty imposed by the tax authority? Looking ahead, will this affect your plans for share buybacks and dividend payouts? Thank you.

Speaker #5: Looking ahead, will this affect your plans for share buybacks and dividend payouts? Thank you.

Speaker #3: Okay. Thanks for your question. And then Mark. First of all, this is an absolute losing not is not a penalty. And the company is and has always been in full compliance with applicable tax laws.

Mark Wang: Okay, thanks for your question. Mark, first of all, this is an absolute losing, is not a penalty. The company is and has always been in full compliance with applicable tax laws and regulatory guidelines. This adjustment represents a prudent step in the company's continuous enhancement of its compliance framework. Through a proactive reassessment aligned with prevailing best practice, we are mitigating compliance risk and providing greater tax certainty. This is not a compliance finding or penalty. Withholding tax on dividends is a transaction cost associated with capital mobility, not an operational expense. Our operating margin and pre-tax cash flows remain fully intact. The company maintains multiple avenues to optimize offshore liquidity, and cash repatriation is just one of them. Accordingly, we anticipate any impact on our future net margin to be minimal. The company remains fully committed to our long-term shareholder return promise.

Speaker #3: And the regulatory guidelines. This adjustment represents a prudent step in the company's continuous enhancement of its compliance framework. Through a proactive reassessment aligned with prevailing best practices, we are mitigating compliance risk.

Speaker #3: And providing greater tax certainty. This is not a compliance funding or...

Speaker #1: Penalty and the withholding tax on dividend is a transaction cost associated with capital mobility, not an operational expense. All core operating margin in the pre-tax cash flows remains fully intact.

Mark Wang: Withholding tax on dividends is a transaction cost associated with capital mobility, not an operational expense. Our operating margin and pre-tax cash flows remain fully intact. The company maintains multiple avenues to optimize offshore liquidity, and cash repatriation is just one of them. Accordingly, we anticipate any impact on our future net margin to be minimal. The company remains fully committed to our long-term shareholder return promise. Thank you.

Speaker #1: The company maintains multiple avenues to optimize offshore liquidity and cash. Repatriation is just one of them. Accordingly, we anticipate any impact on our future net margin to be minimal.

Speaker #1: The company remains fully committed to our long-term shareholder return promise. Thank you.

Mark Wang: Thank you.

Speaker #2: Thank you for the questions. Please hold for our next question. The next question will come from the line of Sedona Fong from UBS.

Operator: Thank you for the questions. Please hold for our next question. The next question will come from the line of Sardonna Fong from UBS. Your line is open. Please go ahead.

Speaker #2: Your line is open. Please go ahead.

Speaker #3: Thank you for taking my question . I see one . You Of The I'll translate myself So congrats on the strong . To grow GMV growth performance of over 20% .

Sardonna Fong: Thank you management for taking my question。谢谢管理层接受我们的提问。我想先问一下姗姗奥莱二Q有一个非常强的增长表现，那管理层对于下半年的增长展望会是怎么样？然后随着前两个REIT完成上市之后，后续剩余的奥莱项目的推进节奏会是怎么样的？第三个问题是关于股东回报，看到公司在二Q恢复了回购，并在8月也新增了$10亿的回购计划，我们怎么展望下半年股东回报的水平，还有节奏？I'll translate myself。So congrats on the strong Shan Shan 2Q GMV growth performance of over 20%。What's management outlook for the second half?

[Translator]: I'll translate myself。So congrats on the strong Shan Shan 2Q GMV growth performance of over 20%。What's management outlook for the second half? Now that the two REITs have already completed their listing, what would be the pace of progress on the securitization of the remaining outlet projects that management can share? Lastly, on shareholder return, noted that the company resumed buybacks in Q2 and management also announced a new buyback program in August of USD 1 billion. How should we think about the level and pace of shareholder returns for the H2? Thank you.

Speaker #3: What's the outlook for the second half? And now that the two REITs have already completed their listings, what would be the pace of progress on the securitization of the remaining outlet projects that management can share?

Sardonna Fong: Now that the two REITs have already completed their listing, what would be the pace of progress on the securitization of the remaining outlet projects that management can share? Lastly, on shareholder return, noted that the company resumed buybacks in Q2 and management also announced a new buyback program in August of USD 1 billion. How should we think about the level and pace of shareholder returns for the H2? Thank you.

