Vip.Com Chairman And Chief Executive Shen Ya: Profit Increase Is Due To The Delivery Of SF.

29 consecutive quarters of profitable clothing sales, vip.com recently released its unaudited fourth quarter and full year earnings in 2019. Earnings data show that vip.com's net revenue in the fourth quarter increased to 29 billion 300 million yuan (about 4 billion 200 million U.S. dollars), an increase of 12.4% over the same period last year. According to general accounting standards, vip.com's net profit attributable to shareholders in the fourth quarter was 1 billion 500 million yuan (about 200 million US dollars), an increase of 111.4% over the previous year, higher than market expectations.


Meanwhile, in 2019, vip.com's net revenue reached 93 billion yuan (US $13 billion 400 million), an increase of 13% compared to the same period last year. According to general accounting standards, the net profit attributable to shareholders was 4 billion yuan (about 570 million US dollars), an increase of 88.7% over the same period last year. The total number of subscribers was 566 million 300 thousand, an increase of 29% over the same period last year. The number of active users increased to 69 million, an increase of 14% over the same period last year.


Shenyang, chairman and chief executive of vip.com, said that the sharp increase in net profit was mainly due to the termination of vip.com's express business of its own express delivery company in November 2019. The termination of the product delivery service has brought vip.com heavy assets and personnel spending and profits.


In addition, against the current outbreak of the new crown pneumonia, vip.com is pessimistic about its revenue forecast for the first quarter of this year. The company expects revenue range from 17 billion 100 million to 18 billion 100 million yuan.


According to the insiders, vip.com's strong performance is mainly due to its unique positioning on the online platform which turned back to the garment inventory in early 2019, and the water in the clothing industry will be high and the cost will be well controlled.


Wu Yue, an analyst at CICC, said vip.com's strategic return is worth looking at. In 2019, vip.com's clearer brand image became clearer, and its unique location alleviated the risk of competition and further released potential market space. Under this strategy, it is expected that vip.com's compound annual growth rate of future revenue is expected to remain at 10%, while the non common criteria operating profit margin will reach. 8-10%. It is expected that there will be room for further improvement in vip.com's profit margin. From the point of view, first, the company stopped shipment from December 2019, and orders were delivered from Shun Feng. The 4 quarter's performance fee rate optimization was obvious, but in view of not a full quarter, we expect that the cost rate will be further lowered in the future. Two, as the company focuses more on the positioning and strategy of the final cargo, it is expected that the organizational structure or advance will be promoted. Step simplification and R & D investment need not be excessive. But taking into account vip.com's long-term sustainable growth, it will maintain a balance of revenue and profitability. It is estimated that the future reasonable level of the non general criteria operating profit margin will be 8-10% (instead of two digits, though also capable of achieving that level). The excess profit space will be invested in the promotion of commodity price advantage, so as to reduce user access to cost related marketing costs. Consolidate the leading position of online brand discount retailers.


Wu Yue said that despite the impact of the epidemic in the first quarter of this year, there was a temporary weakness in online clothing sales, but taking into account the demand recovery after the end of the epidemic and the further rise in the inventory level of the industry, it was expected from the demand side and the supply side. All will create favorable conditions for vip.com to rebound. Vip.com's revenue in the first quarter of 2020 is expected to decline by 17% over the first quarter of last year (the clothing category is more affected), but the 2-3 quarter revenue growth is expected to improve and accelerate. It is expected that the short-term impact of the epidemic will usher in structural benefits. With the increase of apparel industry inventory, vip.com is expected to benefit from the largest online brand discount retailer in the country.


It is understood that since the second half of 2018, vip.com has again focused on brand sales, layout deep discount channel "last crazy rush", "only product rush rush", through low-priced sales to consolidate repeat users, increase the number of orders, and stimulate GMV growth.


Changjiang Securities researcher Lei Yu pointed out that at present, the pattern of double strong electricity suppliers is stable, and the sales structure of vip.com based on clothing has hidden worries for its growth. At present, the domestic electricity supplier has a strong pattern, and Ali (Tmall) and Jingdong two share nearly 80% of the domestic B2C market and nearly 90% of the market share of the mobile shopping market. The rest of the electricity providers cut more into vertical subdivision areas, such as suning.com of 3C, shoes bags of wheat bags, cosmetics jumei.com, department store 1, dream bazaar and so on. And the sales structure of vip.com products is still dominated by clothing. Under the double strong pattern of Jingdong and Alibaba, there are certain worries for its subsequent growth. At the same time, vip.com's high performance fee needs to be diluted by larger business scale, thereby enhancing its profitability.


Vip.com adopts the way of category expansion and the introduction of high value flow to cope with market competition and profit pressure. In terms of category expansion, epitaxy is an important way to expand vip.com's category. In 2014, vip.com acquired 75% stake in the beauty shop electric business, and in 2015 invested Mai Le, spicy mama, Beilun technology, lotus parent and child four maternal and child electricity providers, and carried out cross-border electricity business. Accordingly, the proportion of cosmetics and maternal and infant products business has been significantly improved. In terms of drainage, under the background of gradual loss of Internet traffic dividends, vip.com's strategic cooperation with Tencent and Jingdong is conducive to the introduction of efficient traffic at a lower cost. According to the strategic cooperation agreement, Tencent will give vip.com entry to its WeChat wallet interface. Jingdong will also access vip.com at the main interface of its mobile APP and WeChat's shopping entrance, so as to help vip.com achieve certain transaction volume targets on Jingdong platform.


Lei Yu said frankly, in the background of the gradual disappearance of Internet traffic dividends and the increasingly stable competition pattern in the industry, the major online platforms need to enhance the platform stickiness on the one hand by enhancing the consumption experience; on the other hand, in the process of seeking new balance between efficiency and cost online and offline, we seek a more efficient transformation of customer traffic through active channels under the stock line.


Public information shows that vip.com (VIPS) was founded in August 2008 and its headquarters is in Guangzhou. Its website was established in December 8th of the same year. On the one hand, vip.com's early luxury goods discount, but on the one hand, the luxury audience is small. On the other hand, top luxury goods are prudent in network channel authorization, fake luxury goods are flooded with online channels, and early luxury business is difficult to pick up. Subsequently, vip.com adjusted its product positioning from luxury sale to two or three line brand sale.