Vipshop Reports Unaudited Fourth Quarter and Full Year 2022 Financial Results

Conference Call to Be Held at 7:30 A.M. U.S. Eastern Time on February 23, 2023

GUANGZHOU, China, Feb. 23, 2023 /PRNewswire/ — Vipshop Holdings Limited (NYSE: VIPS), a leading online discount retailer for brands in China (“Vipshop” or the “Company”), today announced its unaudited financial results for the quarter and full year ended December 31, 2022.

Fourth Quarter and Full Year 2022 Highlights

• Total net revenues for the fourth quarter of 2022 were RMB31.8 billion (US$4.6 billion), as compared with RMB34.1 billion in the prior year period. Total net revenues for the full year of 2022 were RMB103.2 billion (US$15.0 billion), as compared with RMB117.1 billion in the prior year.
• GMV^[1] for the fourth quarter of 2022 was RMB54.4 billion, as compared with RMB57.0 billion in the prior year period. GMV for the full year of 2022 was RMB175.2 billion, as compared with RMB191.5 billion in the prior year.
• Gross profit for the fourth quarter of 2022 increased by 2.8% year over year to RMB6.9 billion (US$1.0 billion) from RMB6.7 billion in the prior year period. Gross profit for the full year of 2022 was RMB21.6 billion (US$3.1 billion), as compared with RMB23.1 billion in the prior year.
• Net income attributable to Vipshop’s shareholders for the fourth quarter of 2022 increased by 57.9% year over year to RMB2.2 billion (US$323.9 million) from RMB1.4 billion in the prior year period. Net income attributable to Vipshop’s shareholders for the full year of 2022 increased by 34.6% year over year to RMB6.3 billion (US$913.2 million) from RMB4.7 billion in the prior year.
• Non-GAAP net income attributable to Vipshop’s shareholders^[2] for the fourth quarter of 2022 increased by 23.9% year over year to RMB2.2 billion (US$323.5 million) from RMB1.8 billion in the prior year period. Non-GAAP net income attributable to Vipshop’s shareholders for the full year of 2022 increased by 13.7% year over year to RMB6.8 billion (US$991.3 million) from RMB6.0 billion in the prior year.
• The number of active customers^[3] for the fourth quarter of 2022 was 47.7 million, as compared with 49.2 million in the prior year period. The number of active customers for the full year of 2022 was 84.8 million, as compared with 93.9 million in the prior year.
• Total orders^[4] for the fourth quarter of 2022 increased to 218.5 million from 216.9 million in the prior year period. Total orders for the full year of 2022 were 739.5 million, as compared with 786.6 million in the prior year.

Mr. Eric Shen, Chairman and Chief Executive Officer of Vipshop, stated, “We had another quarter of strong earnings to finish off an extremely challenging year. Our business fundamentals are now stronger with the capabilities that we have built in merchandising, operations, and technologies in the past year. We have gained momentum with brand partners, securing a consistent flow of quality merchandise at exceptional values to our platform. We have won loyalty from customers, growing the high-value customer base all year long. And we have stepped up efforts in sustainability that benefits all stakeholders. Our sharp execution in 2022 gives us confidence as we look ahead for the post-pandemic opportunities. We believe that we are now in a healthier position than before to achieve both growth and profitability.”

Mr. David Cui, Chief Financial Officer of Vipshop, further commented, “We are pleased to deliver the most profitable quarter in the past two years as we continued with topline recovery. For the full year, we achieved record-high net income with solid margin expansion through consistent efforts to optimize operating efficiency. In addition, we remain committed to delivering value to our shareholders, with a total of US$952 million of ADSs repurchased under our share buyback programs throughout 2022. Looking ahead into 2023, we are confident about regaining growth while sustaining healthy profitability.”  

Fourth Quarter 2022 Financial Results

REVENUES

Total net revenues for the fourth quarter of 2022 were RMB31.8 billion (US$4.6 billion), as compared with RMB34.1 billion in the prior year period, primarily attributable to short-term disruptions on economic activities from the surge of COVID-19 infections nationwide.

GROSS PROFIT

Gross profit for the fourth quarter of 2022 increased by 2.8% year over year to RMB6.9 billion (US$1.0 billion) from RMB6.7 billion in the prior year period. Gross margin for the fourth quarter of 2022 increased to 21.7% from 19.7% in the prior year period.

