Vipshop Holdings (NYSE:VIPS) released first-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.

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Summary

Vipshop Holdings reported a 1.2% year-over-year increase in net revenues for Q1 2026, reaching RMB 26.6 billion.

The company saw a 9% year-over-year growth in SVIP members, who accounted for 55% of online spending.

Gross profit increased by 6.8% to RMB 6.5 billion, with a gross margin improvement to 24.4%.

Operational strategies included optimizing merchandising, deepening customer engagement, and integrating AI technologies.

Net income attributable to shareholders increased by 13.6% year over year to RMB 2.2 billion.

Looking forward, Vipshop Holdings expects Q2 2026 revenues to range between RMB 24.5 billion and RMB 25.8 billion, reflecting a cautious outlook due to uncertain consumer sentiment.

The company successfully launched the Vipshop Commercial REIT, expected to generate a one-time investment gain in Q2 2026.

Management focused on sustaining solid baseline profitability and emphasized the importance of AI and targeted customer engagement for long-term growth.

Full Transcript

OPERATOR

Ladies and Gentlemen, Good day everyone and welcome to Vipshop Holdings' first quarter 2026 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.

Jessie Zheng (Head of Investor Relations)

Thank you Operator hello everyone and thank you for joining Vipshop first quarter 2026 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 U.S. 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 statements 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 Reality Shop 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 reconciliation of our non GAAP measures to GAAP measures. With that I would now like to turn the call over to Mr. Eric Shen.

Eric Shen (Co-Founder, Chairman and CEO)

Good morning and good evening everyone. Welcome and thank you for joining our first quarter 2026 earnings conference call. Our first quarter performance reflected a significant calendar driven shift caused by the later Chinese New Year. This led to a successful holiday surge in active that effectively pulled forward demand resulting in the softer March. What important to highlight is sustained health of our customer base. Our holiday results were outstanding driven by customers who actively sought out our seasonal collection and value promotions. This strength of that demand, especially in Apollo, confirms that we remain a top priority for their spending and gives us real confidence in their long term resilience. Our customer metrics this quarter further proves that resilience Total active customers show the positive momentum lead by our SVIP members who grew by 9% year over year, their paid members accounting for 55% of our online spending. We remain focused on the quality of our growth. As we move further into the year, we are making steadily progress in how we optimize merchandising portfolio, engaged with customers and integrate AI to reshape our off price retail model. Since realigning our team last year, we are seeing the benefits of the faster more fluid approach to merchandising. By staying focused on customer relevance and deepening category expertise, we will be able to move from market insight to product on shelf more quickly. ensure our deep discount brand inventory hits when demand peaks. We are also driving better cross category engagement as we create our selection around the broader needs of our customers and develop more effective analytics and marketing tools for brand partners. We are helping shoppers easily discover products across Apollo, child care and home category. Following our last update, we have transitioned our Made for VIP line into the new phase of Globe by raising the bar for quality, style and value. At the same time we are tightened our planning with brand partners seasonal calendars to stay in sync with real time fashion trends. This approach ensure our lineup is always greeted and on trend. Looking ahead, we will continue to evolve their exclusive offering into the primary driver of customer mind share and brand loyalty. Building on our optimistic buying strategy, we will successfully speed up our buying cycle. Over the past few months our teams have locked in a high value of exclusive low priced inventory that is now flow through the platform. This has enhanced the treasure hunt experience for our customers. We are seeing strong daily habits from our high value shoppers who are return more frequency to discover our latest arrivals. This differentiate merchandising approach directly feeds in the stress of our SVIP program. By offering exclusive access to private sales and unique inventory, we are driving both member acquisitions and loyalty. A great example is our recent event with global athletic brands where curated selection deliver a surge in new SVIP sign ups particular among young male shoppers and sales value many times above the baseline. In line with the push of high value engagement, we have shifted towards a more target acquisitions model using refined a green zine that identify members with the highest long term value. By replacing generally take benefits with a tiered service system, we are directly rewarding higher spending with exclusive product access, deepen discount one stop customer support and value added benefits. This will further optimize conventions and individual spend. These integrated efforts ensure the SVIP program remains our primary engine for sustainable revenues and earnings growth. As a piece of the change in retail accelerate, we were excited to embrace the broad opportunities AI offers. Our initial journey focused on putting the customer first, enhancing experience through virtual try ons, smart search and and the recommendations and automate customer support. We also leveraged AIGC to reach potential customer more effectively with automated contents. Having proven this use case, we are now shifting our focus towards scaling that capabilities for great operational impact. For example, we are using generative AI to scale personalized marketing by combining our operational expertise with real time customer feedback Our AI marketing agent effectively generates tailored creative across video, photo and text forms. This has already driven a clear lift in our customer acquisition efficiency beyond the marketing AI is increasingly empowering our brand partners with advanced business analysts, deeper customer cohort insights and optimized merchandising strategy. By anchoring our strategy in the off price model and leveraging best in class technology, we are identified more effective ways to serve our customers from dynamic merchandising to the smart supply chain. This allows us to continue earning customer loyalties through every integral action. We remain committed to investing in our people and our platform. We are confident that by continuously optimizing our operational strategies we will driven steadily profitable growth for the long term. At this point, let me hand over the call to our CFO Ma Huang to go over our financial results.

