VIPShop reaps rewards from a strong apparel focus
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Chinese discount retailer VIPShop Holdings achieved an 11 percent boost in active customers in the second quarter and a 33-per-cent increase in orders.
The online company now boasts 33.1 million active customers who collectively lodged 147.8 million orders in the three months to June 30.
Net revenue for the quarter increased by 9.7 percent year on year to RMB22.7 billion (US$3.3 billion). GMV rose by 11 percent to RMB35.1 billion and gross profit by 25.9 percent to RMB5.1 billion (US$741.3 million), with net profit attributable to shareholders up 19.3 percent to RMB813.5 million (US$118.5 million).
Chairman and CEO Eric Shen said VIPShop’s decision to refocus on discount apparel had resulted in “substantial improvement in our financial results and key operating metrics”.
“We remain committed to executing on our merchandising strategy and further expanding our market share in China’s discount apparel sector. We are confident that we can continue to deliver steady profitability improvement in the future,” Shen said in a statement.
He added that the strategic acquisition of Shan Shan Outlets would further enhance VIPShop’s ecosystem and allow it to explore opportunities in online-and-offline integration.
Donghao Yang, CFO, said the company will continue to focus on its merchandising strategy, particularly in apparel–related categories, in which the GMV grew by 19 per cent year on year.
“The focus on the high-margin apparel category has and will enable us to deliver continuous improvement in our gross margin and overall profitability. Going forward, we will continue to closely monitor the return on investment from all our businesses, especially that of our investment in offline stores. We aim to achieve a balanced top- and bottom-line growth and are committed to delivering long-term, sustainable shareholder return,” he said.
Questions & Answers
Q.What was the main reason for VIPShop's improved financial results in the second quarter?
What was the main reason for VIPShop's improved financial results in the second quarter?
The company's decision to refocus on discount apparel was cited as the primary driver for substantial improvements in its financial results and key operating metrics during the period.
Q.How did VIPShop's acquisition of Shan Shan Outlets contribute to its strategy?
How did VIPShop's acquisition of Shan Shan Outlets contribute to its strategy?
The acquisition of Shan Shan Outlets is expected to enhance VIPShop's ecosystem. It will also allow the company to explore opportunities in online-and-offline integration, expanding its market reach.
Q.What is the company's long-term goal regarding profitability and shareholder returns?
What is the company's long-term goal regarding profitability and shareholder returns?
VIPShop aims to achieve a balanced top- and bottom-line growth. They are committed to delivering long-term, sustainable shareholder return by focusing on their merchandising strategy and monitoring return on investment.
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