Vipshop Reports Second Quarter 2013 Financial Results

            Vipshop Reports Second Quarter 2013 Financial Results

2Q13 Total Net Revenues Up 159.7% YOY

2Q13 Gross Margin Increased to 23.5%

Achieved Net Profit of US$9.0 Million

Conference Call to be Held at 8:00 AM U.S. Eastern Time on August 15, 2013

PR Newswire

GUANGZHOU, China, Aug. 14, 2013

GUANGZHOU, China, Aug. 14, 2013 /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 June 30, 2013.

Second Quarter 2013 Highlights

  oTotal net revenues increased by 159.7% over the prior year period to
    US$351.3 million, primarily attributable to a 138.7% increase in the
    number of active customers[1] from 1.5 million to 3.5 million and a 136.3%
    increase in total orders[2] from 4.7 million to 11.0 million.
  oGross margin increased to 23.5% from 21.8% in the prior year period.
  oNon-GAAP income from operations[3] was US$9.5 million, as compared to a
    non-GAAP loss from operations of US$3.8 million in the prior year period.
    Non-GAAP operating income margin[4] was 2.7%, compared to a non-GAAP
    operating loss margin of 2.8% in the prior year period.
  oNet income was US$9.0 million, compared to a net loss of US$5.8 million in
    the prior year period. Net income margin was 2.6%, compared to a net loss
    margin of 4.3% in the prior year period.
  oNon-GAAP net income[5] was US$11.8 million compared to a non-GAAP net loss
    of US$4.2 million in the prior year period. Non-GAAP net income margin[6]
    was 3.4% compared with a non-GAAP net loss margin of 3.1% in the prior
    year period.

Mr. Eric Shen, Chairman and CEO of Vipshop, stated, "We are proud to report
another solid quarter with strong revenue growth and margin expansion. We
believe that these results attest to our growing market leadership and brand
reputation as China's leading online discount retailer for brands. Our unique
positioning is underpinned by our core competency in merchandizing, logistics
and consumer intelligence that are specifically designed and integrated into
our differentiated business model. As we continue to leverage our strong
market position, we have further grown our loyal customer base and deepened
our relationships with our brand partners, strengthening the scale effects
associated with our growing business operation. With almost 140%
year-over-year increase in both active customer count and the number of total
orders, Vipshop has increasingly become the preferred online discount outlet
for our customers to shop for their favorite brands and for brand partners to
provide special offers on their merchandise. Building upon our increased
operation and scale effect, we remain confident that our market leadership
position will continue to help us deliver strong returns for our shareholders
over the long term."

Mr. Donghao Yang, CFO of Vipshop, commented, "We are pleased that our
increased business scale and brand recognition have and will continue to
strengthen our bargaining power and operational efficiency, further improving
our overall profitability. As we remain focused on enlarging our warehouse
capacity, improving operational efficiency and expanding our mobile commerce
capabilities, we aim to further expand upon growth opportunities associated
with China's large and underdeveloped discount retail market. We believe this
dedication will further strengthen Vipshop's customer loyalty and brand
partner satisfaction while fostering sustained growth."

Second Quarter 2013 Financial Results

REVENUES

Total net revenues for the second quarter of 2013 increased by 159.7% to
US$351.3 million from US$135.3 million in the prior year period, primarily
driven by growth in the number of active customers and total orders.

The number of active customers for the second quarter of 2013 increased by
138.7% to 3.5 million from approximately 1.5 million in the prior year period.
The number of total orders for the second quarter of 2013 increased by 136.3%
to 11.0 million from 4.7 million in the prior year period. This increase was
primarily due to the Company's continued efforts to optimize and increase
brand and product selection, available on its website. In addition, the
Company has expanded its warehouse capacity to help facilitate and accommodate
increased demand from customers as well as accelerate the delivery of
purchased products.

GROSS PROFIT

Gross profit for the second quarter of 2013 increased by 179.6% to US$82.6
million from US$29.6 million in the prior year period. This reflects both the
significant increase in total net revenues as well as continued margin
expansion. Gross margin increased to 23.5% in the second quarter of 2013 from
21.8% in the prior year period. This increase is attributable to the Company's
increased bargaining power with its suppliers due to increased purchasing
scale.

