Image source: The Motley Fool.

DATE

Thursday, May 21, 2026 at 7:30 a.m. ET

Call participants

• Chief Executive Officer — Eric Shen
• Chief Financial Officer — Mark Wang
• SVP, Finance — Jessie Fan

Takeaways

• Total net revenues -- RMB 26.6 billion, up 1.2% year over year, impacted by holiday-driven demand concentration.
• Gross profit -- RMB 6.5 billion, representing a 6.8% year-over-year increase.
• Gross margin -- 24.4%, improving from 23.2% in the prior period.
• Total operating expenses -- RMB 4.2 billion, up from RMB 4.0 billion, accounting for 15.7% of revenue versus 15.3% previously.
• Fulfillment expenses -- RMB 2.0 billion, representing 7.7% of revenue compared to 7.2%.
• Marketing expenses -- RMB 719.3 million, down 1.8% year over year, comprising 2.7% of revenue versus 2.8%.
• Technology and content expenses -- RMB 448.2 million, edged down by 0.2% year over year, equating to 1.7% of revenue.
• General and administrative expenses -- RMB 950.5 million, at 3.6% of revenue.
• Income from operations -- RMB 2.5 billion, up 9.7% year over year, with an operating margin rising to 9.4% from 8.7%.
• Non-GAAP operating margin -- 10.2%, an increase from 10.0% year over year.
• Net income attributable to shareholders -- RMB 2.2 billion, up 13.6%, with net margin of 8.3% versus 7.4%.
• Net income per diluted ADS -- RMB 4.48, rising from RMB 3.72.
• Non-GAAP net income attributable to shareholders -- RMB 2.31 billion, flat year over year, with a non-GAAP net margin of 8.7%.
• Non-GAAP net income per diluted ADS -- RMB 4.6, compared to RMB 4.43 a year earlier.
• Cash and cash equivalents plus restricted cash -- RMB 28.3 billion at quarter-end; short-term investments RMB 2.7 billion.
• Active customers -- SVIP members grew by 9% year over year, and now contribute 50%-55% of total online spending.
• Shan Shan Outlets GMV -- Achieved approximately 30% year-over-year growth in gross merchandise value.
• Dividend distribution -- USD 300 million distributed as annual dividend in April.
• Q2 revenue outlook -- Predicted range of RMB 24.5 billion to RMB 25.8 billion, reflecting a year-over-year decrease of approximately 5%-10% to 0%.
• REIT transaction -- Official approval obtained; will result in a GAAP onetime investment gain of about RMB 5.3 billion, with a reported cash inflow of RMB 1.7 billion expected in Q2.
• AI adoption -- Generative AI already providing measurable lift in customer acquisition efficiency and is being scaled for broader operational use.

Need a quote from a Motley Fool analyst? Email [email protected]

Risks

• Management described April and May to date as "very challenging," with continued softness in consumer activity and low visibility for the rest of the quarter.
• Q2 guidance anticipates revenues may decline by 5%-10% year over year, citing muted expectations for industry-wide promotional activity and uncertainties around consumer sentiment.
• Return exchange rates marginally increased, widening the gap between GMV and revenue due to higher apparel returns and increased reliance on commission-based outlet GMV.

Summary

Vipshop Holdings Limited (VIPS 0.10%) implemented targeted merchandising and exclusive buying strategies that contributed to resilient profitability metrics, despite a consequential pull-forward of demand into the Chinese New Year season. Operational execution produced margin improvements and stable financial health, as reflected by notable year-over-year gains in operating and net income, even as topline growth remained modest. The company's offline Shan Shan Outlet segment led with 30% GMV growth, further supported by the successful launch and partial deconsolidation of a commercial REIT, which will deliver a substantial onetime investment gain and incremental cash influx in the next quarter. AI-driven optimizations have already enhanced acquisition efficiency, and management has signaled continued focus on exclusive offerings and higher-tier member engagement to weather a cautious consumer environment. Detailed forward guidance now reflects a conservative stance, explicitly flagging second-quarter revenue risk and considerably reduced market activity after the holiday period.

