--- title: "VIPS (Trans): FY revenue slightly down; outlets emerge as a new growth lever" type: "Topics" locale: "en" url: "https://longbridge.com/en/dolphin/post/43587063.md" description: "Sasseur Outlets' GMV grew over 20% in 1H. Its commercial REIT raised RMB 7.7bn, and a new $1bn buyback authorization was approved.However, Q3 revenue guidance of RMB 20.3–21.4bn implies -5% to 0% YoY. Full-year revenue is expected to be slightly down.Management said it will not follow industrywide profitless subsidies. The focus is to keep NPM relatively stable." datetime: "2026-08-25T13:29:57.000Z" locales: - [en](https://longbridge.com/en/dolphin/post/43587063.md) - [zh-CN](https://longbridge.com/zh-CN/dolphin/post/43587063.md) - [zh-HK](https://longbridge.com/zh-HK/dolphin/post/43587063.md) author: "[Dolphin Research](https://longbridge.com/en/dolphin.md)" generator: "portal-rs" --- # VIPS (Trans): FY revenue slightly down; outlets emerge as a new growth lever **Dolphin Research's VIPS FY26 Q2 earnings call Trans:** **I. Key takeaways** 1) Shareholder returns: In 1H, the company returned approx. $400mn via cash dividends and buybacks, exhausting its prior authorization. The BOD approved a new $1bn buyback to be executed opportunistically. The company reiterated that 2026 dividends plus buybacks will be at least 75% of 2025 non-GAAP net income. Management expressed full confidence in meeting this target. 2) Guidance: Q3 total net revenue is guided to RMB 20.3–21.4bn, implying approx. -5% YoY to flat. Management also commented that 2H consumer sentiment is similar to 1H and expects full-year revenue to post a slight decline YoY, with Q2 finishing at the low end of guidance. 3) One-offs in tax and investment gains: Income tax expense was RMB 3.3bn vs. RMB 407.2mn a year ago. The delta came from two non-operating items. a) RMB 1.63bn: income tax associated with a one-off investment gain recognized by Shanshan Commercial Group, the original owner of the underlying assets, in a commercial REIT issuance. This is a non-operating item tied to asset securitization. b) RMB 1.56bn: accrual for withholding tax on historical onshore dividends to Hong Kong, with payment expected in Q3. Going forward, any intended remittance of onshore profits offshore will accrue dividend WHT at the applicable rate. c) Excluding the above one-off, non-operating tax impacts, the normalized effective tax rate was stable YoY. Management noted the new accrual approach effectively raises the cost of directly remitting onshore equity returns offshore. 4) Key financials this quarter a) Top line: total net revenue RMB 24.7bn (vs. RMB 25.8bn a year ago). GP RMB 5.8bn with GPM of 23.3% (vs. 23.5%). b) Opex: total operating expenses fell 2.4% YoY to RMB 4.5bn, with opex as % of revenue rising to 18.0% (vs. 17.7%). Fulfillment expense was RMB 2.14bn, 8.7% of revenue (vs. 8.2%), the main headwind. c) Marketing expense was RMB 760.3mn and tech & content was RMB 486.2mn. The ratios rose to 3.1% and 2.0%, respectively. d) G&A fell 17.5% YoY to RMB 1.1bn, with the ratio down to 4.3% (vs. 5.0%). The decline was mainly due to higher SBC at Shanshan Outlets in the prior year. e) Profit: OP was RMB 1.5bn with OPM of 6.2% (vs. 6.6%). Non-GAAP OP was RMB 2.0bn with OPM of 8.1% (vs. 9.3%). f) Net income: GAAP attributable net income rose 189.1% YoY to RMB 4.3bn with NPM of 17.4%, mainly driven by a one-off investment gain of RMB 5.79bn from the commercial REIT listing. g) Non-GAAP attributable net income was RMB 392.2mn with NPM of 1.6%. Excluding the one-off WHT accrual, it was approx. RMB 2.0bn with NPM of 7.9%. h) Cash: end-Quarter cash, cash equivalents and restricted cash were RMB 29.9bn. Short-term investments were RMB 3.6bn. **II. Call details** **2.1 Management remarks** 1) Consumer backdrop and operating stance a) Q2 retail remained challenging: consumers were not only price-sensitive but highly selective across promotions, prioritizing clear utility and real value. The bar for purchase intent rose further. b) The company stayed cautious in discretionary categories like apparel, accepting near-term revenue sacrifice. Traffic was soft, but VIPS did not chase unprofitable scale and kept its core deep-discount, branded flash-sale positioning. 2) SVIP and user operations a) Active SVIP users rose 8% YoY in Q2, contributing 54% of online GMV. Management reads this as higher-intent shoppers gravitating toward platforms offering trust, value, quality and service when budgets tighten. b) SVIP membership topped 10mn this quarter. The user strategy prioritizes retention and LTV, with tiered service models to lift wallet share among SVIPs. 3) Supply and merchandise mix a) The 1P model underpins differentiation: category expertise has built brand trust to the point where brands proactively reallocate inventory to the platform. Deep collaboration with core apparel brands helped buffer category weakness. b) The merchandise mix is shifting toward more discerning customers, focusing on core apparel and lifestyle fashion. Assortment is aligned to usage scenarios to ensure clear utility, recognizable brands and strong value. c) Opportunistic buys add inventory flexibility: brands are de-stocking in a soft market, and the company secures exclusive, high-demand SKUs as a reliable discount channel. This strengthens differentiated supply. d) The 'made for VIP' exclusive line is being repositioned, aligning product standards and seasonality with brand partners. Higher-quality products are emerging, supporting conversion and assortment stability. 