OPERATING INCOME AND EXPENSES

Total operating expenses for the second quarter of 2013 increased by 118.6% to
US$77.3 million from US$35.4 million in the prior year period. As a percentage
of total net revenues, total operating expenses decreased to 22.0% from 26.1%
in the prior year period.

  oFulfillment expenses increased by 108.4% to US$42.8 million from US$20.5
    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 12.2% from 15.2% in the prior
    year period, which reflects the Company's strategy of shifting towards
    using regional and local delivery services to reduce the Company's
    shipping and handling expenses per order as well as the capacity expansion
    of regional warehouses.
  oMarketing expenses increased by 128.9% to US$15.1 million from US$6.6
    million in the prior year period. As a percentage of total net revenues,
    marketing expenses decreased to 4.3% from 4.9% in the prior year period,
    demonstrating the Company's ability to control marketing expenses by
    retaining repeat customers and achieving high growth of new customers
    through word-of-mouth referrals.
  oTechnology and content expenses increased by 225.9% to US$8.7 million from
    US$2.7 million in the prior year period, primarily reflecting the
    Company's continued efforts to invest in its website and IT systems to
    better support future growth. As a percentage of total net revenues,
    technology and content expenses was 2.5%, compared with 2.0% in the prior
    year period.
  oGeneral and administrative expenses increased by 92.9% to US$10.8 million
    from US$5.6 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 decreased to 3.1% from 4.1% in the prior year
    period, reflecting the Company's increased operational leverage as well as
    continued cost-control efforts.

Income from operations increased to US$6.7 million, compared to a loss from
operations of US$5.4 million in the prior year period, reflecting the growing
scale of the Company's operations, improved gross margin and costs control.
Operating income margin increased to 1.9%, compared to an operating loss of
4.0% in the prior year period.

Non-GAAP income from operations, which excludes the impact of share-based
compensation expense, increased to US$9.5 million, compared to a non-GAAP loss
from operations of US$3.8 million in the prior year period. Non-GAAP operating
income margin increased to 2.7%, compared to a non-GAAP operating loss margin
of 2.8% in the prior year period.

NET INCOME/LOSS

Net income increased to US$9.0 million, compared to a net loss of US$5.8
million in the prior year period. Net income margin increased to 2.6%,
compared with a net loss margin of 4.3% in the prior year period. Net income
per diluted ADS[7] increased to US$0.16, compared to a net loss per diluted
ADS of US$0.11 in the prior year period.

Non-GAAP net income, which excludes share-based compensation expenses,
increased to US$11.8 million compared to a non-GAAP net loss of US$4.2 million
in the prior year period. Non-GAAP net income margin increased to 3.4%
compared with a non-GAAP net loss margin of 3.1% in the prior year period.
Non-GAAP net income per diluted ADS increased to US$0.20 in the second quarter
of 2013 compared to a non-GAAP net loss per diluted ADS of US$0.08 in the
prior year period.

For the quarter ended June 30, 2013, the Company's weighted average number of
ADSs used in computing diluted income per ADS was 58,036,735.

As of June 30, 2013, the Company had cash and cash equivalents of US$167.2
million and held-to-maturity securities of US$217.3 million.

For the second quarter of 2013, net cash from operating activities was US$11.1
million.

Business Outlook

For the third quarter of 2013, the Company expects its total net revenues to
be between US$365 million and US$370 million, representing a year-over-year
growth rate of approximately 134% to 137%. 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, August 15, 2013 at 8:00
am Eastern Time or 8:00 pm Beijing Time to discuss its financial results and
operating performance for the second quarter 2013.

To participate in the call, please dial the following numbers:

United States:           +1-845-675-0438
International Toll Free: +1-855-500-8701
China Domestic:          400-1200654
Hong Kong:               +852-3051-2745
Conference ID:           #20205962

The replay will be accessible through August 22, 2013 by dialing the following
numbers:

United States Toll Free: +1-855-452-5696
International:           +61 2 8199 0299
Conference ID:           #20205962

