Vipshop Holdings Ltd (NYSE:VIPS) has had an impressive year going by the 30% plus rally since the start of the year. The rally has come at the backdrop of increased focus on e-commerce stocks in the aftermath of the COVID-19 pandemic.
E-commerce Boom
Just like other e-commerce players, Vipshop has enjoyed booming business on shopping patterns shifting to online. At the same time, the company has been flying under the radar that has not been the case in 2020. The company has been on the spotlight on investors acknowledging the potential impact of China’s population when it comes to e-commerce.
Vipshop runs a discount shopping site in China. It has already inked deals with over 30,000 brands. It also boasts of a huge user base of 340 million active accounts affirming its credentials in the burgeoning Chinese e-commerce landscape.
While the company faces stiff competition from industry leaders of the likes of Alibaba and Tencent, it has succeeded in carving a niche for itself in bargain-bin flash sales. While second-quarter results did fell short of analysts’ estimates, it included a 6% year over year increase in sales to $3.4 billion.
While a 6% sales growth is a shadow of what other players posted, it still exceeded the company’s guidance affirming the fact that the company is meeting its targets. Net income in the quarter was also up 89% to $218 million.
Vipshop Improving Prospects
The fact that Vipshop is the sixth largest e-commerce company in China underscores its credentials as well as long term prospects amid the expected growth in the sector. Chief Executive Officer Eric Shen has already confirmed that the company is well-positioned to continue gaining market share in China’s discount retail segment.
Likewise, the company expects a 5% to 10% increase in revenues in the third quarter. A 5% to 10% revenue growth would be impressive, given that the third quarter is traditionally a light session without much promotional events. The CEO expects the company to post stellar results in the fourth quarter as it is the quarter where apparel stock sales are much higher.