• The REIT transaction involves deconsolidating two outlet assets, with Vipshop retaining a 49% stake in the vehicle.
• Offline channels are notably outperforming online, especially in categories like footwear and outdoor products; management links this to consumer and brand partner preference shifts as well as seasonal dynamics.
• Net income and margin gains coincided with strict resource allocation, dynamic expense management, and restrained marketing outlays.
• SVIP member activity is now distinctly positioned as the primary growth and loyalty driver, with enhanced benefits and exclusive access distinguishing high-value cohorts.
• Management reiterated commitment to maintaining at least "steady operational performance" for the remainder of the year, despite short-term sector volatility.

Industry glossary

• SVIP: Super VIP; a tier of high-value, paid membership within Vipshop's customer program, providing exclusive benefits and preferential access.
• GMV: Gross merchandise value; the total value of merchandise sold through Vipshop's platforms, excluding returns and cancellations.
• REIT: Real estate investment trust; a securitized investment vehicle that owns, operates, or finances income-producing retail real estate assets such as shopping outlets.

Full Conference Call Transcript

Eric Shen: Good morning, and good evening, everyone. Welcome, and thank you for joining our first quarter 2026 earnings conference call. Our first quarter performance reflected a significant calendar-driven shift caused by the later Chinese New Year. This lead to a successful holiday surge in active that effectively pulled forward demand, resulting in the soft March. What is important to highlight is sustain the health of our customer base. Our holiday results was outstanding, driven by customers who actively sought out our seasonal collection and value promotions. This strength of that demand, especially in apparel confirms that we remain a top priority for their spending and gives us real confidence in their long-term resilience.

Our customer metrics this quarter further prove that resilience. Total active customers showed positive momentum, led by our SVIP members who grew by 9% year-over-year. Their paid members accounting for 50% -- 55% of our online spending. We remain focused on the quality of our growth as we move further into the year. We are making steadily progress in how we optimize merchandising portfolio, engaged with customers and increased AI to reshift our price retail model.

Since realigning our team last year, we are seeing the benefits of the faster, more fluid approach to merchandising by staying focused on customer relevance and deeping category expertise, we will be able to move from market insights to product on shelf more quickly ensure our deep discount brand inventory hits when demand peaks. We are also driven better cross-category engagement as we create our selection along the broad needs of our customers and develop more effective and analytics editing tools for brand partners. We are helping shopper cost tale Hello, Cedar and Home category.

Following our last update, we have transitioned our made 4 VIP line into the new phase of Globe by reading the bar for quality, stick and value. At the same time, we have tightened our planning with brand partners, seasonal challenges to stay in sync with real-time fashion trends. This approach ensures our line up is always created and on trend. Looking ahead, we will continue to involve their exclusive offering into the primary driver of customer mind share and brand loyalty. Building on our optimistic buying strategy, we will successfully speed up our buying cycle. Over the past few months, our teams have locked in a high value of exclusive low-priced inventory that is now flow through the platform.

This has enhanced the treasury and experience for our customers. We are seeing strong daily habits from our high-value shoppers will return more frequency to discover our latest alive. This differentiates merchandising approach likely fit in the strength of our SVIP program by offering exclusive access to privesales and unique inventory. We are driving both member acquisitions and loyalty. A great example is our recent event with a global athletic brands where curated selection deliver a surge in new SPA design apps, particularly among young mall shoppers and sales value many times about the baseline.

In line with the push of high-value engagement, we have shifted towards a more target acquisition model using refined agreeing that identify members with the highest long-term value by replacing genetic benefits with tiered service system, we are directly rewarding higher spending with exclusive product success, deepened discount one-stop customer support and value-added benefits, this will further optimize the conventions and individual spend. These integrated assets ensures the SVIP program remains our primary engine for sustainable revenues and earnings growth. At the pace of the change in retail accelerate, we were excited to embrace the broad opportunities AI offers. Our initial focused on putting the customer first enhancing experiences through virtual try-ons, smart search and recommendations and automated customer support.

