Vipshop Holdings Ltd (VIPS) 2025 Q4 法說會逐字稿

Ladies and gentlemen, good day, everyone, and welcome to Vipshop Holdings Limited fourth-quarter and full year 2025 earnings conference call. At this time, I would like to turn the call to, Ms. Jessie Zheng, Vipshop's Head of Investor Relations. Please proceed.

Thank you, operator. Hello, everyone, and thank you for joining Vipshop's fourth-quarter and full-year 2025 earnings conference call. With us today are Eric Shen, our Co-Founder, Chairman, and CEO, and Mark Wang, our CFO.

Before management begins their prepared remarks, I would like to remind you that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations.

Potential risks and uncertainties include, but are not limited to, those outlined in our safe harbor statement in our earnings release and public filings with the Securities and Exchange Commission, which also applies to this call to the extent any forward-looking statements may be made.

Please note that certain financial measures used on this call, such as non-GAAP operating income, non-GAAP net income attributable to Vipshop's shareholders, and non-GAAP net income per ADS, are not presented in accordance with US GAAP. Please refer to our earnings release for details relating to the reconciliations of our non-GAAP measures to GAAP measures. With that, I would now like to turn the call over to Mr. Eric Shen.

Good morning, and good evening, everyone. Welcome, and thank you for joining our fourth quarter and full year 2025 earnings conference call. This year has been defined by strategic realignment, operating resilience, and a firm commitment to high-quality growth in a dynamic market.

While we entered 2025 facing a multi-consumer environment, I'm pleased to report that the agility of our off-price retail model has allowed us to stabilize our top-line performance and continue to deliver robust profitability for the full year.

Our fourth quarter results came in slightly below our expectations. This was primarily due to a deceleration in December sales as customer activity slowed. We attributed it to the weak winter apparel demand alongside delayed holiday shopping due to a later spring festival.

While we saw short-term pressure this quarter, our long-term road map remains unchanged. We continue to make solid progress that reinforces our flywheels from merchandising, customer engagement, to operations.

In 2025, we implemented a strategic reorganization of our merchandising and customer engagement team to enhance agility and long-term competitiveness by enabling faster decision-making and breaking down internal silo. We have unlocked a strong foundation for long-term growth.

Throughout the year, our merchandising strategy centered on three pillars: enhancing customer relevance, building differentiation, and deepening category expertise. Advancing these capabilities has been fundamentally allowed us to consistently and effectively align high-value brand supply with evolving customer demand. We are building a stronger, more connected portfolio of branded products.

Last year, our merchandising team further deepened our supply network. This enabled us to acquire more quality deep discount inventory, driving sales growth steadily across our most valuable brands. Leveraging data-driven insights, we are proactively shaping a resilient assortment that wins in growth categories while keeping our supply chains responsive to shifts in customer needs.

We are seeing an encouraging early signal of cross-sell from apparel into related categories like mother and baby, childcare, and lifestyle. We will remain focused on refining these synergies to better serve our customers' diverse needs.

Our Made for VIP line has become a key driver of our differentiation, with sales in these exclusive categories growing by over 40% to account for 5% of online apparel sales in 2025. Having successfully built these foundations of scale, we are now in the position to evolve our approach for the next stage of growth.

We are streamlining our exclusive products to build a clear identity and drive mind share when customers see an exclusive tech, which should instantly recognize a promise of high value and reliability. This is how we transfer the line into competitive differentiations, reliable courage, on-trend selection, and exceptional value.

Our optimistic buying proactive is another key differentiator, allowing us to select a portfolio of high-demand items from top global and domestic partners. This delivers a compelling value proposition based on quality, price, and style.

Combined with dynamic fresh sales and treasure hunt experience, it drives wild customer apparel, full excitement, and encourages repeat visits. We are moving faster to lock in more exclusive low-priced inventory to attract high-value shoppers and deepen the discovery drive of our platform.

To enhance customer experience, one team now manages the entire journey from initial brand and acquisitions to value-driven growth and lifelong engagement. We have enhanced our capabilities to target and engage user efficiency, which serves as the core foundation of our full life cycle customer strategy.