A live and archived webcast of the conference call will also be available at
the Company's investor relations website at http://ir.vipshop.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
ir.vipshop.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/(loss),
non-GAAP net income/(loss) per diluted ADS, non-GAAP income/(loss) from
operations, non-GAAP net income/(loss) margin, and non-GAAP operating
income/(loss) margin, each of which is a non-GAAP financial measure. Non-GAAP
net income/(loss) is net income/(loss) excluding share-based compensation
expenses. Non-GAAP net income/(loss) per diluted ADS is non-GAAP net
income/(loss) divided by weighted average number of diluted ADS. Non-GAAP
income/(loss) from operations is income/(loss) from operations excluding
share-based compensation expenses. Non-GAAP operating income/(loss) margin is
non-GAAP income/(loss) from operations as a percentage of total net revenues.
Non-GAAP net income/(loss) margin is non-GAAP net income/(loss) as a
percentage of total net revenues. The Company believes that separate analysis
and exclusion of the non-cash impact of share-based compensation 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,
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/(loss) 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.
[2] Total orders are defined as the total number of orders placed during the
    period.
    Non-GAAP income/(loss) from operations is a non-GAAP financial measure,
[3] which is defined as income/(loss) from operations excluding share-based
    compensation expenses.
    Non-GAAP operating income/(loss) margin is a non-GAAP financial measure,
[4] which is defined as non-GAAP income/(loss) from operations as a percentage
    of total net revenues.
[5] Non-GAAP net income/(loss) is a non-GAAP financial measure, which is
    defined as net income/(loss) excluding share-based compensation expenses.
    Non-GAAP net income/(loss) margin is a non-GAAP financial measure, which
[6] is defined as non-GAAP net income /(loss) as a percentage of total net
    revenues.
[7] "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 (Loss) and Comprehensive Income
(Loss)
(In US dollars, except for share data)
                                    Three Months Ended
                                    June 30, 2012 June 30, 2013 March 31, 2013
                                    USD           USD           USD
                                    (Unaudited)   (Unaudited)   (Unaudited)
Net revenues                       135,279,785   351,027,738   310,658,681
Other revenues(1)                   -             261,475       -
Total net revenues                  135,279,785   351,289,213   310,658,681
Cost of goods sold                  (105,727,006) (268,659,461) (237,908,540)
Gross profit                        29,552,779    82,629,752    72,750,141
Operating expenses
Fulfillment expenses(2)             (20,540,533)  (42,815,750)  (37,699,224)
Marketing expenses                  (6,593,048)   (15,092,686)  (13,126,003)
Technology and content expenses     (2,656,044)   (8,656,210)   (7,948,145)
General and administrative expenses (5,575,356)   (10,755,077)  (9,804,914)
Total operating expenses            (35,364,981)  (77,319,723)  (68,578,286)
Other income                        369,609       1,438,012     1,306,068
(Loss) income from operations       (5,442,593)   6,748,041     5,477,923
Interest expense                    (33,977)      -             -
Interest income                     375,826       3,607,987     2,436,478
Exchange gain (loss)                (678,866)     1,039,605     (222,618)
(Loss) income before income taxes   (5,779,610)   11,395,633    7,691,783
Income tax expenses                 -             (2,362,458)   (1,850,610)
Net (loss) income                   (5,779,610)   9,033,175     5,841,173
Weighted average numbers of shares used in calculating earnings (loss) per
share:
---- Basic                          101,138,565   110,564,733   103,004,723
---- Diluted                        101,138,565   116,073,470   109,132,970
Net earnings (loss) per share
---- Basic                          (0.06)        0.08          0.06
---- Diluted                        (0.06)        0.08          0.05
Net earnings (loss) per ADS (2
ordinary shares equal to 1 ADS)
---- Basic                          (0.11)        0.16          0.11
---- Diluted                        (0.11)        0.16          0.11
(1)Other revenues primarily consist of fees charged to third-party merchants
which the
Company provides platform access for sales of their products.
(2) Including shipping and handling expenses, which amounted US$12 million,
US$23.5 million and US$24 million in the three month periods ended June 30,
2012,
June 30, 2013 and March 31, 2013, respectively.
Net (loss) income                   (5,779,610)   9,033,175     5,841,173
Other comprehensive income, net of
tax:
Foreign currency translation        90,810        929,198       219,668
adjustments
Comprehensive (loss)income          (5,688,800)   9,962,373     6,060,841
                                    Three Months Ended
                                    June 30, 2012 June 30, 2013 March 31, 2013
                                    USD           USD           USD
                                    (Unaudited)   (Unaudited)   (Unaudited)
Share-based compensation charges
included are follows
Fulfillment expenses                75,540        184,945       77,771
Marketing expenses                  29,628        91,117        80,247
Technology and content expenses     212,248       689,445       261,343
General and administrative expenses 1,286,408     1,826,200     2,766,446
Total                               1,603,824     2,791,707     3,185,807



