Earnings call transcript: Vipshop Q2 2025 beats expectations, stock rises

Vipshop Holdings Limited (Market cap: $8.36 billion) reported its Q2 2025 earnings, surpassing expectations with an EPS of 4.06 against a forecast of 3.98. The company’s revenue also slightly exceeded predictions, reaching 25.81 billion yuan. Following the earnings announcement, Vipshop’s stock price rose by 3.67% in pre-market trading, reflecting investor optimism. According to InvestingPro data, the stock is trading near its 52-week high of $17.94, with a robust year-to-date return of 30.48%.

Key Takeaways

• Vipshop’s Q2 2025 EPS and revenue surpassed forecasts.
• Stock price increased by 3.67% following the earnings release.
• The company continues to expand its AI capabilities and exclusive product offerings.
• Revenue and net income showed a year-over-year decline.
• The SVIP loyalty program is contributing significantly to sales growth.

Company Performance

Vipshop’s overall performance in Q2 2025 was marked by a slight decline in revenue and net income compared to the previous year. Despite these declines, the company managed to exceed market expectations for earnings per share and revenue. The e-commerce landscape remains competitive, but Vipshop’s focus on exclusive offerings and customer loyalty has bolstered its position.

Financial Highlights

• Revenue: 25.81 billion yuan, down from 26.9 billion yuan year-over-year.
• Earnings per share: 4.06, compared to a forecast of 3.98.
• Gross profit: 6.1 billion yuan, down from 6.3 billion yuan.
• Gross margin: 23.5%, a slight decrease from 23.6%.

Earnings vs. Forecast

Vipshop’s Q2 2025 earnings per share were 4.06, surpassing the forecast of 3.98 by 2.01%. Revenue also exceeded expectations, coming in at 25.81 billion yuan against a forecast of 25.77 billion yuan. This performance continues the company’s trend of meeting or slightly exceeding market expectations.

Market Reaction

Following the earnings announcement, Vipshop’s stock rose by 3.67%, reaching 16.96 in pre-market trading. The positive market reaction reflects investor confidence in the company’s ability to navigate a competitive e-commerce environment. The stock is currently trading at 17.04, a 0.47% increase in premarket activity, suggesting continued optimism.

Outlook & Guidance

Vipshop provided a cautious yet optimistic outlook for the coming quarters, expecting 0% to 5% year-over-year revenue growth in Q3. The company aims for positive top-line growth in both Q3 and Q4, with a focus on accelerating growth and returning a significant portion of non-GAAP net income to shareholders.

Executive Commentary

CEO Eric Shen emphasized the importance of offering high-quality products at exceptional value, a sentiment echoed by Head of Investor Relations Jessie Xing, who expressed confidence in future sales and revenue growth. CFO Mark Wang highlighted the company’s commitment to investing in business growth and profitability.

Risks and Challenges

• Revenue and net income declines could impact future growth.
• Competitive pressures from quick commerce platforms remain a challenge.
• Slight decreases in gross margin may affect profitability.
• Macroeconomic conditions could impact consumer spending habits.
• Supply chain disruptions pose a potential risk to product availability.

Q&A

Analysts inquired about the impact of quick commerce platforms, to which executives responded that there was no significant effect. Questions also focused on the company’s share buyback program and expansion of the outlet business, both of which were highlighted as strategic priorities.

Full transcript - Vipshop Holdings (VIPS) Q2 2025:

Conference Operator: Ladies and gentlemen, good day, everyone, and welcome to Vipshop Holdings Limited Second Quarter twenty twenty five Earnings Conference Call. At this time, I would like turn the call over to Ms. Jessie Xing, Vipshop’s Head of Investor Relations. Please proceed.

Jessie Xing, Head of Investor Relations, Vipshop Holdings Limited: Thank you, operator. Hello, everyone, and thank you for joining Vipshop’s second quarter twenty twenty five 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 apply to this call to the extent any forward looking statements may be made. Please note that certain financial measures used on this call, such as non GAAP operating income, non GAAP net income attributable to Vipshop shareholders and non GAAP net income per ADS are not presented in accordance with The U. S.

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 Shen.

Eric Shen, Co-Founder, Chairman and CEO, Vipshop Holdings Limited: Good morning and good evening, everyone. Welcome and thank you for joining our second quarter twenty twenty five earnings conference call. In the second quarter, our team acted swiftly to revive customer activities and the sales momentum, driving stabilization in our business. These efforts delivered the measurable progress against our key priorities for renewed growth. Total GMV returned to growth driven by clear strengths in apparel related category, reflecting our refined adjustments in the merchandising portfolio.