Ma Huang (Chief Financial Officer)

Thanks Eric and hello everyone. Our latest results landed within our guided range, reflecting a dynamic quarter that was heavily influenced by late Chinese New Year. The holiday period triggered a concentrated surge in demand for winter and early spring apparel categories where our merchandise strength resonates well with a broader base of consumers. By successfully capturing these peak season opportunities, we proved that the effectiveness of our coordinated efforts across merchandising, customer engagement and operations. This operation synergy directly fed into our bottom line margins remain healthy and stable underpinned by highly favorable category mix and our continued operational discipline. As Eric outlined, we maintained focused strategic investment in our key growth drivers, expanding differentiate merchandise offerings, deepening SVIP's engagement and scaling AI integration across our operations. At the same time, we continue to manage our broader resource pool with strict prudence, dynamically shifting spend to our most productive activities. This balanced approach ensures we sustain a solid baseline profitability by prioritizing high quality profitable revenue today. Simultaneously, it allows us to systematically strengthen our foundations for the long term even as we navigate an uncertain micro economic backdrop. Turning to shareholder returns, we remain firmly on track to deliver on our 2026 commitment of returning no less than 75% of full year 2025 non GAAP net income to shareholders. In April we complete our annual dividend distributing approximately US$300 million. For the quarters ahead, we look forward to executing the remaining balance of our shareholder return program. Our free cash flow outlook is robust and we have the full financial capacity to meet our full year allocation target. Now moving to our detailed quarterly financial highlights. Before I get started, I would like to clarify that all financial numbers presented below are RMB and all the percentage change are year over year change unless otherwise noted. Total net revenues for the first quarter of 2026 increased by 1.2% year over year to RMB 26.6 billion from RMB 26.3 billion in the prior year period. Gross profit increased by 6.8% year over year to RMB 6.5 billion from RMB 6.1 billion in the prior year period. Gross margin increased to 24.4% from 23.2% in the prior year period. Total operating expenses were RMB 4.2 billion compared with RMB 4.0 billion in the prior year period. As a percentage of total net revenues, total operating expenses was 15.7% compared with 15.3% in the prior year period. Fulfillment expenses were RMB 2.0 billion compared with RMB 1.9 billion in the prior year period. As a percentage of total net revenues, fulfillment expenses were 7.7% compared with 7.2% in the prior year period. Marketing expenses decreased by 1.8% year over year to RMB 719.3 million for RMB 732.1 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 0.2% year over year to RMB 448.2 million for RMB 449.1 million in the prior year period. As a percentage of total net revenues, technology and content census were 1.7% which stays slight as compared with that in the prior year period. General and Administrative expenses were RMB 950.5 million compared with RMB 950.8 million in the prior year period. As a percentage of total net revenues, general and administrative expenses was 3.6% which stayed flat as compared with that in the prior year period. Income from operations increased by 9.7% year over year to RMB $2.5 billion from RMB 2.3 billion in the prior year period. Operating margin increased to 9.4% from 8.7% in the prior year period. Non-GAAP income from operations increased by 3.5% year over year to RMB 2.7 billion from RMB 2.6 billion in the prior year period. Non-GAAP operating margin increased to 10.2% from 10.0% in the prior year period. Net income attributable to VIP Shop shareholders increased by 13.6% year over year to RMB 2.2 billion from RMB 1.9 billion in the prior year period. Net margin attributable to VIP shareholders increased to 8.3% from 7.4% in the prior year period. Net income attributable to VIP Shop shareholders per diluted ads increased to RMB 4.48 from RMB 3.72 in the prior year period. Non-GAAP net income attributable to VIP shop shareholders was RMB 2.31 billion compared with RMB 2.31 billion in the prior year period. Non-GAAP net margin attributable to VIP shops shareholders was 8.7% compared with 8.8% in the prior year period. Non-GAAP net income attributable to VIP Shop shareholders per diluted ads increased to RMB 4.68 from RMB 4.43 in the prior year period. As of March 31, 2026, we had cash and cash equivalents and restricted cash of RMB 28.3 billion and short term investment of RMB 2.7 billion. Looking forward to the second quarter of 2026, we expect our total net revenues to be between RMB 24.5 billion and RMB 25.8 billion, representing a year over year decrease of approximately 5% to 10% to 0%. Please note that this forecast reflects our current and a 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 and A.