Speaker #3: And lastly, on shareholder return, I noted that the company resumed buybacks in the second quarter, and management also announced a new buyback program in August of $1 billion US.

Speaker #3: How should we think about the level and pace of shareholder returns for the second half? Thank you.

Eric Ya Shen: 对，我先回答第一个问题，然后Mark回答第二个问题。第一个问题就是姗姗，我们看到它的增长趋势都不错，整体Q1其实还更好，因为我们说的在中国的整个大消费环境里，Q1其实还算不错的，那么Q2增长也可以。所以说Q1、Q2加在一起是20%，我们期望是在Q3、Q4也能实现20%的增长，据我们判断应该是能做得到的。包括我们其实对他们还要求，因为他们有新开门店，如果是同店，过去的门店，我们期望都要有双位数的增长。所以说整体我们对整个姗姗的发展，我们认为还是比较放心的。另外刚刚他有问是不是接下来的REITs计划，是吧？对，包括REITs计划也一样，由Mark来回答。

Eric Shen: 对，我先回答第一个问题，然后Mark回答第二个问题。第一个问题就是姗姗，我们看到它的增长趋势都不错，整体Q1其实还更好，因为我们说的在中国的整个大消费环境里，Q1其实还算不错的，那么Q2增长也可以。所以说Q1、Q2加在一起是20%，我们期望是在Q3、Q4也能实现20%的增长，据我们判断应该是能做得到的。包括我们其实对他们还要求，因为他们有新开门店，如果是同店，过去的门店，我们期望都要有双位数的增长。所以说整体我们对整个姗姗的发展，我们认为还是比较放心的。另外刚刚他有问是不是接下来的REITs计划，是吧？对，包括REITs计划也一样，由Mark来回答。

Speaker #4: For La Nicole. Q2, Women Q1. Q: Thank you, Nicole. You...

Speaker #5: We're quite optimistic about Shenzhen's outlets growth momentum in the first half. Shenzhen outlets grew by over 20% in terms of GMV.

Jessie Zheng: We are quite optimistic about Shan Shan Outlet growth momentum in H1. Shan Shan Outlet grew by over 20% in terms of GMV. Actually, Q1 turned out to be much better, followed by a very decent Q2, given the general soft consumer sentiment today. We continue to expect a similar growth momentum for H2. We do believe that over 20% GMV growth is completely achievable. Actually, we have higher standards for comparable same store sales for the existing Shan Shan Outlets, which we believe will grow at least double digits.

[Translator]: We are quite optimistic about Shan Shan Outlet growth momentum in H1. Shan Shan Outlet grew by over 20% in terms of GMV. Actually, Q1 turned out to be much better, followed by a very decent Q2, given the general soft consumer sentiment today. We continue to expect a similar growth momentum for H2. We do believe that over 20% GMV growth is completely achievable. Actually, we have higher standards for comparable same store sales for the existing Shan Shan Outlets, which we believe will grow at least double digits.

Speaker #5: Actually, the first quarter turned out to be much better, and was followed by a very decent second quarter, given the general soft consumer sentiment today.

Speaker #5: We continue to expect a similar growth momentum for the second half , and we do believe that over 20% GM growth is a competitive a completely achievable and actually , we have higher standards for comparable same store sales for the existing Shenzhen outlets , which we believe will grow at least double digits

Speaker #1: Okay . Mark , let me answer your second and third questions . Your second question is regarding the reached status in the planning Well , on on June 18 , 2026 , we successfully leased our commercial REIT on the Shanghai Stock Exchange and the listing makes a significant strategic milestone for VIP shop .

Mark Wang: Okay, Mark. Let me answer your second and third questions. Your second question is regarding the REIT status in the planning. On 18 June 2026, we successfully listed our commercial REIT on the Shanghai Stock Exchange. The listing makes a significant strategic milestone for Vipshop, expanding our presence from consumer infrastructure REIT into the broader commercial REIT arena. The REIT, with a total of RMB 7.7 billion, making it the largest commercial REIT in terms of the fundraising scale among the first batch of commercial REITs listed on China's capital market. There are two underlying assets, Shan Shan Outlets in Zhengzhou and Harbin, in the commercial REIT. Both are mature outlets, operated for around 10 years. Both outlets hold leading position in their regional markets. The Zhengzhou Outlets is the highest grossing outlet in Henan province, while the Harbin Outlets ranked first in Heilongjiang province.

