On Wednesday, Citi reaffirmed its Buy rating and $25.00 price target for Vipshop Holdings (NYSE:VIPS) stock, following the company's mixed financial results for the first quarter of 2024.
Vipshop's total net revenue for the quarter reached ¥27.6 billion, a slight 0.4% year-over-year increase, which was at the lower end of the company's guidance range of ¥27.5-28.9 billion. The figure also fell short of Citi's and the consensus estimates by 0.6% and 0.9%, respectively.
The company observed a decrease in active customers by 1.4% year-over-year, bringing the total to 43.1 million, while the total number of orders declined by 3.2% year-over-year to 178.5 million. Despite these drops, Vipshop's Gross Merchandise Value (GMV) saw an 8.0% year-over-year increase, reaching ¥52.4 billion.
Vipshop reported a significant increase in its non-GAAP net income, which grew by 24.8% year-over-year to ¥2.58 billion.
This growth was attributed to a slightly higher gross profit margin and lower-than-expected expenses in sales and marketing, research and development, and general and administrative categories, offsetting higher fulfillment costs. The non-GAAP net income exceeded Citi's and the consensus estimates by 13% and 15%, respectively.
For the second quarter of 2024, Vipshop has provided revenue guidance in the range of ¥26.5-27.9 billion, which represents a decrease of 5% to 0% year-over-year or a change of -4% to +1% quarter-over-quarter.
The mid-point of this guidance is 6.5% and 7.2% below Citi's and consensus estimates of ¥29.1 billion and ¥29.3 billion, respectively. This guidance has been characterized as "surprisingly soft" by Citi.
InvestingPro Insights
As Vipshop Holdings (NYSE:VIPS) navigates a mixed financial landscape, certain metrics stand out to provide a clearer picture of its market position. According to InvestingPro data, Vipshop boasts a market capitalization of $8.92 billion, indicating its significant presence in the retail sector. The company's P/E ratio, a key indicator of its earnings relative to share price, is attractively low at 7.98, suggesting that Vipshop's stock could be undervalued compared to its earnings potential.
Moreover, Vipshop's revenue growth over the last twelve months as of Q4 2023 has been positive at 9.41%, showing the company's ability to increase its sales in a challenging economic environment. This is complemented by a robust gross profit margin of 22.79%, which underscores the company's efficiency in managing its cost of goods sold and maintaining profitability.
An InvestingPro Tip worth mentioning is that Vipshop has been actively buying back shares, signaling management's confidence in the company's value. Additionally, it holds more cash than debt on its balance sheet, which is a reassuring sign of financial stability for investors. With these insights and 11 additional InvestingPro Tips available, including the company's low revenue valuation multiple and its position as a prominent player in the Broadline Retail industry, Vipshop's outlook seems promising for investors seeking long-term growth.
For those looking to delve deeper into Vipshop's financial health and strategic positioning, InvestingPro offers a comprehensive set of tips and data metrics. To access these valuable insights and make informed investment decisions, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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