OPERATOR

Thank you. If you would like to ask a question, you will need to press star and one on your telephone and wait for your name to be announced. And to withdraw your question, please press star and one again. Please kindly translate your question into Chinese. If you are bilingual, please stand by while we compile the Q and A roster. Thank you. We'll now take the first question today. This is from Thomas Chong from Jefferies. Please go ahead.

Thomas Chong (Equity Analyst)

Let me translate into English. Thanks management for taking my question. My first question is about the monthly Gross Merchandise Volume (GMV) trend. Given that we have seen some softness in industry parcel volume in the past few weeks or even last month?. So how is our monthly Gross Merchandise Volume (GMV) so far? And my second question is relating to June 18th. How should we think about the events this year versus last year? And on top of that, how is the consumer sentiment currently that we should think about the outlook for the second half? Thank you.

Eric Shen (Co-Founder, Chairman and CEO)

Okay, so we actually started the year on a very strong note. We have seen holiday surge during the January to February period when consumers actually concentrate their buying activities and that effectively pushed forward demand. So following the holiday period, we saw a very apparent moderation of sales in March. And as we enter the second quarter, the April data does not turn out very well. It's not improving from March and into May. To date, still very challenging, but actually we saw a slight pickup in consumer activity. But we have been through half of the quarter. It seems that we have limited visibility on consumer sentiment and activity. How the rest of the quarter will turn out still depends on the month long industry promotion, which we also don't have very big expectations. So we think it's prudent, it's more prudent for us to give a conservative guidance and reset our second quarter expectations. Turning to our outlook for the full year, we think we still have opportunities in the second half and we believe as consumer sentiment may be improving marginally, we should be able to capture opportunities in discretionary spending, especially apparel. And we look forward to making the best effort to maintain steady operational performance for the second half. So for the full year I will continue to believe that we will maintain steady outlook.

OPERATOR

Thank you. Thank you. We will now take the next question. This is from Vicky Wu from cicc. Please go ahead,

Ma Huang (Chief Financial Officer)

I will translate by myself. Thanks management for taking my question. I would like to ask for some updates regarding Shenshan outlets. First, would you walk us through Shenshan's first quarter performance? And second, we've noticed that Vipshop commercial rig is about to be launched and how should we assess its subsequent impact on the financial statements? Thank you. Well, thanks for your question. And actually Shenzhen Outlets business is quite strong in the first quarter and the GMV grows around 30% year over year. And thanks for your question regarding the REITs. And I think some of the investors may be aware that VIP Shop Commercial REIT obtained official approval from the CSRC and the Shanghai Stock Exchange in late April and complete the pricing process on May 19. And there are two underlying assets, Shenshan List in Zhengzhou and Harbin. Both material outlets operate for around 10 years and both outlets hold leading position in their regional markets. Zhengzhou outlets is the highest-grossing outlet in Henan Province while the Harbin outlets ranks first in Heilongjiang Province and the commercial REITs issued feature more flexible policy regarding the fund usage and extension mechanism. And actually, in addition to these three outlets already used as underlying assets for the risk, we also hold another 18 outlets projects demonstrating strong potential for future expansion. We will conduct further evaluation based on our strategy and market conditions and for the accounting treatment for this Zhengzhou and Harbin we subscribe for 49% of the total shares in the commercial rate. In simple terms we will lose control and we will deconsolidate the investment from our financials and recognize the related investment again. Accordingly and more specifically on a GAAP basis we will book a one time investment gain of around 5.3 billion RMB in the second quarter, an increase of RMB 1.7 billion income tax expenses and cash flow wise we will see a significant increase in net cash inflow of RMB 1.7 billion in the second quarter.

