VIPS: Negative Growth Again? 10% Shareholder Return to the Rescue

$Vipshops(VIPS.US) released its 4Q25 results on the evening of Feb 26. Although the company had already lowered guidance, the print still came in weaker, with revenue reverting to negative growth; disciplined cost control nevertheless kept profit growing. Specifics below:

1) Core ops — GMV growth stalled again this quarter, with YoY growth under 1%, falling short of market expectations.

The drag came from another decline in active users, down ~400k YoY, alongside a clear drop in order frequency per user, resulting in total orders down 5% YoY. The key reasons were warmer 4Q weather and a late Chinese New Year, which delayed domestic demand for new-season and winter apparel beyond 4Q.

Fortunately, AOV rose meaningfully and offset the volume decline, keeping GMV marginally positive. This likely reflects a higher mix of SVIP and other high-value users, as well as more high-ticket items such as luxury goods.

2) With GMV growth nearly flat, total revenue turned negative, down ~2% YoY this quarter, missing even the revised outlook of +1% YoY. On a brighter note, the growth gap between GMV and revenue narrowed further to under 300bps, suggesting the impact from higher return rates is fading.

3) The prior downtrend in GPM showed signs of stabilization this quarter. GPM was 22.9%, down just 10bps YoY, better than expected. As noted, the AOV uplift was likely a key driver.

Amid revenue contraction, the company again ‘skillfully’ protected margins through tight expense control. Total opex fell 3.7% YoY, outpacing the revenue decline.

Specifically, R&D, S&M, and G&A all declined by more than 5% YoY, while fulfillment costs, directly tied to volume, were more rigid.

5) With GPM essentially stabilized and exemplary cost control, operating profit reached RMB 2.9bn this quarter, up 1.7% YoY, beating the Street.

6) Shareholder returns: the company repurchased roughly $700mn and paid about $250mn in dividends over the past year, exceeding $950mn in total, or ~11% of current market cap, providing robust support for the stock. It also announced an FY25 annual dividend to be paid next year of about $305mn, up 22% YoY.

Dolphin Research View:

VIPS’s print this quarter would otherwise have been quite negative; even after communicating a lower guide, most operating metrics missed — user attrition, fewer orders, and near-zero GMV growth drove another YoY revenue decline. These are unambiguously negative developments.

However, drawing on its experience managing external shocks and improving customer and product mix, the company lifted AOV and helped arrest the GPM slide. Combined with exceptional cost control, it delivered a counter-trend earnings outcome.

In a cross-comparison, versus players like Meituan and Alibaba that are absorbing heavy investments in food delivery and AI and thus compressing or even eliminating profits, VIPS still generated RMB 2–3bn of quarterly profit with positive growth despite much larger peers. It stands out within the broader e-commerce cohort.

Looking ahead, management guides next-quarter revenue growth to 0%–5% YoY, implying a high likelihood of a return to growth. With a late Chinese New Year weighing on 4Q apparel sales but benefiting 1Q, improvement next quarter is reasonably visible.

We think this quarter’s trough can be ‘looked through’. Focus now shifts to how next quarter lands.

On valuation, using a conservative FY25 net income of ~RMB 7.4bn and assuming FY26 profit of RMB 7.5–8.0bn, the current market cap implies ~7.6x–8.0x PE, slightly above the historical midpoint.

That said, a meaningful share of VIPS investors may prioritize shareholder returns over capital gains. With about a 10% capital return this year, among the best across U.S.-listed China names, this alone is likely to attract investors and support the stock.