Early progress is promising, and we are focused on the sustainable runway ahead to build a more seamless cross-category experience that maximizes lifetime value. The Super VIP program remains the cornerstone of our growth. Active SVIP members sustained double-digit growth for the fourth quarter.

For the full year 2025, active SVIPs grew by 11% to 9.8 million, contributing 52% of our online spending. Through exclusive upgrades such as providing sales and family benefits, SVIPs consistently demonstrate significantly higher retention and repeat purchase than those of regular customers. Their sustained loyalty and spending power provide a reliable revenue stream and increase our apparel to brand partners, seeking high-quality customer access.

Turning to the operations. We have enhanced our capabilities to better think merchandise with customer intent, delivering measurable results. We implemented multi-objective optimization in our searching engine, directly improving conversion rate. We also prioritize diversity and freshness in our recommendation engine, which has enriched discovery and drive high browsing frequency and return visits.

Look ahead, we are exploring generative search and recommendations to enable more dynamic, interactive, and integrate discovery experience. Lastly, we have made great strides in deploying AI across our business to drive tangible value with advanced AI applications in searching and recommendations, customer service, and marketing. We have enhanced the customer experience and empowering our brand partners, laying a strong foundation for deeper company-wide integration.

Notably, our AI-powered customer service effectively automates routine interactions, improving the overall speed and relevance of customer support. The system now manages the majority of product inquiries and generate personalized recommendations with automated resolutions reach approaching 90%. AI-generated content is now widely used in marketing, driving efficiency and effectiveness, taking our own campaign, for example, by leveraging AIGC to automate creatives and placements.

We have reduced production costs while optimize customer acquisition efficiency. Furthermore, we have used AIGC to generally summarize our customer reviews and product portfolio, helping brand partners boost their sales effectiveness.

With its full-scale launch, our AI virtual try-on feature has proven to be an effective driven customer engagement. Initial data confirm its impact on loyalty, showing that engaged customer has a high rate of repeat visits.

Our next phase is fundamentally integration of AI, moving beyond stand-alone workflows to embed it within our core operations, making it primary driver of growth and business-wide efficiency. As we're looking back on 2025, we have become a more agile, customer-central and technology-driven organizations.

We have enhanced our leadership in the off-price sector as an indispensable gateway for brand navigation, China shifting consumption landscape, as value shopping become a structural trend. We are uniquely positioned to capture high-value customers and expand our share of wallet through merchandising and supply chain reliability.

While the macro environment remains dynamic, our focused strategy and strength execution giving us great confidence in delivering sustainable profitability growth in 2026 and beyond.

At this point, let me hand over the call to our CFO, Mark Wang, to go over our financial results.

Thanks, Eric, and hello, everyone. We concluded 2025 with resilient performance underpinned by solid profitability in a dynamic market. This financial strength stems from our disciplined approach to investing, ensuring the every dollar we deploy advance our core business and builds lasting momentum.

Over the past year, we focused on enabling the business with agility, ensuring our investments in merchandising, consumer engagement, and operational upgrades, as well as AI enhancements, directly strengthen our business core. This discipline has translated into quality earnings and is building the foundation for durable competitive advantage.

As Eric emphasized, we have seen tangible progress which has repositioned us for sustained momentum. Our focus remains on stewarding our capital to support its business priorities, ensuring we have both the flexibility and the financial foundation to execute our long-term growth strategy.

Turning to capital returns. I'm pleased to confirm that we delivered on our 2025 commitment, returning a total of USD944 million to shareholders through dividends and share repurchase. For 2026, we are maintaining this momentum.

Consistent with our prior year's policy, we intend to distribute no less than 75% of our full year 2025 non-GAAP net income attributable to Vipshop's shareholders. This will be executed through an increased annual dividend of approximately USD300 million as well as the continuation of our share repurchase program. These actions reflect our confidence in the company's cash-generating capability and our steadfast commitment to shareholder value creation.

Now moving to our detailed quarterly financial highlights. Before I get started, I would like to clarify that all financial numbers presented below in renminbi and all the percentage change are year-over-year change, unless otherwise noted.

