Vipshop Reports Unaudited First Quarter 2014 Financial Results - San Diego, California News Station - KFMB Channel 8 - cbs8.com

Vipshop Reports Unaudited First Quarter 2014 Financial Results

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SOURCE Vipshop Holdings Limited

1Q14 Total Net Revenues Up 125.9% YOY to US$701.9 Million

1Q14 Gross Margin Increased to 24.9%

1Q14 Net Income Attributable to Vipshop's shareholders Up 355.3% YoY to US$26.6 Million

Conference Call to be Held at 8:00 AM U.S. Eastern Time on May 15, 2014

GUANGZHOU, China, May 14, 2014 /PRNewswire/ -- Vipshop Holdings Limited (NYSE: VIPS), China's leading online discount retailer for brands ("Vipshop" or the "Company") today announced its unaudited financial results for the quarter ended March 31, 2014.

First Quarter 2014 Highlights

  • Total net revenues increased by 125.9% over the prior year period to US$701.9 million, primarily attributable to a 165.1% increase in the number of active customers[1] to 7.4 million from 2.8 million and a 129.3% increase in total orders[2] to 20.2 million from 8.8 million over the prior year period.
  • Gross margin increased to 24.9% from 23.4% in the prior year period.
  • Non-GAAP income from operations[3] increased by 394.3% year-over-year to US$42.8 million from US$8.7 million in the prior year period. Non-GAAP operating income margin[4] increased to 6.1% from 2.8% in the prior year period.
  • Net income attributable to Vipshop's shareholders increased by 355.3% to US$26.6 million from US$5.8 million in the prior year period. Net income margin increased to 3.8% from 1.9% in the prior year period.
  • Non-GAAP net income attributable to Vipshop's shareholders[5] increased by 318.2% to US$37.7 million from US$9.0 million in the prior year period. Non-GAAP net income margin increased to 5.4% from 2.9% in the prior year period.

Mr. Eric Shen, Chairman and CEO of Vipshop, stated, "We are very excited to report robust first quarter 2014 financial results, which reflect our continued strong growth momentum and increasing operational efficiencies, evidenced by 125.9% year-over-year growth in net revenues and incremental gross margin expansion to 24.9%. As the integration of our strategic acquisition of Lefeng commences, we expect to benefit from synergies associated with streamlining our comprehensive cosmetics offerings and cross selling to our customer bases and lowering our combined operating expenses. In addition, we aim to further improve the customer experience for viewing and purchasing products across both the PC and mobile platforms and evolve with our customers' purchasing habits. We are confident that our initiatives in 2014 of expanding our warehousing, merchandizing and IT capabilities will help further enhance our ability to satisfy, retain and attract customers, through delivering the best-in-class customer experience and product selection, and drive long-term value for our shareholders."

Mr. Donghao Yang, CFO of Vipshop, commented, "We're proud of our first quarter financial performance and initial results of our integration with Lefeng. We believe that our on-going investments in warehousing expansion and management will continue to help us improve sales capacity and reduce our operating costs, providing a strong foundation for our continued growth over the coming years. We are committed to further growing our product portfolio both organically and through acquisitions when appropriate."

First Quarter 2014 Financial Results

REVENUES

Total net revenues increased by 125.9% to US$701.9 million from US$310.7 million in the prior year period, primarily driven by growth in the number of active customers and total orders. Less than 5% of total net revenues during the first quarter of 2014 were attributed to Lefeng.com Limited ("Lefeng"), the online cosmetics and fashion products retailor that the Company acquired in February 2014.

The number of active customers for the first quarter of 2014 increased by 165.1% to 7.4 million from approximately 2.8 million in the prior year period. The number of total orders for the first quarter of 2014 increased by 129.3% to 20.2 million from 8.8 million in the prior year period. This increase was primarily due to increased brand recognition as well as the Company's continued efforts to optimize and increase brand and product selections available on its website. In addition, the Company has expanded its warehouse capacity to streamline suppliers' operations and effectively manage inventory, in order to facilitate and accommodate increased demands from customers as well as accelerate the delivery of purchased products.

GROSS PROFIT

Gross profit for the first quarter of 2014 increased by 140.3% to US$174.8 million from US$72.8 million in the prior year period. This reflects both the significant increase in total net revenues as well as effective margin management. Gross margin increased to 24.9% in the first quarter of 2014 from 23.4% in the prior year period. This increase is attributable to the Company's increased bargaining power with its suppliers due to increased scale of the Company's business and the growth of the Company's marketplace business.

