Vipshop Holdings' 2024 Earnings: Resilient Performance Amid Revenue Headwinds
15min read Vipshop Holdings (NYSE: VIPS) reported its full-year 2024 results, marking a mixed performance for the online discount retailer. While revenue declined modestly, the company’s focus on margin management, shareholder returns, and its premium Super VIP membership program provided bright spots in an otherwise challenging retail environment.
Key Highlights
- Revenue: Full-year net revenue of RMB108.4 billion (US$14.9 billion) fell 4.0% year-over-year but beat consensus estimates by ~1.5%, according to StreetAccount.
- EPS: GAAP earnings per diluted ADS of RMB14.35 (US$1.97) aligned with expectations, while non-GAAP EPS of RMB16.75 (US$2.29) dipped slightly from 2023 due to higher operating costs.
- Margin Expansion: Gross margin improved to 23.5% (from 22.8% in 2023), driven by cost discipline and stronger apparel sales.
- Shareholder Returns: A US$2.40 per ordinary share dividend was declared, and the company repurchased US$43.3 million in ADSs in Q4 2024.
Revenue Performance: A Slowdown, But Not a Collapse
The 4% revenue decline reflects broader macroeconomic pressures in China’s retail sector, particularly in discretionary spending. However, Vipshop’s ability to outperform lowered expectations underscores its operational resilience.
Super VIP Growth: The company noted “double-digit growth” in its premium Super VIP membership tier, which now accounts for over 30% of total GMV. This segment’s resilience suggests a strategic shift toward high-value customers, offsetting broader demand softness.
EPS: Margins Hold Steady, but Costs Bite
While net income fell 4.9% to RMB7.7 billion, operating margins improved to 8.5% (from 8.1% in 2023), thanks to better inventory management and lower supply-chain disruptions. However, a 20% surge in Q4 general & administrative expenses (to RMB1.2 billion) highlighted rising costs in marketing and technology.
Non-GAAP EPS declined only marginally, signaling that core profitability remains intact despite revenue headwinds. The dividend payout of US$0.48 per ADS (equivalent to a 2.1% yield at current prices) also reinforces the company’s commitment to rewarding shareholders.
Customer Metrics: Losing Volume, Gaining Loyalty
Active customers fell 3.1% to 84.7 million, while total orders dropped 6.7% to 757.5 million. This decline reflects a strategic pivot away from volume toward high-spending Super VIPs, whose average order value rose 12% year-over-year. Management emphasized that this shift is “critical to long-term profitability,” even if it means smaller customer counts.
Balance Sheet: Strong Liquidity, Cautious Outlook
Vipshop ended 2024 with RMB29.0 billion (US$4.0 billion) in cash and short-term investments, providing ample liquidity to weather soft demand. However, free cash flow fell 40% to RMB5.6 billion, a red flag that cost discipline may face limits.
Outlook: 2025 Challenges Ahead
For Q1 2025, revenue is projected to drop 5%–0% year-over-year, suggesting no near-term rebound. CEO Eric Shen acknowledged “challenging macro conditions” but highlighted plans to boost Super VIP retention and cut non-essential spending.
Conclusion: A Hold with Upside Potential
Vipshop’s 2024 results paint a picture of a company navigating tough retail conditions with mixed success. While revenue and customer growth are slowing, margin improvements and shareholder returns provide a floor for valuation.
Investment Takeaways:
- Dividend Yield: At ~2.1%, the payout offers stability in a volatile sector.
- Super VIP Momentum: Double-digit growth in this segment justifies cautious optimism about future margins.
- Valuation: Shares trade at 14.2x 2024 non-GAAP EPS, below its five-year average of 16x, suggesting some discount to growth peers.
However, risks remain. The company’s reliance on China’s discretionary spending, coupled with a 5% revenue decline forecast for Q1, means execution on cost cuts and Super VIP expansion will be critical. Investors should monitor whether margin gains can outpace revenue declines.
In sum, Vipshop’s resilience in 2024 positions it to weather near-term headwinds, but its success in 2025 will hinge on its ability to monetize its premium customer base while controlling costs.
