Why Vipshop Shares Are Sliding Today

Vipshop Holdings Ltd VIPS reported a Q2 FY23 revenue growth of 13.6% Y/Y to RMB27.9 billion ($3.84 billion), beating the consensus of $3.83 billion.

GMV increased by 24.5% Y/Y to RMB50.6 billion. The number of active customers grew by 9.6% Y/Y to 45.7 million. Total orders increased by 14.7% Y/Y to 213.8 million.

The gross margin expanded to 22.2% from 20.5% a year ago. The non-GAAP operating margin increased 8.2% from 6.3% a year ago.

Non-GAAP earnings per ADS of $0.59 beat the consensus of $0.44.

As of June 30, 2023, the company held cash and equivalents of $2.7 billion. Net cash generated from operating activities stood at RMB4.1 billion ($559.0 million) as of June 30, 2023.

"During the quarter, our team was able to secure much more quality supply from core brands, which fueled the broad-based strength in apparel-related categories. Customers also showed stronger preference for us as they constantly seek value for money, led by robust momentum in our Super VIP members. With our clear-cut value proposition in discount retail, we are well positioned to capture the opportunity to further gain mindshare among consumers, making Vipshop the first go-to online shopping platform for apparel. To that end, we are building out our capabilities to offer a rich and diverse selection of great value, as well as reassuring customer service and experience," said Mr. Eric Shen, Chairman and CEO.

In Q2, Vipshop repurchased shares worth $348.5 million of its ADSs under its current $1 billion share repurchase program, effective through March 2025. As of June 30, 2023, the company had $564.9 million unutilized amount under this program.

Outlook: Vipshop sees Q3 revenue of RMB21.6 billion - RMB22.7 billion, representing a year-over-year increase of approximately 0% to 5% Y/Y.

Price Action: VIPS shares are trading lower by 5.739% at $15.30 premarket on the last check Friday.