Vipshop Holdings Limited
Condensed Consolidated Balance Sheets
(Amounts in US dollars)
                                   AsofDecember31,2012 AsofJune30,2013
                                   USD                     USD
ASSETS                                                     (Unaudited)
CURRENT ASSETS
Cash and cash equivalents          124,472,629             167,214,905
Restricted deposits                -                       -
Held-to-maturity securities        86,097,191              217,314,886
Accounts receivable                6,990,560               2,192,221
Amounts due from related parties   177,237                 -
Other receivables                  9,993,887               10,510,137
Inventories                        143,963,931             117,534,809
Advance to suppliers               9,569,795               13,863,756
Prepaid expenses                   686,876                 1,875,785
Deferred tax assets                -                       3,205,385
Total current assets               381,952,106             533,711,884
NON-CURRENT ASSETS
Property and equipment, net        12,637,567              16,085,557
Deposits for property and          4,322,217               2,516,913
equipment
Other assets                       5,230                   3,050
Total non-current assets           16,965,014              18,605,520
TOTAL ASSETS                       398,917,120             552,317,404
LIABILTIES AND EQUITY
CURRENT LIABILITIES
Accounts payable (Including
accounts
payable of the VIE without
recourse to the
Company of $101,556 and $35,563 as 193,455,827             190,757,330
of
December 31, 2012 and June 30,
2013,
respectively)
Advance from customers (Including
advance from
customers of the VIE without
recourse to the
Company of $55,948,713 and         55,948,713              52,261,942
$52,261,942 as of
December 31, 2012 and June 30,
2013,
respectively)
Accrued expenses and other current
liabilities(Including accrued
expenses and other
current liabilities of the VIE
without recourse to the            52,676,443              97,282,377
Company of $24,908,418 and
$55,512,863 as of
December 31, 2012 and June 30,
2013,
respectively)
Amounts due to related
parties(Including amounts
due to related parties of the VIE
without recourse to
the Company of $789,057 and $      1,335,756               1,748,221
1,286,479 as of
December 31, 2012 and June 30,
2013,
respectively)
Deferred income (Including
deferred income of the
VIE without recourse to the
Company of                         12,917,567              14,215,130
$10,850,319 and $13,101,398 as of
December 31,
2012 and June 30, 2013,
respectively)
Total current liabilities          316,334,306             356,265,000
Total liabilities                  316,334,306             356,265,000
EQUITY:
Ordinary shares (US$0.0001 par
value, 471,620,833
shares authorized, and 101,284,881
and
110,648,469 shares issued and      10,128                  11,065
outstanding as of
December 31, 2012 and June 30,
2013,
respectively)
Additional paid-in capital         258,368,448             355,813,887
Accumulated losses                 (176,025,335)           (161,150,987)
Accumulated other comprehensive    229,573                 1,378,439
income
Total shareholders' equity         82,582,814              196,052,404
TOTAL LIABILITIES AND              398,917,120             552,317,404
SHAREHOLDERS' EQUITY



Vipshop Holdings Limited
Reconciliations of GAAP and Non-GAAP Results
                                   Three Months Ended
                                   June30, 2012  June30, 2013 March31, 2013
                                   USD            USD           USD
                                   (Unaudited)    (Unaudited)   (Unaudited)
(Loss) income from operations      (5,442,593)    6,748,041     5,477,923
Share-based compensation expenses  1,603,824      2,791,707     3,185,807
Non-GAAP (loss) income from        (3,838,769)    9,539,748     8,663,730
operation
Net (loss) income                 (5,779,610)    9,033,175     5,841,173
Share-based compensation expenses  1,603,824      2,791,707     3,185,807
Non-GAAP net (loss) income         (4,175,786)    11,824,882    9,026,980
Non-GAAP weighted average numbers of shares used in calculating net income
(loss) per share:
---- Basic                         101,138,565    110,564,733   103,004,723
---- Diluted                       101,138,565    116,073,470   109,132,970
Non-GAAP net income/loss per share
---- Basic                         (0.04)         0.11          0.09
---- Diluted                       (0.04)         0.10          0.08
Non-GAAP net income/loss per ADS (2 ordinary
shares equal to 1 ADS)
---- Basic                         (0.08)         0.21          0.18
---- Diluted                       (0.08)         0.20          0.17

SOURCE Vipshop Holdings Limited

Website: http://ir.vipshop.com
Contact: Vipshop Holdings Limited, Millicent Tu, +86-20-2233-0732,
IR@vipshop.com; or ICR, Inc., Jeremy Peruski, +1-646-405-4866, IR@vipshop.com
 
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