Vipshop Holdings Ltd (NYSE:VIPS) is popping up after reporting robust financial and operational that affirms growth in the core business amid the COVID-19 shocks. The Chinese online discount retailer is the subject of renewed investor interest, having emerged as a key player in the Chinese trillion-dollar e-commerce sector.
Active Customers Growth
Third-quarter results have all but affirmed that Vipshop is a key player in China’s e-commerce sector after registering a 36% year-over-year increase in active customers to 43.4 million. A high existing and new customers underscore a high retention rate even as the company faces stiff competition from Alibaba and Tencent when it comes to online sales.
Positive trends in customer base growth and retention should continue to drive growth and profitability going forward. Likewise, the massive customer base is expected to continue supporting robust topline growth coupled with strong profitability heading into the year-end.
In the third quarter, gross merchandise volume was up 21% year-over-year to $38.3 billion, attesting to the impact of a massive customer base. Vipshop saw strong demand for core apparel- related categories, which grew faster at 29%. Buoyed by the third-quarter report, the discount retailer intends to focus on improving merchandising capability and offering.
Revenue in the quarter was up 18.2% to $3.4 billion, driven by growth in the number of active customers that led to a significant increase in Gross merchandise volume. Similarly, Gross Profit was up 15.3% to $7187.9 million. Net income attributed to shareholders was up 42% to $183.3 million.
Expected Growth
Signaling continued growth, as the number of active customers continues to increase; Vipshop has issued impressive fourth-quarter guidance. The discount retailer expects net revenue to increase by between 15% and 20% to between RMB33.7 billion and RMB35.2 billion.
Vipshop remains well-positioned to finish the year on a high after taking a significant hit in the first half of the year. China’s e-commerce industry is growing at an impressive rate in the wake of the COVID-19 pandemic. With consumers' shopping patterns switching to online, the company should be able to register a robust increase in revenues, going by the number of active customers on its platform.