Total active customer also showed clear signs of recovery. Super VIP membership sustained its double digit growth. In the second quarter, active SVIP customer increased by 15% year over year contributing 52% of our online spending. This high value custom segment continued to outperform in terms of sales and revenue growth. With the fast moving industry dynamic, we remain anchored to the vision of the discount retail for brands.

We believe at its heart, discount retail for brand is about offering customer beloved brand and the high quality product at exceptional value. While the execution many innovate, The fundamentals stay true, great brand, great quality and great value. To achieve this, we are making change to shopping our merchandising strategy, which is key to deliver unique compelling value to brand partners and customers. We are relying our merchandising team to better capitalize our own evolving customer trends and the lifestyles while enhancing cross category synergies. Operationally, we are taking a more holistic approach to plan and manage our brand and the customer interactions to maximize platform wide value creations.

We will also unify the marketing, customer growth and engagements efforts to advance customer value through each life cycle stage across customer segments. We hope these initiatives will inject great agility and efficiency into our business model creating a self reinforcing flywheel that advanced our growth priority from merchandising operations to customer engagement. So start with merchandising, we are pursuing a path that is unique VIP shop. We focus on the three pillars of our merchandising strategy, relevancy, differentiation and specialization in the competitive environment. We’re standing out by consistently offering customer high value brands that they love, exclusive made for VIP shops, customized the product and carefully curated portfolio of highly sought after items.

In the meantime, we keep up with new trends, new styles and innovative fabrics and the materials in each category. This ensures a steady and sustainable inflow of inventory that aligns with shifting customer demand. In the first half, we added close to 500 brands to our platform, which are gaining traction among customers. The made for VIP shop line is a key part of our differentiation. It’s delivering a more compelling brand of the quality and the value that results in high value customers, repeat purchase and the best conversions.

In the second quarter, it maintained strong sales momentum contributing a meaningful portfolio of our apparel sales for many brands. This customized product accounting for more than 20% of their sales on our platform. In the second quarter, we added more high fashion selections, achieving improved sales loop. We saw growing customer recognitions of our platform as the go to place for fresh sale and the treasure huntings leveraging our global sales capabilities. We will have the steadily stream of differentiated item that flows into our assortment, so that shoppers always have something to discover as they come back.

For our customers, we continue to create a unique experience that not only reinforces the affordability and the reliability they love, but also inspire them to discover the value and the freshness we offer. This is coming from optimized traffic allocation along with the customer journey enhanced through improved search and the recommendations for both existing and the new offerings. A good example of our customer centric approach is the SVIP loyalty program. In the second quarter, we upgrade our private sales for SVIP member offering high allowed branded products to create a great sense of exclusive and delight. We expect the loyalty program to deliver a more differentiated and personalized experience for our top tier customers.

Lastly, we continue to develop and leverage AI capabilities as part as our overall technology advancement to drive growth and efficiency. We are deepening collaboration with business team to expand AI application cases and deliver measurable results. We speak promising early traction across our AI initiatives. AI generated reviews and the Q and A are contributing to enhance customer journey. AI driven per sales support is showing initiative benefits to commissions and the issue resolution.

Besides AI powered marketing contents are demonstrate effective reach to potential customers. Despite near team challenges, we are investing in multiple ways to grow share across our merchandising portfolio and the customer segments. Our roadmap for sustainable the profitable growth in the long term relies on the consistent and the collaborative execution every day. It stay true to who we are always being while adapting to involving trends, enhancing our capabilities and always thinking about our unique role in retail for today’s customers. At this point, let me hand over the call to our CFO, Mark Wang to go over our financial results.

Mark Wang, CFO, Vipshop Holdings Limited: Thanks Eric and hello everyone. We have delivered another quarter of healthy profitability with margins hold up, well as we moved at pace to stabilize the business. This underscores our team’s consistent financial discipline yet dynamic operating environment. During the quarter, we prioritize investments in growth initiatives related to customer engagement and the merchandising categories where we saw good momentum. We were more agile to dynamically reallocate resources in response to more productive activities that really helped the business grow at a profit.