OPERATOR

Thank you. Thank you. We will now take the next question. This is from Alicia Yap from Citigroup. Please go ahead.

Alicia Yap (Equity Analyst)

Hi. Hello. So thanks management for taking my questions. I wanted to follow up. I think management earlier mentioned that seems like you guys saw April is a negative growth for your platform and then maybe May there's also so far month to date it also seems to be negative. But then I think last week we have the China retail sales data is the total apparel sales is actually grew 3.6% in April. So just wanted to see where is the disconnect. Is it a lot of these spending been shifting to offline or is it there are some of the, you know the market share, you know our market shares are losing to other online platform and then related to that is also on the Shenshan Outlet. Also I think management mentioned the platform grew like 30 plus percent. Also wanted to know is this because of the consumer behavior that you observe started to shift more to the offline shopping or is it because Shenshan actually has certain merchandise that VIP online doesn't have? Thank you.

Ma Huang (Chief Financial Officer)

Okay, so the National Bureau of Statistics (NBS) data, the apparel sales, the growth of 3.6% you have mentioned actually refers to both online and offline. Based on our observation actually online we have noted we have seen a very notable decline and we are actually quite in line with the industry trend. And offline we do see very strong growth. We believe it could be the difference of consumer activity with online and offline shopping. When they do online shopping they tend to return a lot. So that would make the sales and after revenue data more compressed. And with offline consumers do shift part of their spending increasingly to outlet channels.. And it's actually the same with merchants with brand partners. They have been shifting a little bit more resources to offline outlets channels as well. But we think it's still partially holiday driven and going forward we have to see whether the momentum can be sustained. In addition the offline outlook, the outperformance is actually benefiting from a higher concentration of certain categories, especially sportswear and outdoor products, that makes its sales performance exceptionally strong. Because consumers tend to shop into these categories, it's just fitting in with their lifestyle and it's actually the same thing with the online category performance. Even in April and May, when we do see a broader weakness in apparel categories, sportswear and outdoor products continue to outperform. I think the real weakness is actually going into discretionary, more discretionary apparel categories like women's wear and menswear, which are pretty much fashion driven. So I think we still need some time to see whether the discretionary spending will turn out better than expected going forward.

OPERATOR

Thank you. Thank you. We will now take the next question. This is from Ronald Kung from Goldman Sachs. Please go ahead.

Ronald Kung (Equity Analyst)

Thank you management for taking my question. First, want to ask about the GMV gap with revenue. Is that due to Shenshan or maybe the return rates have changed? Second is given that the March, April, May trends have been quite soft, should we take this or read this into the second half? Given the base in the third quarter last year is not a low one which therefore the basis is normal so how should we think of the recent trends and translating to our expectations into the second half? Thank you. Well, thanks for your question and let me answer the first question. Actually the year over year growth gap between revenue and GMV in the first quarter increased due to the following two reasons. The first one is the return exchange rate slightly increased year over year due to higher contribution from apparel categories and SVIP members. Secondly just you mentioned the increased GMV contribution from financial outlets given that Shenzhen operates on a commission based model so from accounting wise we recognize this revenue based on net method which resulting revenue to GMV gap become wider.

Ma Huang (Chief Financial Officer)

In terms of our full year outlook even when we face near term pressure from March to May to date we think it's still within our control. It's just from negative 5% to 0% that's the range we are confident to maintain and also the recent softness is related to a number of factors weather conditions, seasonal transition to spring and summer apparel. Of course there is a bit of uncertainties on consumer sentiment and behavior, et cetera. So we may need more time to see whether the trend will be improving going forward. But for the full year we think our full year target is still achievable and by continuously optimizing our operational strategies, we should be able to maintain at least a steady business performance. Thank you.

OPERATOR

Thank you. Due to time constraints, that concludes today's Q and A session. At this time, I will turn the conference back to Jessie for any closing remarks.

Jessie Zheng (Head of Investor Relations)

Thank you for taking the 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.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.