Speaker #1: Expanding our presence from customers , from consumer infrastructure rates into the broader commercial rate arena and the REIT , with a total of RMB 7.7 billion , making it the largest commercial REIT in terms of the fund scaling , fund raising scale .

Speaker #1: Among the first batch of commercial rates listed on China's capital market, there are two underlying assets: Shenzhen Outlets and Zhongjun Harbin in the commercial REIT. Both are mature outlets, operating for around ten years.

Mark Wang: There are two underlying assets, Shan Shan Outlets in Zhengzhou and Harbin, in the commercial REIT. Both are mature outlets, operated for around 10 years. Both outlets hold leading position in their regional markets. The Zhengzhou Outlets is the highest grossing outlet in Henan province, while the Harbin Outlets ranked first in Heilongjiang province.

Speaker #1: Both outlets hold leading position in their regional markets . The Chengdu Atlas is the highest growth grossing outlet in Hunan Province , while the Harbin outlets ranks first in Longjiang province In addition to the three outlets already used as underlying assets for the REIT issuance , we also hold another 18 outlets projects demonstrating strong potential for future expansion .

Mark Wang: In addition to the three outlets already used as underlying assets for the REIT issuance, we also hold another 18 outlets projects, demonstrating strong potential for future expansion. We will conduct future evaluation based on our strategy and the market conditions. Your third question is regarding the buyback. During the 2021 to 2025, we have already returned $3.7 billion to shareholders. Our long-term returns to shareholder is built on our strong business model and health cash flow. External factors may cause short-term volatility in our business. Our corporation are managed to deliver stable and robust profitability across economic cycles. This strength let us keep providing sustainable returns to our shareholders over time. For 2026, we remain fully committed to our full-year shareholder return policy, which targets total payout ratio of no less than 75% of our 2025 non-GAAP net income.

Speaker #1: We will conduct future evaluation based on our strategy and the market conditions And your third questions regarding the buyback . Well , during the 2021 to 2025 , we have already returned 3.7 billion USD to shareholders .

Speaker #1: Our long-term returns to shareholders are based on our strong business model and healthy cash flow. External factors may cause short-term volatility in our business.

Mark Wang: External factors may cause short-term volatility in our business. Our corporation are managed to deliver stable and robust profitability across economic cycles. This strength let us keep providing sustainable returns to our shareholders over time. For 2026, we remain fully committed to our full-year shareholder return policy, which targets total payout ratio of no less than 75% of our 2025 non-GAAP net income.

Speaker #1: Our corporation are managed to deliver stable and robust profitability across economic cycles . This . Let us keep providing sustainable returns to our shareholders over time For 2026 , we remain fully committed to our full year shareholder return policy , which targets total payout ratio of no less than 75% of our 2025 non-GAAP net income And in first half , we have distributed approximately 400 million USD through dividend and buy back Reflecting the anticipated utilization of our existing authorization , the Board of Directors have approved a new $1 billion share repurchase program .

Mark Wang: In H1, we have distributed approximately $400 million through dividend and buyback. Reflecting the anticipated utilization of our existing authorization, the board of directors have approved a new $1 billion share repurchase program. We will continue the buyback opportunistically in the quarters ahead. Thanks.

Speaker #1: We will continue the backup opportunistically in the quarters ahead. Thanks.

Speaker #3: Thank you .

Jessie Zheng: Thank you.

Sardonna Fong: Thank you.

Speaker #2: Thank you for the questions . Due to time constraints , that concludes today's Q&A session . At this time , I will turn the conference back to Jesse for any closing remarks .

Operator: Thank you for the questions. Due to time constraint, that concludes today's Q&A session. At this time, I will turn the conference back to Jessie for any closing remarks.

Speaker #5: Thank you for taking the time to join us today. If you have any questions, please don't hesitate to contact our IR team.

Jessie Zheng: 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 #5: We look forward to speaking with you next quarter.

Operator: That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.