From A Financial PERSPECTIVE

From A Financial PERSPECTIVE 1

Disclosure: I’ve no positions in virtually any stocks mentioned, and no plans to initiate any positions next 72 hours. Vipshop Holdings Reported Staggers Q1 Earnings That Exceeded Analyst Expectations. The Effect FROM THE LeFeng Acquisition Will Be Seen By 2014Q4 At THE INITIAL Likely But Should Prove To Be A EXTREMELY Shrewd Acquisition. THE BUSINESS Stands To Benefit Further From A Blossoming Chinese Ecommerce Market. In light of last week’s earnings release and the plethora of Chinese commerce companies listing in the US this year, this article will discuss Vipshop’s outlook and its own procedures in China.

Vipshop offers genuine brands most importantly discounts for a limited time period and their consumer bottom has grown to 28 million in only 4 years. The customer base is currently predominantly female, with only 25% of customers being male. The ongoing company has about 9900 brands, where in fact the top 20 suppliers take into account about 12% of revenue, and the top 10 account for less than 10% of total net revenue.

Many traders have been under the impression that the majority of the revenue comes from tier 3 and 4 metropolitan areas. However, the income from tier 1 and 2 combined is actually larger than the tier 3 and 4 combined revenues. Tier 1 cities represent 12% of revenue, whilst tiers 2 represents 40%. That is important, because Vipshop attracts the whole of China, rather than just a particular set of customers. It allows Vipshop to consider the advantage of the whole boom in the Chinese commerce market, than only a particularly segment rather. In 2014, Vipshop will concentrate on reducing expenses by expanding warehouse capability. This will enhance their ability to serve their customers as well.

The company is committed to growing their product stock portfolio both organically and through acquisitions. Cosmetics is an integral element, and this was shown by the business’s acquisition of LeFeng. Of the full-total energetic customers from Q1 of 7.4m, about 1m actually came from LeFeng, which generated 1.3m purchases. Analysts have talked about the result of LeFeng on the average order size, because in Q1 the common ticket size actually reduced. However, as CFO Yang Donghao explained, cosmetic customers’ orders generally have a lower dollar amount. The traditional average purchases per customer for Vipshop is about 3x a quarter, which is more than the 1 significantly.3x from LeFeng customers.

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It remains to be observed whether this is an ongoing craze, as the LeFeng acquisition wasn’t officially shut until mid-February, so the 1.3x figure could improve in the next quarter. Yet Vipshop plans to address this primarily by enhancing operational capabilities, as beauty products customers do tend to order less than other customers. Furthermore, the income contribution from LeFeng in Q1 was less than 5%, February although this is attributed to the deal being closed on 14th.

167m, rendering it the second largest player in the market, and ascension to the first place is targeted in the near future. CFO Yang Donghao talked about how the revenue produced by LeFeng isn’t presently meaningful to the overall company, as it’s still small. Actually, LeFeng isn’t growing as fast as Vipshop’s primary business of apparel.

From A Financial PERSPECTIVE
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