OPERATING INCOME AND EXPENSES

Total operating expenses for the first quarter of 2014 increased by 115.0% to US$147.4 million from US$68.6 million in the prior year period. As a percentage of total net revenues, total operating expenses decreased to 21.0% from 22.1% in the prior year period.

  • Fulfillment expenses increased by 97.8% to US$74.6 million from US$37.7 million in the prior year period, primarily reflecting the increase in sales volume and number of orders fulfilled. As a percentage of total net revenues, fulfillment expenses decreased to 10.6% from 12.1% in the prior year period, which reflects the Company's continued efforts to reduce warehousing and personnel costs, negotiate better courier rates and leverage the increased order size.
  • Marketing expenses increased by 129.0% to US$30.1 million from US$13.1 million in the prior year period. As a percentage of total net revenues, marketing expenses remained stable at 4.3% compared to 4.2% in the prior year period, reflecting the Company's continued efforts to control marketing expenses by retaining repeat customers and achieving high growth of new customers through word-of-mouth referrals.
  • Technology and content expenses increased by 134.8% to US$18.7 million from US$7.9 million in the prior year period, primarily reflecting the Company's continued effort to invest in its website and IT systems to better support future growth. As a percentage of total net revenues, technology and content expenses remained stable at 2.7% compared with 2.6% in the prior year period.
  • General and administrative expenses increased by 146.1% to US$24.1 million from US$9.8 million in the prior year period, primarily due to increased headcount and office rentals associated with the growth in the Company's overall business. As a percentage of total net revenues, general and administrative expenses increased to 3.4% from 3.2% in the prior year period due to the amortization of US$5.0 million of intangible assets resulting from the acquisition of Lefeng.

Income from operations increased by 452.0% to US$30.2 million from US$5.5 million in the prior year period due to the growing scale of the Company's operations, improved gross margin and cost control. Operating income margin increased to 4.3% from 1.8% in the prior year period.

Non-GAAP income from operations, which excludes US$7.6 million in share-based compensation expenses and US$5.0 million in amortization of intangible assets resulting from the business acquisition, increased by 394.3% to US$42.8 million from US$8.7 million in the prior year period.Non-GAAP operating income margin increased to 6.1% from 2.8% in the prior year period.

NET INCOME/LOSS

Net income attributable to Vipshop's shareholders increased by 355.3% to US$26.6 million from US$5.8 million in the prior year period. Net income margin increased to 3.8% from 1.9% in the prior year period. Net income per diluted ADS[6] increased to US$0.46 from US$0.11 in the prior year period.

Non-GAAP net income attributable to Vipshop's shareholders, which excludes share-based compensation expenses and amortization of intangible assets resulting from business acquisitions, increased by 318.2% to US$37.7 million from US$9.0 million in the prior year period. Non-GAAP net income margin increased to 5.4% from 2.9% in the prior year period. Non-GAAP net income per diluted ADS increased to US$0.63 from US$0.17 in the prior year period.

For the quarter ended March 31, 2014, the Company's weighted average number of ADSs used in computing diluted income per ADS was 59,580,486.

As of March 31, 2014, the Company had cash and cash equivalents of US$871.8 million, restricted securities of US$179.1 million and held-to-maturity securities of US$332.5 million.

For the first quarter of 2014, net cash from operating activities was US$84.1 million.

Business Outlook

For the second quarter of 2014, the Company expects its total net revenues to be between US$780 million and US$790 million, representing a year-over-year growth rate of approximately 122.0% to 124.9%. These forecasts reflect the Company's current and preliminary view on the market and operational conditions, which are subject to change.

Conference Call Information

The Company will hold a conference call on Thursday, May 15, 2014 at 8:00 AM U.S. Eastern Time or 8:00 pm Beijing Time to discuss its financial results and operating performance for the first quarter 2014.

United States:

+1-845-675-0438

International Toll Free:

+1-855-500-8701

China Domestic:

400-1200654

Hong Kong:

+852-3051-2745

Conference ID:

#33943909

The replay will be accessible through May 22, 2014 by dialing the following numbers:

United States Toll Free:

+1-855-452-5696

International:

+61 2 9003 4211

Conference ID:

#33943909

A live and archived webcast of the conference call will also be available at the Company's investor relations website at http://ir.vip.com.

