What happened

Shares of Vipshop Holdings (VIPS -0.91%) slumped on Thursday and never regained their footing. The stock cratered as much as 19.8% in early trading. As of 12:21 p.m. ET, the stock was still down 15.9%

A disappointing third-quarter financial report was the catalyst that sent China's leading online discount retailer tumbling, but things went from bad to worse when the company provided guidance that was far below expectations. 

A smiling person entering credit card information into a smartphone making an e-commerce purchase.

Image source: Getty Images.

So what

Vipshop reported revenue of RMB 24.9 billion ($3.9 billion), up 7.5% year over year, plagued by gross merchandise volume that climbed just 5%. The company's net margin crashed, falling to 2.5%, down from 5.4% in the prior-year quarter. This resulted in adjusted earnings per American depositary share (ADS) being cut nearly in half, to RMB 0.92 ($0.14), down from RMB 1.80.

To give those numbers context, analysts' consensus estimates were calling for revenue of RMB24.7 billion and adjusted earnings per ADS of RMB 1.55. 

Growth in Vipshop's active customers slowed to a crawl, edging 1.1% higher year over year, while total orders of 172.9 million was essentially flat compared to 172.8 million in the prior-year quarter.

Chairman and CEO Eric Shen cited "a challenging macro and retail environment" for the shortfall. He chose to focus on the silver lining, saying the company was "encouraged" by successful changes to its merchandising strategy, "while also expanding our high-value customer base."

Now what

Even Vipshop's guidance was lacking. Management said it expects total net revenue in the fourth quarter to grow in a range of 0% to 5% year over year, or RMB 36.7 billion at the midpoint of its guidance, far below analysts' consensus estimate of RMB 38.4 billion, decelerating further from this quarter's dismal performance.

This continues the troubling trend for Vipshop shareholders in recent months. Since reaching an all-time high of about $46 back in March, the stock has plunged 78%, with no end in sight.

To say investors weren't pleased with the results would be an understatement. It was difficult to find any upside to the quarter.