Vipshop (VIPS) Misses Q3 Earnings, Sales Beat Estimates

Vipshop Holdings Limited (NYSE:VIPS) posted mixed third-quarter 2017 results, with revenues surpassing the Zacks Consensus Estimate and earnings missing the same by a penny. This is the second consecutive quarter of an earnings miss for the company.

Apparently, investors are not impressed with Vipshop’s third-quarter performance. Consequently, the stock has declined 5.4% during the trading session on Nov 20.

Also, shares of this Guangzhou-based company have underperformed the industry in the past six months. The stock has lost 31.7% as against the industry’s rally of 4.6%.

Quarter in Details

The Chinese online discount retailer reported adjusted earnings of 14 cents per share (RMB0.91), which missed the Zacks Consensus Estimate of 15 cents. On a local-currency basis, adjusted earnings fell 9% from the year-ago figure. Notably, margin contraction hurt the bottom line.

Total revenues of $2,301.6 million beat the Zacks Consensus Estimate of $2,230 million. On a local-currency basis, revenues rose 27.6% to RMB15,313.2 million from the prior-year quarter.

Accelerated growth in active customers aided revenue growth. Over the past year, the number of active customers increased 22% year over year to 60.5 million. Further, the top line during the quarter was driven by the addition of several domestic and international brands, leading to robust growth in the company’s core categories.

Gross profit increased 19.4% to RMB3,499.5 million (US$526 million). However, gross margin contracted 150 basis points (bps) to 22.9% owing to higher promotional activities.

Adjusted operating income declined 3.9% to RMB703.2 million (US$105.7 million). Adjusted operating margin declined 150 bps to 4.6%.

Vipshop Holdings Limited Price, Consensus and EPS Surprise

Vipshop Holdings Limited Price, Consensus and EPS Surprise | Vipshop Holdings Limited Quote

Other Updates

The company exited the quarter with cash and cash equivalents of RMB3,665.3 million (US$550.9 million). During the quarter under review, the company incurred capital expenditures of RMB719.1 million (US$108.1 million).

During the quarter, Vipshop added three local warehouses in China, taking the total count to 14. The company’s average revenue per customer increased 11% from the year-ago quarter, courtesy of higher average ticket size and orders per customer. Vipshop also rolled out the Super VIP Paid Membership Program during the third quarter, post which frequency of enrolled member visits increased by almost 100%.

At the end of the third quarter, users under the company’s consumer financing business increased 146% from the prior-year quarter to 3.8 million.

Fourth-Quarter 2017 Guidance

For the fourth quarter, this Zacks Rank #3 (Hold) company envisions total net revenue growth of 20-25% on a year-over-year basis.

Looking for More? Check these 3 Trending Picks

Investors interested in the same sector may also consider stocks such as Wipro Limited (NYSE:WIT) , Motorola Solutions, Inc. (NYSE:MSI) and Oracle Corporation (NYSE:ORCL) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Wipro Limited delivered an average positive earnings surprise of 10.3% in the trailing four quarters. It has a long-term earnings growth rate of 8%.

Motorola Solutions pulled off an average positive earnings surprise of 13.23% in the trailing four quarters. It has a long-term earnings growth rate of 4.4%.

Oracle Corporation came up with an average positive earnings surprise of 6.8% in the trailing four quarters. It has a long-term earnings growth rate of 9.8%.

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