About Vipshop Holdings Limited

Vipshop Holdings Limited is China's leading online discount retailer for brands. Vipshop offers high quality and popular branded products to consumers throughout China at a significant discount to retail prices. Since it was founded in August 2008, the Company has rapidly built a sizeable and growing base of customers and brand partners. For more information, please visit http://www.vip.com.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as Vipshop's strategic and operational plans, contain forward-looking statements. Vipshop may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Vipshop's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Vipshop's goals and strategies; Vipshop's future business development, results of operations and financial condition; the expected growth of the online discount retail market in China; Vipshop's ability to attract customers and brand partners and further enhance its brand recognition; Vipshop's expectations regarding demand for and market acceptance of flash sales products and services; competition in the discount retail industry; fluctuations in general economic and business conditions in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Vipshop's filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Vipshop does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Use of Non-GAAP Financial Measures

The unaudited condensed consolidated financial information is prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"), except that the consolidated statement of shareholders' equity, consolidated statements of cash flows, and the detailed notes required by Accounting Standards Codification 270 Interim Reporting ("ASC270"), have not been presented. Vipshop uses non-GAAP net income attributable to Vipshop's shareholders, non-GAAP net income per diluted ADS, non-GAAP income from operations, non-GAAP net income margin, and non-GAAP operating income margin, each of which is a non-GAAP financial measure. Non-GAAP net income attributable to Vipshop's shareholders is net income attributable to Vipshop's shareholders excluding share-based compensation expenses and amortization of intangible assets. Non-GAAP net income per diluted ADS is non-GAAP net income divided by weighted average number of diluted ADS. Non-GAAP income from operations is income from operations excluding share-based compensation expenses and amortization of intangible assets. Non-GAAP operating income margin is non-GAAP income from operations as a percentage of total net revenues. Non-GAAP net income margin is non-GAAP net income as a percentage of total net revenues. The Company believes that separate analysis and exclusion of the non-cash impact of share-based compensation and amortization of intangible assets adds clarity to the constituent parts of its performance. The Company reviews these non-GAAP financial measures together with GAAP financial measures to obtain a better understanding of its operating performance. It uses these non-GAAP financial measures for planning, forecasting and measuring results against the forecast. The Company believes that non-GAAP financial measures are useful supplemental information for investors and analysts to assess its operating performance without the effect of non-cash share-based compensation expenses and amortization of intangible assets, which have been and will continue to be significant recurring expenses in its business. However, the use of non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that they do not include all items that impact the Company's net income for the period. In addition, because non-GAAP financial measures are not measured in the same manner by all companies, they may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP financial measure in isolation from or as an alternative to the financial measure prepared in accordance with U.S. GAAP.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Vipshop Holdings Limited Reconciliations of GAAP and Non-GAAP Results" at the end of this release.

[1]

Active customers are defined as any registered member who has purchased products from the Company at least once during the period. The active customer figure in 2014 includes active Lefeng customers after the Lefeng acquisition was completed in February 2014.

[2]

Total orders are defined as the total number of orders placed during the period. The total order figure in 2014 includes orders attributable to Lefeng after the Lefeng acquisition was completed in February 2014.

[3]

Non-GAAP income from operations is a non-GAAP financial measure, which is defined as income from operations excluding share-based compensation expenses and amortization of intangible assets resulting from the Lefeng acquisition. 

[4]

Non-GAAP operating income margin is a non-GAAP financial measure, which is defined as non-GAAP income from operations as a percentage of total net revenues.

[5]

Non-GAAP net income attributable to Vipshop's shareholders is a non-GAAP financial measure, which is defined as net income attributable to Vipshop's shareholders excluding share-based compensation expenses and amortization of intangible assets resulting from business acquisitions. 

[6]

"ADS" means American Depositary Share. Each ADS represents two ordinary shares, par value US$0.0001 per share, of the Company.