OPERATING EXPENSES

Total operating expenses for the fourth quarter of 2022 decreased by 6.5% year over year to RMB4.6 billion (US$673.9 million) from RMB5.0 billion in the prior year period. As a percentage of total net revenues, total operating expenses for the fourth quarter of 2022 was 14.6%, which stayed flat as compared with the prior year period.

• Fulfillment expenses for the fourth quarter of 2022 were RMB2.2 billion (US$312.8 million), which largely stayed flat as compared with the prior year period. As a percentage of total net revenues, fulfillment expenses for the fourth quarter of 2022 was 6.8%, as compared with 6.4% in the prior year period.
• Marketing expenses for the fourth quarter of 2022 decreased by 17.6% year over year to RMB944.1 million (US$136.9 million) from RMB1.1 billion in the prior year period. As a percentage of total net revenues, marketing expenses for the fourth quarter of 2022 decreased to 3.0% from 3.4% in the prior year period, primarily attributable to more prudent marketing strategy.
• Technology and content expenses for the fourth quarter of 2022 decreased by 7.8% year over year to RMB408.5 million (US$59.2 million) from RMB443.0 million in the prior year period. As a percentage of total net revenues, technology and content expenses for the fourth quarter of 2022 was 1.3%, which stayed flat as compared with the prior year period.
• General and administrative expenses for the fourth quarter of 2022 decreased by 5.2% year over year to RMB1.1 billion (US$165.0 million), as compared with RMB1.2 billion in the prior year period. As a percentage of total net revenues, general and administrative expenses for the fourth quarter of 2022 was 3.6%, as compared with 3.5% in the prior year period.

INCOME FROM OPERATIONS

Income from operations for the fourth quarter of 2022 increased by 37.1% year over year to RMB2.5 billion (US$363.8 million), as compared with RMB1.8 billion in the prior year period. Operating margin for the fourth quarter of 2022 increased to 7.9% from 5.4% in the prior year period.

Non-GAAP income from operations^[5] for the fourth quarter of 2022, which excluded share-based compensation expenses and amortization of intangible assets resulting from business acquisitions, increased by 33.6% year over year to RMB2.8 billion (US$402.2 million) from RMB2.1 billion in the prior year period. Non-GAAP operating income margin^[6] for the fourth quarter of 2022 increased to 8.7% from 6.1% in the prior year period.

NET INCOME

Net income attributable to Vipshop’s shareholders for the fourth quarter of 2022 increased by 57.9% year over year to RMB2.2 billion (US$323.9 million) from RMB1.4 billion in the prior year period. Net margin attributable to Vipshop’s shareholders for the fourth quarter of 2022 increased to 7.0% from 4.1% in the prior year period. Net income attributable to Vipshop’s shareholders per diluted ADS^[7] for the fourth quarter of 2022 increased to RMB3.66 (US$0.53) from RMB2.07 in the prior year period.

Non-GAAP net income attributable to Vipshop’s shareholders for the fourth quarter of 2022, which excluded (i) share-based compensation expenses, (ii) impairment loss of investments, (iii) investment loss (gain) and revaluation of investments excluding dividends, (iv) reconciling items on the share of equity method investments, (v) amortization of intangible assets resulting from business acquisitions, and (vi) tax effects on non-GAAP adjustments, increased by 23.9% year over year to RMB2.2 billion (US$323.5 million) from RMB1.8 billion in the prior year period. Non-GAAP net margin attributable to Vipshop’s shareholders^[8] for the fourth quarter of 2022 increased to 7.0% from 5.3% in the prior year period. Non-GAAP net income attributable to Vipshop’s shareholders per diluted ADS^[9] for the fourth quarter of 2022 increased to RMB3.65 (US$0.53) from RMB2.64 in the prior year period.

For the quarter ended December 31, 2022, the Company’s weighted average number of ADSs used in computing diluted income per ADS was 610,448,180.

BALANCE SHEET AND CASH FLOW

As of December 31, 2022, the Company had cash and cash equivalents and restricted cash of RMB23.1 billion (US$3.3 billion) and short term investments of RMB1.6 billion (US$231.4 million).

For the quarter ended December 31, 2022, net cash generated from operating activities was RMB6.5 billion (US$946.1 million), and free cash flow^[10], a non-GAAP measurement of liquidity, was as follows:

Full Year 2022 Financial Results

Total net revenues for the full year of 2022 were RMB103.2 billion (US$15.0 billion), as compared with RMB117.1 billion in the prior year.

