Vipshop Stock Surges After Q4 Earnings Beat, CEO Highlights Apparel Growth And Discounted Offerings, Sees Up To 5% Revenue Decline In Q1

Vipshop Holdings Limited (VIPS) stock surged on Friday, February 21, 2025, after the company reported fourth-quarter sales of $4.55 billion (33.2 billion Chinese Yuan), topping Wall Street estimates of $4.42 billion. The Chinese discounted branded retailer also registered adjusted earnings per ADS of 78 cents, surpassing analyst consensus estimates of 72 cents. The stock price surged after the report, with VIPS stock up 9.57% to $15.92 premarket at last check Friday.

Vipshop's flash sales, which offer deep discounts on apparel and other goods in a short time window, have been a significant driver of the company's success. The company's CEO, Eric Shen, highlighted the growth in apparel categories and the company's discounted offerings as key factors contributing to the stock price jump. Apparel-related categories contributed to more than 70% of the total gross merchandise volume processed by the company, with repeat customers as a percentage of total active customers jumping to 79.7% in 2019.



However, Vipshop warned that it expects first-quarter revenue to fall 15% to 20% from the year-ago period, primarily factoring in the short-term impact from the novel coronavirus outbreak. The company's total orders for the quarter were 217.5 million, compared with 234.3 million in the prior year period. The number of active customers for the quarter was 45.7 million, down from 48.5 million a year ago.

Despite the near-term challenges, Vipshop remains committed to its merchandising strategy and expects to continue to see strong growth in the Chinese discount retail market. The company's gross margin for the quarter was 23.0%, down from 23.7% in the prior year period. Gross profit declined by 7.4% to $1.04 billion (7.6 billion Chinese Yuan). GMV for the quarter was 66.2 billion Chinese Yuan versus 66.4 billion Chinese Yuan a year ago.

Vipshop's strong cash position, with $3.7 billion (27.0 billion Chinese Yuan) in cash and cash equivalents and $256.6 million (1.9 billion Chinese Yuan) in short-term investments, supports the company's newly announced annual cash dividend of $0.48 per ADS and the completion of its $1.0 billion share repurchase program. The company's strategic shift towards lower-margin apparel categories and offseason branded apparel has positioned it for long-term success in the competitive discount retail space, as it continues to focus on high-value market segments and maintain customer loyalty.

In conclusion, Vipshop's Q4 earnings beat and CEO's comments on apparel growth and discounted offerings have contributed to the stock price jump. However, the company faces near-term challenges due to the coronavirus outbreak and expects a revenue decline in Q1. Despite these challenges, Vipshop's strong cash position, strategic focus, and commitment to its merchandising strategy position it for long-term success in the competitive discount retail market.