Total net revenues for the fourth quarter of 2025 were RMB32.5 billion compared with RMB33.2 billion in the prior year period. Gross profit was RMB7.4 billion compared with RMB7.6 billion in the prior year period. Gross margin was 22.9% compared with 23.0% in the prior year period. Total operating expenses decreased by 3.7% year-over-year to RMB4.9 billion from RMB5.1 billion in the prior year period.

As a percentage of total net revenues, total operating expenses decreased to 15.0% from 15.2% in the prior year period. Fulfillment expenses decreased by 1.0% year-over-year to RMB2.4 billion from RMB2.5 billion in the prior year period. As a percentage of total net revenues, fulfillment expenses were 7.5% compared with 7.4% in the prior year period.

Marketing expenses decreased by 6.1% year-over-year to RMB873.7 million from RMB903.3 million in the prior year period. As a percentage of total net revenues, Marketing expenses decreased to 2.7% from 2.8% in the prior year period. Technology and content expenses decreased by 9.3% year-over-year to RMB425.5 million from RMB469.2 million in the prior year period.

As a percentage of total net revenues, technology and content expenses decreased to 1.3% from 1.4% in the prior year period. General and administrative expenses decreased by 5.2% year-over-year to RMB1.1 billion from RMB1.2 billion in the prior year period. As a percentage of total net revenues, general and administrative expenses decreased to 3.5% from 3.6% in the prior year period.

Income from operations increased by 1.7% year-over-year to RMB2.90 billion from RMB2.85 billion in the prior year period. Operating margin increased to 8.9% from 8.6% in the prior year period. Non-GAAP income from operations was RMB3.2 billion compared with RMB3.4 billion in the prior year period. Non-GAAP operating margin was 10.0% compared with 10.2% in the prior year period.

Net income attributable to Vipshop's shareholders increased by 5.8% year-over-year to RMB2.6 billion from RMB2.4 billion in the prior year period. Net margin attributable to Vipshop shareholders increased to 8.0% from 7.4% in the prior year period. Net income attributable to Vipshop's shareholders per diluted ADS increased to RMB5.12 from RMB4.69 in the prior year period.

Non-GAAP net income attributable to Vipshop's shareholders was RMB2.9 billion compared with RMB3.0 billion in the prior year period. Non-GAAP net margin attributable to Vipshop's shareholders was 8.8% compared with 9.0% in the prior year period. Non-GAAP net income attributable to Vipshop's shareholders per diluted ADS was RMB5.66 compared with RMB5.70 in the prior year period. As of December 31, 2025, we had cash and cash equivalents and restricted cash of RMB24.1 billion and short-term investments of RMB5.8 billion.

Now I will briefly walk through the highlights of our full year results. Total net revenues were RMB105.9 billion compared with RMB108.4 billion in the prior year. Gross profit was RMB24.5 billion compared with RMB25.5 billion in the prior year.

Gross margin was 23.1% compared with 23.5% in the prior year. Income from operations was RMB8.1 billion compared with RMB9.2 billion in the prior year. Operating margin was 7.7% compared with 8.5% in the prior year. Non-GAAP income from operations was RMB9.9 billion compared with RMB10.7 billion in the prior year. Non-GAAP operating margin was 9.3% compared with 9.9% in the prior year.

Net income attributable to Vipshop shareholders was RMB7.2 billion compared with RMB7.7 billion in the prior year. Net margin attributable to Vipshop's shareholders was 6.8% compared with 7.1% in the prior year. Net income attributable to Vipshop shareholders per diluted ADS was RMB14.15 compared with RMB14.35 in the prior year.

Non-GAAP net income attributable to Vipshop's shareholders was RMB8.7 billion compared with RMB9.0 billion in the prior year. Non-GAAP net margin attributable to Vipshop's shareholders was 8.3%, which remained stable as compared with that in the prior year period. Non-GAAP net income attributable to Vipshop shareholders per diluted ADS increased to RMB17.08 compared with RMB16.75 in the prior year.

Looking forward to the first quarter of 2026, we expect our total net revenues to be between RMB26.3 billion and RMB27.6 billion, representing a year-over-year increase of approximately 0% to 5%. Please note that this forecast reflects our current and preliminary view 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 Instructions)

Ronald Keung, Goldman Sachs.

(spoken in foreign language)

Ronald, would you please translate your question into English please? So maybe I'll just translate the question first and then let Eric respond to the question.

