Vipshop Holdings Limited (VIPS) Earnings

Management highlights

- Customer Base Health & SVIP Program Performance * Q1 performance was impacted by a later Chinese New Year, which pulled holiday demand forward into January-February and resulted in softer March sales, but underlying customer health remains strong * Total active customers grew positively, with SVIP paid members growing 9% YoY, and paid members accounting for 55% of total online spending * The firm shifted to a targeted, high-value customer acquisition model, replacing generic benefits with a tiered reward system that offers exclusive product access, deeper discounts, priority support and value-added benefits for high-spending members to boost conversion and average spend * A recent curated private sale event with global athletic brands drove a large surge in new SVIP sign-ups, particularly among young male shoppers, with sales far exceeding baseline levels - Merchandising Strategy Optimization * After 2025 team realignment, the firm has adopted a faster, more customer-aligned merchandising process that reduces time from market insight to product availability, to capture peak demand for deep discount branded inventory * The firm expanded cross-category offerings across apparel, childcare and home goods, and improved analytics and marketing support for brand partners * The made-for-VIP exclusive line was repositioned under the new Globe brand, with higher quality, style and value standards, and aligned with brand partners' seasonal calendars to stay on-trend with real-time fashion trends * The firm accelerated its buying cycle and locked in large volumes of exclusive low-priced inventory, which has enhanced the core

Guidance

- Second quarter 2026 total net revenue is guided to a range of RMB 24.5 billion to RMB 25.8 billion, representing a YoY decrease of 5% to 0%, a downward revision from earlier more optimistic expectations due to weaker than expected April and early May demand - Management reaffirmed the 2026 commitment to return no less than 75% of full-year 2025 non-GAAP net income to shareholders, and remains on track to deliver this with strong free cash flow; the $300 million annual dividend was completed in April 2026 - Management maintained a steady full-year 2026 outlook, expecting marginal improvement in consumer sentiment in the second half of the year, particularly for apparel discretionary spending, and believes full-year performance targets remain achievable with targeted operational optimization

Segment performance

The call does not break out financial performance for separate product segments at the firm level. Aggregate first quarter 2026 results: total net revenues increased 1.2% YoY to RMB 26.6 billion; gross profit increased 6.8% YoY to RMB 6.5 billion, gross margin expanded to 24.4% from 23.2% YoY; operating income increased 9.7% YoY to RMB 2.5 billion, operating margin expanded to 9.4% from 8.7% YoY; net income attributable to VIP Shop shareholders increased 13.6% YoY to RMB 2.2 billion, net margin expanded to 8.3% from 7.4% YoY. For the standalone Shanshan Outlets segment, first quarter 2026 GMV grew ~30% YoY.

Risks & headwinds

- Uncertain macroeconomic and consumer sentiment backdrop in China, with weaker than expected discretionary apparel spending in March, April and early May 2026 - Ongoing industry-wide softness in online apparel sales, with a gradual shift in consumer and brand partner resource allocation toward offline outlet channels - Near-term demand volatility driven by seasonal factors: unseasonable weather has slowed spring/summer apparel transition, and the later 2026 Chinese New Year pulled forward demand into Q1, leading to softer post-holiday sales - Limited visibility on consumer demand trends through the second quarter, with low expectations for significant upside from the annual 618 industry promotion

Analyst Q&A

• Q: Given recent industry parcel volume softness, can you share April/May GMV trends, your 618 expectations, and second half 2026 consumer sentiment outlook? /

  A: January-February 2026 saw very strong demand boosted by the later Chinese New Year, which pulled consumption forward from March. Sales moderated sharply in March, and April results were also weak with negative year-over-year growth. May has seen a slight pickup but remains challenging overall. Management expects 618 to be relatively stable, with no material upside expected, hence the conservative Q2 guidance. Management expects marginal improvement in consumer sentiment in the second half, particularly for apparel, and aims to deliver full-year steady performance.

• Q: What was Shanshan Outlets' Q1 performance, and what is the financial impact of the upcoming commercial REIT listing? /

  A: Shanshan Outlets' Q1 2026 GMV grew approximately 30% year-over-year. The REIT, which includes the leading Zhengzhou and Harbin Shanshan Outlets as underlying assets, received regulatory approval and completed pricing in May 2026. VIP Shop will retain a 49% stake, deconsolidate the assets from its financial statements, and recognize a one-time 5.3 billion RMB GAAP gain in Q2 2026, with 1.7 billion RMB in incremental income tax expense. Net cash inflow will increase by 1.7 billion RMB in Q2. VIP Shop holds 18 additional outlet projects for potential future REIT inclusion, pending strategic and market evaluations.

• Q: NBS reported 3.6% YoY growth in total Chinese apparel sales in April, but VIP Shop saw negative growth. Is this due to spending shifting to offline or market share loss to other online platforms? How does this relate to Shanshan Outlets' strong growth? /

  A: The NBS figure includes both online and offline apparel sales. Industry-wide online apparel sales saw a notable decline in April, and VIP Shop's performance is aligned with this industry trend, while offline sales have grown strongly. Consumers are increasingly shifting some apparel spending to offline outlet channels, and brand partners are also shifting more resources to these offline channels. Shanshan's outperformance is also driven by its high concentration of fast-growing sportswear and outdoor categories, which align with current consumer lifestyle trends and continue to outperform even amid broader apparel weakness. The main weakness is in more discretionary fashion categories like women's and men's wear.

• Q: Why has the gap between GMV and revenue grown wider, and will the recent March-May softness hurt second half performance given the normal base from Q3 2025? /

  A: The wider revenue-GMV gap comes from two factors: a slight year-over-year increase in return rates driven by higher apparel and SVIP contribution, and the growing GMV contribution from Shanshan Outlets, which uses a commission-based revenue recognition model that creates a larger gap between gross transaction value and reported revenue. Management noted the recent softness was within the guided 0% to -5% YoY range, and is partially driven by seasonal weather factors that delayed spring/summer apparel transitions. While near-term sentiment remains uncertain, management believes full-year targets remain achievable, and expects overall performance to stay steady.