Gross profit for the full year of 2022 was RMB21.6 billion (US$3.1 billion), as compared with RMB23.1 billion in the prior year. Gross margin for the full year of 2022 increased to 21.0% from 19.7% in the prior year.

Income from operations for the full year of 2022 increased by 11.0% year over year to RMB6.2 billion (US$898.5 million) from RMB5.6 billion in the prior year. Operating margin for the full year increased to 6.0% from 4.8% in the prior year.

Non-GAAP income from operations for the full year of 2022, which excluded share-based compensation expenses and amortization of intangible assets resulting from business acquisitions, increased by 12.1% year over year to RMB7.4 billion (US$1.1 billion) from RMB6.6 billion in the prior year. Non-GAAP operating income margin for the full year of 2022 increased to 7.2% from 5.6% in the prior year.

Net income attributable to Vipshop’s shareholders for the full year of 2022 increased by 34.6% year over year to RMB6.3 billion (US$913.2 million) from RMB4.7 billion in the prior year. Net margin attributable to Vipshop’s shareholders for the full year of 2022 increased to 6.1% from 4.0% in the prior year. Net income attributable to Vipshop’s shareholders per diluted ADS for the full year of 2022 increased to RMB9.83 (US$1.43) from RMB6.75 in the prior year.

Non-GAAP net income attributable to Vipshop’s shareholders for the full year of 2022, which excluded (i) share-based compensation expenses, (ii) impairment loss of investments, (iii) investment loss(gain) and revaluation of investments excluding dividends, (iv) reconciling items on the share of equity method investments, (v) amortization of intangible assets resulting from business acquisitions, and (vi) tax effects on non-GAAP adjustments, increased by 13.7% year over year to RMB6.8 billion (US$991.3 million) from RMB6.0 billion in the prior year. Non-GAAP net margin attributable to Vipshop’s shareholders for the full year of 2022 increased to 6.6% from 5.1% in the prior year. Non-GAAP net income attributable to Vipshop’s shareholders per diluted ADS for the full year of 2022 increased to RMB10.67(US$1.55) from RMB8.67 in the prior year.

For the full year of 2022, the Company’s weighted average number of ADSs used in computing diluted earnings per ADS was 640,786,520.

For the full year of 2022, net cash generated from operating activities was RMB10.5 billion (US$1.5 billion), and free cash flow, a non-GAAP measurement of liquidity, was as follows:

Share Repurchase Program

During the quarter ended December 31, 2022, the Company repurchased US$317.9 million of its ADSs under its current US$1 billion share repurchase program, which is effective through March 2024. As of December 31, 2022, the Company has an un-utilized amount of US$247.5 million under this program.

Business Outlook

For the first quarter of 2023, the Company expects its total net revenues to be between RMB25.2 billion and RMB26.5 billion, representing a year-over-year increase of approximately 0% to 5%. These forecasts reflect the Company’s current and preliminary view on the market and operational conditions, which is subject to change.

Exchange Rate

The Company’s business is primarily conducted in China and the significant majority of revenues generated are denominated in Renminbi. This announcement contains currency conversions of Renminbi amounts into U.S. dollars solely for the convenience of the reader. Unless otherwise noted, all translations from Renminbi to U.S. dollars are made at a rate of RMB6.8972 to US$1.00, the effective noon buying rate on December 30, 2022 as set forth in the H.10 statistical release of the Federal Reserve Board. No representation is made that the Renminbi amounts could have been, or could be, converted, realized or settled into U.S. dollars at that rate on December 30, 2022, or at any other rate.

Conference Call Information

The Company will hold a conference call on Thursday, February 23, 2023 at 7:30 am U.S. Eastern Time, 8:30 pm Beijing Time to discuss the financial results.

All participants wishing to join the conference call must pre-register online using the link provided below.

Registration Link: https://register.vevent.com/register/BI6984a3247975465ba30e29f8757ef611

Once pre-registration has been completed, each participant will receive dial-in numbers and a unique access PIN via email. To join the conference, participants should use the dial-in details followed by the PIN code.

A live webcast of the earnings conference call can be accessed at https://edge.media-server.com/mmc/p/wo4ejch9. An archived webcast will be available at the Company’s investor relations website at http://ir.vip.com.