4) Brand refresh and AI deployment a) A new integrated marketing campaign launched alongside new collections and main-site upgrades, reviving the signature slogan 'Big brands at 70% off'. The outreach targets both younger and more mature cohorts. b) User-side AI: virtual try-on usage keeps rising, and AI-enabled voice and prediction in customer service are lifting conversion. AIGC accelerates product discovery and enhances efficiency. c) The AI marketing agent is delivering the strongest results so far, covering the full chain from media planning to AIGC creatives. Management still sees clear headroom in CAC efficiency and user quality. d) On operations, AI is moving from point tools to a unified intelligence layer. Early gains are visible in supply chain optimization and daily workflows. 5) Shanshan Outlets (offline discount retail) a) Since the 2019 acquisition, the chain expanded steadily across new Tier-1, Tier-2 and key cities, growing from 5 to 22 locations. It is now the largest outlets chain in China by store count and among the leaders by GMV. b) 1H GMV grew over 20% YoY, supported by value-seeking behavior and the irreplaceable in-store experience. Management expects its contribution to group results to rise steadily. **2.2 Q&A** **Q: How is consumer sentiment now? What are the monthly revenue trends since Apr, and how do you view 2H?** A: **Sales momentum in Jul–Aug only 'slightly recovered' and was far from strong, and full-year revenue is expected to decline slightly.** Consumers are avoiding expensive purchases, are highly value-driven, budget-constrained and very selective, rather than 'buying everything'. Entering Q3, sector pressure has persisted and momentum from Jul to Aug showed some recovery, but only marginally. Management expects 2H and full-year sentiment to mirror 1H and sees full-year total revenue slightly down YoY, while not specifying where Q3 will land within guidance. **Q: OP margin fell YoY. How should we think about GPM, opex and OP margin trends in Q3–Q4?** A: **GPM is stable to improving, and OP is pressured mainly by fulfillment deleverage. NPM is expected to be stable in 2H.** OP margin dipped slightly YoY in Q2 as return rates rose, pushing up fulfillment as % of revenue and causing deleverage, while GPM itself was flat to better, reflecting solid GP and GP-dollar management. Revenue contraction from macro pressure also created fixed-cost and opex deleverage. Management noted many peers subsidize unprofitable growth, which VIPS will not follow, and will prioritize healthy profitability, hence expecting margins, especially NPM, to remain relatively stable in 2H. **Q: What drove the WHT accrual this quarter? Was it a tax penalty, and does it affect buybacks or dividends?** A: **It was not a penalty but a proactive compliance re-assessment, with minimal impact on future NPM. Shareholder return commitments are unchanged.** The company has fully complied and will continue to comply with applicable tax laws and guidance, and the change reflects a prudent step to enhance compliance by benchmarking best practices, reducing risk and improving tax certainty. Dividend WHT is a capital-flow transaction cost, not an operating expense, so core OP margins and pre-tax operating cash flow are unaffected. The company has multiple levers to optimize offshore liquidity, and capital repatriation is only one option, implying minimal impact on future NPM and no change to long-term shareholder return commitments. **Q: What is the outlook for Shanshan Outlets in 2H?** A: **Expect the same cadence in 2H, with full-year GMV growth above 20% and at least double-digit comps.** 1H GMV rose over 20% YoY, with faster growth in Q1, and Q2 also delivered solid results despite softer consumption. Management is optimistic about growth momentum in 2H, confident in >20% GMV growth for the year. For existing stores, they set a higher bar and expect at least double-digit comp growth. **Q: Two REITs have listed. What is the timetable for securitizing the remaining outlets projects?** A: **The commercial REIT listed and raised RMB 7.7bn, while the other 18 projects have no disclosed timeline.** The commercial REIT debuted on the SSE on Jun 18, 2026, extending the company from consumer-infrastructure REITs into broader commercial REITs. The RMB 7.7bn fundraising was the largest among the first batch of listed commercial REITs domestically. Both underlying assets have operated for about 10 years and are leaders in their respective regions. Beyond the three outlets projects already in REITs, the company holds another 18 with further expansion potential. Management will evaluate progressively based on strategy and market conditions, without a specific timetable. **Q: Buybacks resumed in Q2 and a new $1bn authorization was approved in Aug. How should we think about the size and pace of shareholder returns in 2H?** A: **About $400mn was returned in 1H, and the additional $1bn buyback will be used opportunistically. The 75% payout ratio commitment stands.** From 2021 to 2025, the company has returned $3.7bn to shareholders, underpinned by the business model and healthy cash flow across cycles. In 2026, VIPS will continue to return at least 75% of 2025 non-GAAP net income via dividends and buybacks. About $400mn was paid out in 1H through dividends and repurchases, exhausting the prior authorization, and the new $1bn plan will be executed opportunistically over the coming quarters. \ **Risk disclosure and statements:**[**Dolphin Research disclaimer and general disclosure**](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### Related Stocks - [VIPS.US](https://longbridge.com/en/quote/VIPS.US.md) - [CRPU.SG](https://longbridge.com/en/quote/CRPU.SG.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**