We also leveraged AI GC to reach potential customers more effectively with automated content. Having proven this use case, we are now shifting our focus towards scaling their capabilities for great operational impact. For example, we are using generative AI to scale personalized marketing by combined our operational expertise with real-time customer feedback. Our AI marketing agent effectively generally tailored creative across video, photo and tax phones. This has already driven a clear lift in our customer acquisition efficiency.

Beyond the marketing, AI is increasingly empowering our brand partners with advanced business analyst deep customer cohort insights and optimize merchandising strategy by angling our strategy in the off-price model and leveraging best-in-class technology, we have identified more effective ways to serve our customers from dynamic merchandising to the smart supply chain. This allow us to continue earnings customer loyalties through every interaction. We remain committed to investing in our people and our platform. We are confident that by continuously optimize our operational strategies. We were driven steadily profitable growth for the long term. 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. Our latest results landed within our guided range reflecting a dynamic quarter that was heavily influenced by late Chinese New Year. The holiday pyrite triggered a concentrated surge in demand for winter and early spring apparel categories where our merchandise and resonate well with a broader base of consumers. By successfully capturing this big season opportunities, we proved that the effectiveness of our coordinated efforts across merchandising, customer engagement and operations. This operational synergy directly fed into our bottom line. Margins remain healthy and stable, underpinned by highly favorable category mix and our continued operational discipline.

As Eric outlined, we maintained focused strategic investments in our key growth drivers, expanding differentiated merchandise offerings, lifting SVIP's engagement and-- scaling AI integration across our operations. At the same time, we continue to manage our broader resource pool with strict prudence dynamically shifting spend to our most productive activities. This balanced approach ensure we sustain solid baseline profitability by prioritizing high-quality profitable revenue today. Simultaneously, it allows us to systematically strengthen our foundations for the long term. Even as we navigate an uncertain macroeconomic backdrop. Turning to shareholder returns. We remain firmly on track to deliver on our 2026 commitment of returning Nolan 75% of full year 2025 non-GAAP net income to shareholders.

In April, we completed our annual dividend, distributing approximately USD 300 million. For the quarters ahead, we look forward to executing the remaining balance of our shareholder return program. Our free cash flow outlook is robust, and we have the full financial capacity to meet our full year allocation target. Now moving to our detailed quarterly financial highlights. Before I get started, I would like to clarify that all financial numbers presented below in nib and all the percentage changes are year-over-year change unless otherwise noted. Total net revenues for the first quarter of 2026 increased by 1.2% year-over-year to RMB 26.6 billion from RMB 26.3 billion in the prior year period.

Gross profit increased by 6.8% year-over-year to RMB 6.5 billion from RMB 6.1 billion in the prior year period. Gross margin increased to 24.4% from 23.2% in the prior year period. Total operating expenses were RMB 4.2 billion compared with RMB 4.0 billion in the prior year period. As a percentage of total net revenue, total operating expenses was 15.7% compared with 15.3% and in the prior year period. Fulfillment expenses were RMB 2.0 billion compared with RMB 1.9 billion in the prior year period. As a percentage of total net revenues, fulfillment expenses were 7.7% compared with 7.2% in the prior year period.

Marketing expenses decreased by 1.8% year-over-year to RMB 719.3 million for RMB 732.1 million in the prior year period. As a percentage of potent revenues, marketing expenses decreased to 2.7% from 2.8% in the prior year period. Technology and content expenses decreased by 0.2% year-over-year to RMB 448.2 million for RMB 449.1 million in the prior year period. As a percentage of total net revenues, technology and content expenses was 1.7%, which stays slight as compared with that in the prior year period. General and administrative expenses RMB 950.5 million compared with RMB 9050.8 million in the prior year period.

As a percentage of total net revenues, general and administrative expenses were 3.6%, which is light as compared with that in the prior year period. Income from operations increased by 9.7% year-over-year to $2.5 billion from RMB 2.3 billion in the prior year period. Operating margin increased to 9.4% from 8.7% in the prior year period. Non-GAAP income from operations increased by 3.5% year-over-year to RMB 2.7 billion from RMB 2.6 billion in the prior year period. Non-GAAP operating margin increased to 10.2% from 10.0% in the prior year period. Net income attributable to Vipshop's shareholders increased by 13.6% and year-over-year to RMB 2.2 billion from RMB 1.9 billion in the prior year period.

