What happened?

Shares of Vipshop Holdings Limited (VIPS -1.70%), a leading online discount retailer for brands in China, are jumping 11% as of 11:00 a.m. EST Thursday after releasing third-quarter results.

So what

Vipshop posted better-than-expected third-quarter results, with revenues moving 16.4% higher to RMB17.8 billion, or roughly $2.6 billion. The number of active consumers for the third quarter increased 11% to 26.5 million, and total orders increased 29%. Gross profit also increased 3.8%, and despite a 10.5% decline in adjusted earnings, it checked in at $0.11 per share, ahead of analysts' estimates calling for $0.09 per share.

Small cart and product packages on a laptop keyboard.

Image source: Getty Images.

"During the third quarter, our average revenue per customer increased by 5% year over year, driven by the strong improvement in the number of average orders per customer. We continue to execute on our merchandising strategy, which will create sustainable shareholder value in the long term," said Mr. Donghao Yang, chief financial officer of Vipshop, in a press release.

Now what

VIPS Chart

VIPS data by YCharts.

The third-quarter result, top-line growth, better-than-expected bottom-line figure, and subsequent 11% rise in share price were a breath of fresh air for investors, who have endured volatility and double-digit declines after the prior two quarterly results. However, despite today's rising numbers, investors would be wise to temper expectations for the future.

Management's outlook called for 8% to 13% fourth-quarter revenue growth, which could set the company up for its 10th consecutive quarter of decelerating revenue growth. And thanks to other e-commerce competition, management has to spend on promotional activity to generate growth and stay relevant, which has contributed to six straight quarters of shrinking profitability. While the third quarter offered some better-than-expected data, investors would be wise to expect more share price volatility and bottom-line pressure going forward.