Vipshop Holdings, Growing the Top Line with Collaborations, Analysts Review

Vipshop Holdings Limited (NASDAQ: VIPS) operates as an online discount retailer for various brands in the People’s Republic of China. It operates in two segments, Vip.com and Internet Finance Business.

 

Vipshop brings two important factors to the table. It tends to focus on a niche, fashion, rather than trying to sell everything under the sun. Vipshop has also focused on lower-priced and discount goods. It is #3 in China, behind Alibaba (55%) and JD.com (30%).

Mr. Eric Shen, Chairman and Chief Executive Officer of Vipshop, recently stated, “In the first quarter of 2018, we delivered solid operational results as demonstrated by the continued improvement in customer stickiness and loyalty. We made further progress with our strategic collaboration with Tencent and JD.com, opening up the entry on JD’s app homepage in mid-March and the WeChat wallet entry in early April. Looking ahead, we will continue to work closely with Tencent and JD.com in order to improve the traffic flow and conversion rates, which will contribute meaningfully to our long-term customer and revenue growth.”

Vipshop launched its JD flagship store on March 3, 2018 and opened up its entry on the homepage of JD’s app to all customers on March 14, 2018. Vipshop’s JD flagship store attracted approximately half a million followers within the first two months of launching. The majority of customers from the JD channel are new customers, and male apparel is the strongest category.

On May 8, 2018, L’Oréal Paris launched its official WeChat mini-program, which was developed and operated by Vipshop. Vipshop is actively exploring more opportunities within the WeChat ecosystem with its brand partners, empowering brands to grow their business leveraging the robust traffic within WeChat.

 

Products

Women’s Clothing-Men’s Clothing-Accessories-Bags-Shoes-Cosmetic-Food-Digital Electronics.

VIP.com

 

 

 

About

Vipshop Holdings Limited operates as an online discount retailer for various brands in the People’s Republic of China. It operates in two segments, Vip.com and Internet Finance Business. The company offers women’s apparel, such as casual wear, jeans, dresses, outerwear, swimsuits, lingerie, pajamas, and maternity clothes; men’s apparel comprising casual and smart-casual T-shirts, polo shirts, jackets, pants, and underwear; women and men shoes for casual and formal occasions; and accessories that include belts, jewelry, watches, and glasses for women and men. It also provides handbags, which comprise purses, satchels, duffel bags, and wallets; apparel, gears and accessories, furnishings and decor, toys, and games for boys, girls, infants, and toddlers; sports apparel, sports gear, and footwear for tennis, badminton, soccer, and swimming; and consumer electronic products, including computers, mobile handsets, digital cameras, and home appliances. In addition, the company offers skin care and cosmetic products, such as cleansers, lotions, face and body creams, face masks, sunscreen, foundations, lipsticks, eye shadows, and nail polish; and home furnishings comprising bedding and bath products, home decors, dining and tabletop items, and small household appliances. Further, it provides designer apparel, footwear, and accessories; and snacks and health supplements, and occasion-based gifts. Additionally, the company offers Internet finance services, which comprise consumer and supplier financing, and wealth management services. It provides its branded products through its vipshop.com, vip.com, and lefeng.com online platforms, as well as through its cellular phone application. Additionally, the company offers warehousing, logistics, procurement, research and development, consulting, and software development and information technology support services. Vipshop Holdings Limited was founded in 2008 and is headquartered in Guangzhou, the People’s Republic of China.

 

Analysts

7/11/2018          Goldman Sachs Group   Downgrade        Buy ➝ Neutral              $14.30

6/26/2018          CLSA      Upgrade             Underperform ➝ Outperform

5/16/2018          Benchmark        Lower Price Target          Buy        $24.00 ➝ $19.00

5/16/2018          Daiwa Capital Markets   Downgrade        Buy ➝ Hold

5/15/2018          KeyCorp              Downgrade        Overweight ➝ Sector Weight              $20.00

Source: marketbeat.com

 

 

Financial review

 

First Quarter 2018

Total net revenue for the first quarter of 2018 increased by 24.6% year over year to RMB19.9 billion (US$3.2 billion) from RMB16.0 billion in the prior year period.

The number of active customers for the trailing twelve months ended March 31, 2018 was 56.6 million, as compared with 55.5 million in the prior year period.

Total orders for the first quarter of 2018 increased by 25% year over year to 90.2 million from 72.1 million in the prior year period.

Gross profit for the first quarter of 2018 increased by 8.5% year over year to RMB4.0 billion (US$639.2 million) from RMB3.7 billion in the prior year period.

Net income attributable to Vipshop’s shareholders for the first quarter of 2018 was RMB529.7 million (US$84.5 million), as compared with RMB551.9 million in the prior year period.

Non-GAAP net income attributable to Vipshop’s shareholders for the first quarter of 2018 was RMB727.7 million (US$116.0 million), as compared with RMB799.4 million in the prior year period.

As of March 31, 2018, the Company had cash and cash equivalents and restricted cash of RMB7.4 billion (US$1.2 billion) and short-term investments of RMB1.8 billion (US$288.1 million).

 

Stock influences and risk factors

Uncertainties regarding the growth and sustained profitability of the online retail market in China, and in particular, the development of the online flash sales business model, could adversely affect the business, prospects, financial condition and results of operations;

The security of operations of their own and other third-party online payment services may materially and adversely affect the business;

Their business, financial condition and results of operations, as well as their ability to obtain financing, may be adversely affected by the downturn in the global or Chinese economy;

Substantial uncertainties and restrictions exist with respect to the interpretation and application of PRC laws and regulations relating to online commerce and provision of Internet content in China. If the PRC government finds that the structure the company has adopted for its business operations does not comply with PRC laws and regulations, they could be subject to severe penalties, including shut-down of the Vipshop Online Platform.

 

Stock chart

On Wednesday, July 11, 2018, VIPS was at $10.20 on traded volume of 3.6 million shares. The current RSI (14) is 27.42

At $10.20, VIPS shares are trading below their 50 DMA and 200 DMA od $12.30 and $12.81 respectively.

 

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