Net margin attributable to SVIP shareholders increased to 8.3% from 7.4% in the prior year period. Net income attributable to Vipshop shareholders per diluted ADS increased to RMB 4.48 from RMB 3.72 in the prior year period. Non-GAAP net income attributable to Vipshop shareholders was RMB 2.31 billion compared with RMB 2.31 billion in the prior year period. Non-GAAP net margin attributable to Vipshop's shareholders was 8.7% compared with 8.8% in the prior year period. Non-GAAP net income attributable to Vipshop's shareholders per diluted ADS increased to RMB 4.6 billion from RMB 4.43 in the prior year.

As of March 31, 2026, we had cash and cash equivalents and restricted cash of RMB 28.3 billion and short-term investments of RMB 2.7 billion. Looking forward to the second quarter of 2026, we expect our total net revenues to be between RMB 24.5 billion and RMB 25.8 billion, representing a year-over-year decrease of approximately 5% to 10% to 0%. Please note that this forecast reflects our current and preliminary of the market and operational conditions, which is subject to change. With that, I would now like to open the call to Q&A.

Operator: [Operator Instructions] We'll now take the first question today. This is from Thomas Chong from Jefferies.

Thomas Chong: [Interpreted] My first question is about the monthly GMV trend. Given that we have seen some softness in industry parcel volume the past few weeks or even last month. So how is our monthly GMV so far? And my second question is relating to June team. How should we think about the rent this year versus last year? And on top of that, how is the consumer sentiment these days that we should think about the outlook for the second half?

Eric Shen: [Foreign Language]

Jessie Fan: [Interpreted] Okay. So we actually started the year on a very strong note. We have seen a holiday search during the January to February period. when consumers actually concentrate their buying activities and that effectively proved forward demand. So following the holiday period, we saw a very apparent moderation of sales in March and as we enter the second quarter, the April data does not turn out very well, slightly it's not improving from March and into May to date, still very challenging. But actually, we saw a slight pickup in consumer activity. .

But as we have been through half of the quarter, it seems that we have relatively low visibility on consumer sentiment and activity, how the rest of the quarter will turn out view depends on the long industry promotion, which we also don't have very big expectations. So we think it's prudent -- it's more prudent for us to give a conservative guidance and reset our second quarter expectations. Turning to our outlook for the full year, we think we still have opportunities in the second half and we believe as consumer sentiment may be improving marginally we should be able to capture opportunities in discretionary spending, especially apparel.

And we look forward to making the best effort to maintain a steady operational performance for the second half. So for the full year, I will continue to believe that we will maintain steady outlook.

Operator: We will now take the next question. This is Fama Vicky Wu from CICC.

Unknown Analyst: [Interpreted] I would like to ask for some updates regarding Shanshan outlets. First, could you walk us through Shanshan's first quarter performance. And second, we've noticed that the Vipshop commercial rate is about to be launched. And how should we assess its subsequent impact on the financial statements?

Unknown Executive: Well, thanks for your question. And actually, Shenzhen Outlet business is quite strong in the first quarter, and the GMV growth around 30% year-over-year. So -- and thanks for your question regarding the REIT. And I think some of the investors may be aware that VIP stat commercial rate obtained official approval from the CSRC and the Shanghai stock team in late April and complete the pricing process on May 19. And there are 2 underlying assets. Shenzhen less in Zhengzhou and Harbin, both the material as operate for around 10 years. And both outlets hold leading positions in their regional markets. Chung Outlets is the highest grossing ale in Hunan province for the Harman ranks first in Heilongjiang products.

And the commercial rigs should feature more flexible policy regarding the fund usage and expansion mechanism. And actually, in addition to these 3 outlets already used as underlying assets for the REIT, we also hold another 18 projects, demonstrating strong potential for future expansion. We will count further evaluation with on our strategy and market conditions. And for the accounting treatment for this Zhengzhou and Harbin we subscribed for 49% of the total shares in the commercial rate. In simple terms, we will lose control and we will deconsolidate the investment from our financials and recognize the related investment again accordingly.