As Eric indicated, through a series of organized organizational change, we have fully enhanced strategic clarity and execution speed across company. Though we are early on our journey, these actions are building tangible traction, enabling us to position the business for return to sustainable profitable growth in the quarters ahead. Furthermore, we are formally on track to deliver our shareholder return commitment for 2025, which is no less than 75% of the RMB9 billion full year 2024 non GAAP net income. In the first half, we distributed a total of over US640 million dollars through a combination of dividend payments and a share buyback, reflecting both our robust cash flow generation and the conviction in the company’s fundamental value and a growth prospect. 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 and all tend to change a year over year change, unless otherwise noted. Total net revenues for the 2025 were RMB 25.8 billion compared with RMB26.9 billion in the prior year period. Gross profit was RMB6.1 billion compared with RMB6.3 billion in the prior year period. Gross margin was 23.5% compared with 23.6% in the prior year period. Total operating expenses increased by 6.3% year over year to RMB4.6 billion from RMB4.3 billion in the prior year period.

As a percentage of total net revenues, total operating expenses were 17.7% compared with 16% in the prior year period. Fulfillment expenses decreased by 2.6% year over year to RMB2.1 billion from RMB2.2 billion in the prior year period. As a percentage of TotalNet revenues, fulfillment expenses were 8.2% compared with 8.1% in the prior year period. Marketing expenses decreased by 3.3% year over year to RMB 715,900,000.0 from RMB 740,700,000.0 in the prior year period. As a percentage of Sonar revenues, marketing expenses were 2.8%, which remained stable as compared with that in the prior year period.

Technology and content trends decreased by 9.3% year over year to RMB442.0 million from RMB487.2 million in the prior year period. As a percentage of total net revenues, technology and content expenses were 1.7% compared with 1.8% in the prior year period. General and administrative expenses were RMB1.3 billion compared with RMB900.7 million in the prior year period, primarily reflecting an increase in the share based compensation expenses for Shenzhen analysts. As a percentage of total net revenues, general and administrative expenses were 5% compared with 3.4% in the prior year period. Income from operations was RMB1.7 billion compared with RMB2.2 billion in the prior year period.

Operating margin was 6.6% compared with 8.3% in the prior year period. Non GAAP income from operations was RMB2.4 billion compared with RMB2.6 billion in the prior year period. Non GAAP operating margin was 9.3% compared with 9.5% in the prior year period. Net income attributable to Viipshop shareholders was RMB1.5 billion compared with RMB1.9 billion in the prior year period. Net margin attributable to Gravity Shop’s shareholders was 5.8% compared with 7.2% in the prior year period.

Net income attributable to VIBShop shareholders per diluted ADS was RMB2.91 compared with RMB3.49 in the prior year period. Non GAAP net income attributable to VIP shops shareholders was RMB2.1 billion compared with RMB2.2 billion in the prior year period. Non GAAP net margin attributable to Vipshop shareholders was 8% compared with 8.1% in the prior year period. Non GAAP net income attributable to Verbuchop’s shareholders per diluted ADS was RMB4.06 compared with RMB3.91 in the prior year period. As of 06/30/2025, the company had cash and cash equivalents and restricted cash of RMB24.7 billion, the short term investments of RMB3.0 billion.

Looking forward to 2025, we expect our total net revenues to be between RMB20.7 billion and RMB21.7 billion, representing a year over year increase of approximately 0% to 5%. 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 and A.

Conference Operator: Thank you. And to withdraw your question, please press again. We do ask you to translate your question into Chinese if you are bilingual. Please give us one moment to compile the Q and A roster. And the first question comes from Alicia Yap with Citigroup.

Your line is now open.

Jessie Xing, Head of Investor Relations, Vipshop Holdings Limited: Thanks management for taking my question. My first question is about the late pace ecommerce competition. Understand that there is very limit limited overlap, but curious to get management’s view whether the recent setup initiatives of quick commerce by other ecommerce platforms have any impact on VIP shop? Have you seen any change of purchasing frequency declining or budget spend coming down by your customers? My second question is about the weather.

So given the risk recent uncertainty of weather condition with heavy rain and flood in many areas of China, has that affected the apparel items purchasing demand for the summer clothing? Thank you. Thank you. Alicia, thank you for your question. So on the potential impact from instant or quick e commerce, we don’t see any material impact on our business.

We are very much focused on apparel sales and just a small portion of our business is standardized items, which are more suitable for quicker delivery, especially when customers see they can get most of the very essentials within half an hour delivery, may choose to shop on quick e commerce through quick e commerce. But overall, we don’t see any meaningful impact on our business so far. And on customer behavior, there could be some change, but at the end of the day, it depends on the quality and pricing of the offerings, especially in standardized items. Weather conditions, also we don’t see very meaningful impact despite volatile weather conditions across many regions in China, whether it’s rain or flood, we don’t see very much impact on people’s outing travel plans or apparel purchases. And we look at the data across different tiers of cities and we don’t see any abnormalities with regard to their travel or apparel shopping activities.