About Vipshop Holdings Limited

Vipshop Holdings Limited is a leading online discount retailer for brands in China. Vipshop offers high quality and popular branded products to consumers throughout China at a significant discount to retail prices. Since it was founded in August 2008, the Company has rapidly built a sizeable and growing base of customers and brand partners. For more information, please visit https://ir.vip.com/.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as Vipshop’s strategic and operational plans, contain forward-looking statements. Vipshop may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Vipshop’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Vipshop’s goals and strategies; Vipshop’s future business development, results of operations and financial condition; the expected growth of the online discount retail market in China; Vipshop’s ability to attract customers and brand partners and further enhance its brand recognition; Vipshop’s expectations regarding needs for and market acceptance of flash sales products and services; competition in the discount retail industry; the potential impact of the COVID-19 to Vipshop’s business operations and the economy in China and elsewhere generally; fluctuations in general economic and business conditions in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Vipshop’s filings with the SEC. All information provided in this press release is as of the date of this press release, and Vipshop does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Use of Non-GAAP Financial Measures

The condensed consolidated financial information is derived from the Company’s unaudited interim condensed consolidated financial statements prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), except that comparative consolidated statements of income and cash flows for the period presented and detailed footnote disclosures required by Accounting Standards Codification 270, Interim Reporting (“ASC270”), have been omitted. Vipshop uses non-GAAP net income attributable to Vipshop’s shareholders, non-GAAP net income attributable to Vipshop’s shareholders per diluted ADS, non-GAAP income from operations, non-GAAP operating income margin, non-GAAP net margin attributable to Vipshop’s shareholders, and free cash flow, each of which is a non-GAAP financial measure. Non-GAAP net income attributable to Vipshop’s shareholders is net income attributable to Vipshop’s shareholders excluding (i) share-based compensation expenses, (ii) impairment loss of investments, (iii) investment loss (gain) and revaluation of investments excluding dividends, (iv) reconciling items on the share of equity method investments, (v) amortization of intangible assets resulting from business acquisitions,and (vi) tax effects on non-GAAP adjustments. Non-GAAP net income attributable to Vipshop’s shareholders per diluted ADS is computed using non-GAAP net income attributable to Vipshop’s shareholders divided by weighted average number of diluted ADS outstanding for computing diluted earnings per ADS. Non-GAAP income from operations is income from operations excluding share-based compensation expenses and amortization of intangible assets resulting from business acquisitions. Non-GAAP operating income margin is non-GAAP income from operations as a percentage of total net revenues. Non-GAAP net margin attributable to Vipshop’s shareholders is non-GAAP net income attributable to Vipshop’s shareholders as a percentage of total net revenues. Free cash flow is net cash from operating activities adding back the impact from internet financing activities and less capital expenditures, which include purchase and deposits of property and equipment and land use rights. Impact from internet financing activities added back or deducted from free cash flow contains changes in the balances of financial products, which are primarily consumer financing and supplier financing that the Company provides to customers and suppliers. The Company believes that separate analysis and exclusion of the non-cash impact of (i) share-based compensation, (ii) impairment loss of investments, (iii) investment loss (gain) and revaluation of investments excluding dividends, (iv) reconciling items on the share of equity method investments, (v) amortization of intangible assets resulting from business acquisitions,and (vi) tax effects on non-GAAP adjustments add clarity to the constituent parts of its performance. The Company reviews these non-GAAP financial measures together with GAAP financial measures to obtain a better understanding of its operating performance. It uses these non-GAAP financial measures for planning, forecasting and measuring results against the forecast. The Company believes that non-GAAP financial measures are useful supplemental information for investors and analysts to assess its operating performance without the effect of (i) share-based compensation expenses, (ii) impairment loss of investments, (iii) investment loss (gain) and revaluation of investments excluding dividends, (iv) reconciling items on the share of equity method investments, (v) amortization of intangible assets resulting from business acquisitions, and (vi) tax effects on non-GAAP adjustments. Free cash flow enables the Company to assess liquidity and cash flow, taking into account the impact from internet financing activities and the financial resources needed for the expansion of fulfillment infrastructure, technology platform and Shan Shan Outlets. Share-based compensation expenses have been and will continue to be significant recurring expenses in its business. However, the use of non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that they do not include all items that impact the Company’s net income for the period. In addition, because non-GAAP financial measures are not measured in the same manner by all companies, they may not be comparable to other similar titled measures used by other companies. One of the key limitations of free cash flow is that it does not represent the residual cash flow available for discretionary expenditures.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned “Vipshop Holdings Limited Reconciliations of GAAP and Non-GAAP Results” at the end of this release.

Investor Relations Contact

Tel: +86 (20) 2233-0732
Email: [email protected]

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