Vipshop Holdings Limited

Condensed Consolidated Statements of Income and Comprehensive Income

(In US dollars, except for share data)


Three Months Ended


March 31, 2013

March 31, 2014

December 31, 2013


USD

USD

USD


(Unaudited)

(Unaudited)

(Unaudited)





Product revenues

306,522,548

691,379,609

641,801,263

Other revenues (1)

4,136,133

10,548,373

9,215,025

Total net revenues

310,658,681

701,927,982

651,016,288

Cost of goods sold

(237,908,540)

(527,116,531)

(491,590,070)

Gross profit

72,750,141

174,811,451

159,426,218

Operating expenses




Fulfillment expenses(2)

(37,699,224)

(74,586,133)

(73,203,384)

Marketing expenses

(13,126,003)

(30,053,706)

(28,902,617)

Technology and content expenses

(7,948,145)

(18,660,941)

(14,166,544)

General and administrative expenses(3)

(9,804,914)

(24,132,185)

(17,466,907)

Total operating expenses

(68,578,286)

(147,432,965)

(133,739,452)

Other income

1,306,068

2,862,209

3,873,895

Income from operations

5,477,923

30,240,695

29,560,661

Interest expense

-

(1,628,282)

-

Interest income

2,436,478

8,198,147

5,870,876

Exchange gain (loss)

(222,618)

(1,057,905)

251,980

Share of loss of an affiliate

-

(754,714)

-

Income before income taxes

7,691,783

34,997,941

35,683,517

Income tax expenses(4)

(1,850,610)

(10,323,486)

(10,284,887)

Net income

5,841,173

24,674,455

25,398,630

Net loss attributable to noncontrolling interests

-

1,919,566

-

Net income attributable to Vipshop's shareholders

5,841,173

26,594,021

25,398,630





Weighted average numbers of shares used in calculating earnings per share:




-Basic

103,004,723

111,919,288

111,366,346

-Diluted

109,132,970

119,160,971

117,668,616





Net earnings per share




Net income attributable to Vipshop's shareholders--Basic

0.06

0.24

0.23

Net income attributable to Vipshop's shareholders--Diluted

0.05

0.23

0.22





Net earnings per ADS (2 ordinary shares equal to 1 ADS)




Net income attributable to Vipshop's shareholders--Basic

0.11

0.48

0.46

Net income attributable to Vipshop's shareholders--Diluted

0.11

0.46

0.43

(1)Other revenues primarily consist of revenues from product promotion and online advertising, fees charged to third-party merchants which the Company provides platform access for sales of their product.



(2) Including shipping and handling expenses, which amounted US$24 million, US$45.8million and US$43 million in the three month periods ended March 31, 2013, March 31, 2014 and December 31, 2013, respectively.



(3)Including amortization of intangible assets resulting from a business acquisition, which amounted to US$5 million in the three months period ended March 31, 2014. 



(4)For the three months period ended March 31, 2014, included income tax benefits of US$1.3 million related to the reversal of deferred tax liabilities, which was recognized on the businss acquisition of Lefeng.















Net income

5,841,173

24,674,455

25,398,630

Other comprehensive income (loss), net of tax:




Foreign currency translation adjustments

219,668

(5,193,583)

2,022,857

Comprehensive income (loss)

6,060,841

19,480,872

27,421,487

Less: Comprehensive income (loss) attributable to non-controlling interests

-

(1,898,431)

-

Comprehensive income attributable to Vipshop's shareholders

6,060,841

21,379,303

27,421,487






Three Months Ended


March 31, 2013

March 31, 2014

December 31, 2013


USD

USD

USD


(Unaudited)

(Unaudited)

(Unaudited)

Share-based compensation charges included are follows




Fulfillment expenses

77,771

332,925

246,858

Marketing expenses

80,247

691,552

109,228

Technology and content expenses

261,343

3,543,906

1,404,929

General and administrative expenses

2,766,446

3,019,028

1,659,580

Total

3,185,807

7,587,411

3,420,595













 

 

Vipshop Holdings Limited


Condensed Consolidated Balance Sheets


(Amounts in US dollars)



As of December 31, 2013

As of March 31, 2014



USD

USD


ASSETS

(Audited)

(Unaudited)


CURRENT ASSETS




Cash and cash equivalents

334,715,019

871,774,767


Restricted securities(1)

