Vipshop adds customers, but margin narrow

Chinese online discount business Vipshop reports rising revenues but narrower margins during the third quarter.

The New York-listed eCommerce player says its total net revenue increased by 38.4 per cent to RMB12 billion (US$1.8 billion), primarily attributable to a 43 per cent year-on-year increase in the number of active customers to 20.8 million and a 34 per cent year-on-year increase in total orders to 60.1 million.

Gross profit increased by 36 per cent to RMB2.93 billion (US$439.7 million) from RMB2.16 billion in the prior year period.

Income from operations increased by 21.3 per cent to RMB528.8 million (US$79.3 million) from RMB436.1 million in the prior year period, but the company’s operating margin fell from 5 per cent last year to 4.4 per cent.

Vipshop’s net income attributable to shareholders increased by 8.3 per cent to RMB342.9 million (US$51.4 million).

“We are pleased to have delivered solid financial results and healthy customer growth despite a seasonally soft quarter for retail,” said Eric Shen, chairman and CEO.

“As a leading online discount retailer for brands in China, we are committed to advancing the end-to-end shopping experience on our platform by providing our customers with diverse products and more personalised merchandising. The superior user experience across our platform led to improved user stickiness, as demonstrated by the strong 49 per cent year-on-year increase in repeat customers to 16.7 million. Despite macro weakness, our robust customer growth and retention is a testament to the resilience of our business model. We are confident that our strong foundation will continue to drive our overall secular business growth and enable us to maintain our market leadership regardless of macro environment changes,” said Shen.

For the fourth quarter of 2016, the company expects its total net revenue to be between RMB18 billion and RMB18.5 billion, representing a year-on-year growth rate of 30 per cent to 33 per cent.