And more specifically, on a GAAP basis, we will book a onetime investment gain of around RMB 5.3 billion in the second quarter, an increase of CAD 1.7 billion income tax. And cash flow-wise, we will see a significant increase in net cash inflow of RMB 1.7 billion in the second quarter.

Operator: We will now take the next question. This is from Alicia Yap from Citigroup.

Alicis a Yap: [Interpreted] I wanted to follow up, I think management earlier mentioned that since you guys saw April is a negative growth for your platform? And then maybe May, that also so far month-to-date is also -- seems to be negative. But then I think last week, we have China retail sales data, is the total apparel sales is actually grew 3.6% in April. So just wanted to see where is the misconnect. Is it a lot of these spending been shifting to off-line or is it there are some of the market share, our market shares are losing to other online platform. And then related to that is also on the Shasun outlook.

Also, I think mentioned the platform grew like 30-plus percent. I also wanted to know, is this because of the consumer behavior that you observe started to shift more to the offline shopping? Or is it because Shanshan actually have certain merchandise, is that VIP online does it have?

Eric Shen: [Foreign Language]

Jessie Fan: [Interpreted] Okay. So the NBS data, the apparel sales, the growth of 3.6%, you have mentioned actually refers to both online and off-line. Based on our observation, actually online, we have noted -- we have seen a very notable decline -- and we are actually quite in line with the industry trend. And off-line, we do see very strong growth. We believe it could be the difference of consumer activity with online and off-line shopping. When they do online shopping, they tend to return a lot. So that would make the sales and after revenue data are more compressed. And with offline consumers do shift part of their spending increasingly to outlet channels.

And it's actually the same with merchants, with brand partners they have been shifting a little bit more resources through offline outlet channels as well. But we think it's still partially holiday-driven. And going forward, we have to see whether the momentum can be sustained. In addition, the offline out -- the outperformance is actually benefiting from a higher concentration of certain categories, especially both where and outdoor products. That makes their sales performance exceptionally strong because consumers tend to shop into these categories is just being fitting in with their lifestyle.

And it's actually the same thing with the online category performance, even in April and May, when we do see a broader weakness in the power category, a sport where and outdoor products continue to outperform, I think the real weakness is actually going into a discretionary -- more discretionary apparel categories like women's and men's wear, which are pretty much fashion-driven. So I think we still need some time to see whether the discretionary spending will turn out better than expected going forward.

Operator: We will now take the next question. This is from Ronald Keung from Goldman Sachs.

Ronald Keung: [Interpreted] First, I want to ask about the GMV gap with revenue. Is that due to Shanshan or maybe the return rates have changed? Second is given that the March, April, May trends have been quite soft, should we take this or read this into the second half given the pace in the third quarter last year is not a low one, which, therefore, the basis is normal. So how should we think of the recent trends in translating to our expectations into the second half? .

Unknown Executive: Well, thanks for your question, and let me answer the first question. Actually, the year-over-year growth gap between revenue and GMV in the first quarter increased due to the following 2 reasons: the first 1 is return exchange rate slightly increased year-over-year due to higher contribution from apparel categories and SVIP members. And secondly, just you mentioned the increased GMV contribution from financial outlets given the extension operates on a commission-based model. So from accounting-wise, we recognize this revenue based on net method, which result in revenue to GMV gap become wider.

Eric Shen: [Foreign Language].

Jessie Fan: [Interpreted] In terms of our full year outlook, even when we say near-term pressure, from March to May to date. We think it's still within our control. It's just from negative 5% to 0%. That's the range we are confident to maintain and also the recent softness is related to a number of factors, weather condition, seasonal transition to spring and the summer apparel. Of course, there is a bit of uncertainties on consumer sentiment and behavior, et cetera. . So we may need more time to see whether the trend will be improving going forward. But for the full year, we would think our full year target is still achievable.

And by continuously optimizing our operational strategies, we should be able should maintain at least a steady business performance.

Operator: 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.

Jessie Fan: 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. .

Operator: And this concludes today's conference call. Thank you for participating, and you may now disconnect.