-

179,077,703


Held-to-maturity securities

385,841,626

332,491,166


Accounts receivable

3,055,446

4,488,283


Amounts due from related parties

-

-


Other receivables

16,481,032

20,466,154


Inventories

270,126,305

306,087,577


Advance to suppliers

13,216,869

12,477,722


Prepaid expenses

2,384,801

1,661,113


Deferred tax assets

11,126,647

10,364,395


Total current assets

1,036,947,745

1,738,888,880


NON-CURRENT ASSETS




Property and equipment, net

24,299,418

34,699,771


Deposits for property and equipment

5,518,404

20,280,365


Intangible assets

5,294,375

214,961,169


Investment in an affiliate

-

55,022,240


Other investment


1,006,083


Goodwill

-

2,441,632


Total non-current assets

35,112,197

328,411,260


TOTAL ASSETS

1,072,059,942

2,067,300,140






LIABILTIES AND  EQUITY




CURRENT LIABILITIES




Accounts payable (Including accounts
payable of the VIE without recourse to the
Company of $ 70,026 and $ 75,074 as of
December 31, 2013 and March 31, 2014, respectively)

476,847,881

532,670,338


Advance from customers (Including  advance from customers of the VIE without recourse to the Company of $131,781,751 and $114,488,013 as of December 31, 2013 and March 31, 2014, respectively)

131,781,751

115,166,104


Accrued expenses and other current liabilities(Including accrued expenses and other current liabilities of the VIE without recourse to the Company of $ 101,097,647 and $ 117,107,317 as of December 31, 2013 and March 31, 2014, respectively)

196,327,519

223,222,238


Amounts due to related parties(Including amounts due to related parties of the VIE without recourse to the Company of $1,369,767 and $ 1,090,308 as of December 31, 2013 and March 31, 2014, respectively)

2,141,411

25,275,832


Deferred income (Including  deferred income of the VIE without recourse to the Company of $ 20,592,249 and $ 24,768,610 as of December 31, 2013 and March 31, 2014, respectively)

21,705,981

26,072,502


Short-term loans

-

170,299,980


Total current liabilities

828,804,543

1,092,706,994


NON-CURRENT LIABILITIES




Deferred tax liabilities

-

48,726,060


Notes payable

-

617,437,817


Total non-current liabilities

-

666,163,877


Total liabilities

828,804,543

1,758,870,871






EQUITY:




Ordinary shares (US$0.0001 par value, 471,620,833 shares authorized, and 111,665,972 and 113,028,037 shares issued and outstanding as of December 31, 2013 and March 31, 2014, respectively)

11,167

11,303


Additional paid-in capital

363,221,310

371,414,172


Accumulated losses

(123,725,472)

(97,131,451)


Accumulated other comprehensive income

3,748,394

(1,445,189)


Non-controlling interest

-

35,580,434


Total shareholders' equity

243,255,399

308,429,269


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

1,072,059,942

2,067,300,140


(1)Restrited securities consist of held-to-maturity securities pledged to banks for the short term loans.







 

 

Vipshop Holdings Limited

Reconciliations of GAAP and Non-GAAP Results






Three Months Ended


March 31, 2013

March 31, 2014

December 31, 2013


USD

USD

USD


(Unaudited)

(Unaudited)

(Unaudited)

Income from operations

5,477,923

30,240,695

29,560,661

Share-based compensation expenses

3,185,807

7,587,411

3,420,595

Amortization of intangible assets resulting from business acquisition

-

4,997,545

-

Non-GAAP income from operations

8,663,730

42,825,651

32,981,256









Net income

5,841,173

24,674,455

25,398,630

Share-based compensation expenses

3,185,807

7,587,411

3,420,595

Amortization of intangible assets resulting from business acquisition (net of tax)

-

4,503,857

-

Non-GAAP net income

9,026,980

36,765,723

28,819,225









Net  income attributable to Vipshop's shareholders

5,841,173

26,594,021

25,398,630

Share-based compensation expenses

3,185,807

7,587,411

3,420,595

Amortization of intangible assets resulting from business acquisition (exclude non-controlling interests and net of tax)

-

3,566,817

-

Non-GAAP net income attributable to Vipshop's shareholders

9,026,980

37,748,249

28,819,225













Non-GAAP weighted average numbers of shares used in calculating net income per share:




-Basic

103,004,723

111,919,288

111,366,346

-Diluted

109,132,970

119,160,971

117,668,616





Non-GAAP net income per share




Non-GAAP net income attributable to Vipshop's shareholders--Basic

0.09

0.34

0.26

Non-GAAP net income attributable to Vipshop's shareholders--Diluted

0.08

0.32

0.25





Non-GAAP net income per ADS (2 ordinary shares equal to 1 ADS)




Non-GAAP net income attributable to Vipshop's shareholders--Basic

0.18

0.67

0.52

Non-GAAP net income attributable to Vipshop's shareholders--Diluted

0.17

0.63

0.49

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