(interpreted) So the first question is about the quarter-to-date business performance, whether the seasonality, especially late spring festival has impacted the business performance and have -- have we seen any recovery in the business?

Based on the guidance, it seems like we are accelerating revenue growth a little bit. The second question is about the margin outlook for 2026 because we have seen that margins for 2025 seems to be under a little bit pressure in terms of GP margin and NP margin, whether we have new investments for 2026? And how do we think about gross margin cost and expenses and NP margin, whether we can stabilize our margin profile.

(spoken in foreign language)

(interpreted) So on the first question regarding the Q1 guidance, let's take a look at the Q4 first. I think our online sales actually took a hit in Q4, especially in December. It was way too warm in China in most regions for people to buy winter clothes. And since Chinese New Year is late this year, nobody was actually in a rush to shop for the holiday.

Because of that, apparel didn't nearly as well as our other categories. But as we head into the first quarter, Q1, actually, we have seen consumer activity has clearly picked up, largely driven by New Year shopping. And if we look at January and February combined, actually, we do see a nice recovery in our core business. So, this has kept us firm on track with our guidance of zero percentage to 5% top line growth, and we are confident that we can deliver that growth and for Q1 and for the rest of the year.

Second on margins, I think our business philosophy has been very consistent. We remain focused on high-quality growth at sustainable profitable growth for the business, especially in a dynamic macro environment today. So, we expect margins will be stable, and we will make every effort to outperform in terms of margins for 2026 and beyond.

(Operator Instructions)

Alicia Yap, Citigroup.

Hello, good evening. Thank you. (spoken in foreign language)

So thanks for taking my questions. I have two questions. First is that related to the user growth. I think management previously commented that we are hopeful to see the user growth momentum to sustain. So just wondering if management could share with us what is your expectation for the user growth for 2026? And then regarding the demand, how are you seeing the demand for the apparel versus the non-apparel growth? And second question is related to AI.

Just wondering, does management believe the overstocked business model that we have for Vipshop, would that be actually more resilient against this Agentic commerce? And with that, will VIP actually invest more resources into growing the offline business such as the Shan Outlet? Thank you.

(spoken in foreign language)

(interpreted)

So on the first question about customer growth. Customer growth is definitely our top priority. That's actually the foundation for sales growth and ultimately profitability. In Q4, we had thought we should have maintained the customer growth momentum. But due to expected slowdown in consumer activity, actually, customer growth is a little bit under pressure. We expect customer to regrow for 2026.

And we ideally, we should see customer growth is actually faster than sales growth to offset the impact of a slightly rising return rate. So we are definitely going to make every effort to bring customer back to growth track in 2026.

On the second question regarding category preferences, consumers are still, generally speaking, still cautious and selective and value conscious, but they continue to shop across different categories, including discretionary categories. They just need strong reasons to do so.

So that's why we focus so much on providing the best value across the shopping carts, including apparel and non-apparel categories. And we are making changes in both categories, especially in standard categories to drive repeat business for our most valuable customers, including SVIP and high-value customers to increase their cross-category purchases for family shopping.

Lastly, on AI. definitely, AI is fundamentally transforming many industries, including the e-commerce industry. And for an off-price retailer like Vipshop, we are definitely adapting to this trend to remain competitive. We believe fundamentally, our business model relies on merchandising on how well we can secure quality deep discount inventory, how well we can provide a best value for customers. We think as long as we make a difference in merchandising and supply chain reliability, we will not be left behind.

Of course, the online business is a hypercompetitive business. That's why we look for -- we are constantly looking for opportunities offline, especially with the outlet business, which proves to be a very good business model in terms of stable revenue streams and profitability.

So we are actually expanding our presence for Shan Shan outlets which are doing great in terms of sales and profit contribution. And we expect a mirrored pace of expansion into more cities and regions and geographies.

We expect to see continued strong growth in terms of sales, revenue and profit from Shan Shan business. And we expect with a strong offline presence, we will be we will be able to offset any potential challenges from AI.

Thank you. There are no further questions at this time. At this time, I would like to turn the conference back to Jessie for any closing remarks.

Thank you for taking 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.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the company sponsoring this event.