Mark Wang, CFO, Vipshop Holdings Limited: Thank you.

Conference Operator: And the next question comes from Andre Chang with JPMorgan. Your line is open.

Andre Chang, Analyst, JPMorgan: Thank you management for taking my question. My first question is about the third quarter revenue guidance returning to positive year on year. I want to understand whether there’s any comparison effect that helping the year on year growth, or we are back to growth trajectory again, suggesting that the company will maintain positive growth in the coming quarters? My second question is about their share repurchase. The company bought back nearly US350 million dollars in the second quarter, which is the highest in two years.

I wonder if there’s any reason for such a strong jump of buyback and should we expect such a momentum to continue into second half this year given the management’s commitment in terms of shareholder return for 2025? Thank you.

Jessie Xing, Head of Investor Relations, Vipshop Holdings Limited: So Andrew, on your first question on Q3 guidance, we guide for top line growth at 0% to 5%. And we attribute these positive momentum to the efforts that we have made in the last few quarters. We’ve made a lot of organization changes and adjustments in terms of merchandising and operation, so that we actually have started to see there are clear recovery in terms of customer growth. Total active customers actually have returned to growth so far year over year, especially we have seen new customers, which have been struggled for a few quarters, have returned to growth as well. If customers start to regrow and naturally, we are more confident about sales and revenue growth.

So we actually and also on merchandising side, we’ve been talking a lot about providing more consumer relevant and differentiated offerings, especially to provide them with more items at a competitive pricing. So we’ve done a lot of optimization on the merchandising front as well. So that’s why we guide a positive top line growth for Q3. And we don’t think there is any material base effect for Q3. And for Q4, we also want to see a positive growth in terms of top line.

And but Q3, admittedly, we actually had a high base in 2024. We actually benefited to some extent from the long streak of cold weather conditions. But overall, are confident that we can maintain growth for the quarters ahead. And we are looking to accelerate the growth in the foreseeable future after we see our recent changes and adjustments materialize into real growth engines.

Mark Wang, CFO, Vipshop Holdings Limited: Okay, regarding your second question, thanks for your question regarding the program. And actually there is no special reason for increasing the amount of the share share buyback in the second quarter. We just committed to return that to our shareholders continuously. As you may aware that we have mentioned before, we are going to return no less than 75% of our full year 2024 non GAAP net income to shareholders in discretionary share repurchase or dividend distributions. Actually that’s the money almost around $900,000,000 So we just committed to return value to our shareholders and we will continue to invest in our business growth and improving profit and generating cash to support our dividend payout and the buyback.

Thank you.

Conference Operator: The next question comes from Wei Sheng with UBS. Your line is open.

Wei Sheng, Analyst, UBS: Thank you, management, for taking my question. First, we noticed the relatively stable gap between GMV and the revenue this quarter. I’m just wondering, could management share any latest trend regarding the return rate on our platform? Do we see any further room to improvement to narrow this gap going forward? That gap might widen a little bit considering the very healthy growth of SEIP users in the second half of the year?

And secondly, on the other revenue side, could management share the latest progress and revenue and profit trends for Shenzhen outlet business as well as some strategic planning and outlook for next year? Thank you.

Jessie Xing, Head of Investor Relations, Vipshop Holdings Limited: Thank you, Xiong Wei. On your first question, in terms of return rate, we actually see no surprise as regard to return rate. For years, we have seen some relatively stable return from customer behavior. It’s just that our SVIP customers are growing very nicely at double digits. So we potentially will look at two to three percentage points increase every year in terms of return rate due to the structural factor, but it will be smoothed out on a quarterly basis, which we do believe that at some point, we will see a flattish return rate quarter by quarter.

The second question on Shenzhen outlets, we have seen a very good momentum in terms of Shenzhen outlets. We have a total of 20 stores for now. And the comparable same store growth maintained at double digits for several quarters. And we continue to look for the right cities or locations to expand our outlet business, given the fact that the outlet industry is actually prospering in China and are actually riding on the tailing of value for money consumption. And we do believe that there are still a decent amount of cities or locations that are suitable for outlet expansion.

And we intend to build the outlet business as part of our strategic and long term asset.

Conference Operator: I show no further questions at this time. I will turn the conference back to Jessie for any closing remarks.

Jessie Xing, Head of Investor Relations, Vipshop Holdings Limited: 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.

Conference Operator: This concludes today’s conference call. Thank you for participating, and you may now disconnect.

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