--- title: "VIPS: Profit Up Despite Flat Rev.; Q2 Looks Tough" type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/40994158.md" description: "Domestic lean, curated e-com platform -- $Vipshops(VIPS.US) -- released its Q1 2026 results on the evening of May 21. Overall, the print was solid, modestly beating a low bar, with GMV and GPM ahead of expectations.Less encouraging, management guided Q2 revenue growth back to -5% to 0%, implying a return to negative growth. That said, Q2 softness vs. Q1 is now sector consensus, so this is not a surprise.1) Core operating metric — GMV rose nearly 9% YoY. That was a sharp improvement from 0.6% last quarter and topped the street's ~5% expectation..." datetime: "2026-05-21T13:56:48.000Z" locales: - [en](https://longbridge.com/en/topics/40994158.md) - [zh-CN](https://longbridge.com/zh-CN/topics/40994158.md) - [zh-HK](https://longbridge.com/zh-HK/topics/40994158.md) author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)" --- # VIPS: Profit Up Despite Flat Rev.; Q2 Looks Tough China's 'small yet refined' e-commerce platform $Vipshops(VIPS.US) released its Q1 FY26 results on May 21. The quarter was solid, modestly beating a low bar, with upside mainly from GMV and GPM. However, 2Q revenue growth is guided to -5% to 0% YoY, implying a return to negative growth, though a softer 2Q vs. 1Q is broadly expected across the sector.具体来看： **1) Core ops — GMV grew nearly 9% YoY, a sharp acceleration from 0.6% in 4Q**, and ahead of the ~5% market view. The whole sector saw a QoQ recovery from late last year, but VIPS improved slightly more than expected. This is the key beat on the top-line proxy. That said, **active users barely grew (+1%) and orders rose 3%, not a clear beat**. In other words, ecosystem activity and order volume were not as strong as GMV suggests. Growth was **largely driven by an ~5% uplift in ASP**, which **benefited from robust CNY sales of higher-priced, higher-margin winter apparel**. **2)** Despite faster GMV, **total revenue rose only 1.2%**, in line with conservative expectations. By mix, self-operated retail revenue grew just 0.2%, while ads/commission/fulfillment rose 14%, widening the spread. In our view, **a higher 3P mix (incl. outlet business) and more returns** likely drove the divergence. **3) Reversal after a reversal:** while revenue growth was muted, **gross profit tracked GMV and grew strongly**. GPM reached **24.4%, up 120bps YoY**, beating estimates, and **GP was RMB 6.5bn (+~7%), about RMB 330mn above the Street**. The drivers were **higher ASP and a greater mix of higher-margin 3P**. **4)** As growth recovered, **opex ticked up modestly**. Total opex was about RMB 4.16bn, up 3.6% YoY and faster than revenue, slightly diluting margins. Spending discipline was mostly intact despite the volume recovery. By line, **only fulfillment, tied to volumes, rose 8% YoY**, lifting total opex, while other items remained restrained, generally at -2% to 0%. Stepping back, VIPS' beat came from stronger GP on solid ASP and GMV, and although operating leverage softened, **OPM still rose 70bps YoY** (GPM +120bps, opex rate -40bps drag). **Operating profit reached RMB 2.5bn, up ~10% YoY and above the RMB 2.29bn consensus**, delivering profit growth without much revenue growth. **Dolphin Research view:** With only 1% revenue growth and low-single-digit user and order growth, VIPS' results are not absolutely strong. But with expectations subdued, relative performance this quarter was respectable. The delivery was better than feared. One tailwind was CNY timing, which shifted some demand from 4Q into 1Q. Even so, VIPS showed an 'important capability' — even at a 'small yet refined' scale with limited growth in active users and orders, it can lift profits by improving GPM through high-repeat, sticky users and mix upgrades toward higher-ticket apparel and luxury. This mix-led model can still drive earnings. Of course, this assumes sector conditions do not deteriorate materially, and the biz does not shrink. Without scale stability, asking for profit growth is unrealistic. Scale effects matter for margins. The bigger issue now is the new consensus that e-commerce conditions are worsening rapidly in 2Q, as seen in Apr retail sales and company guidances. The key is whether sector sentiment improves in 2H as state subsidies fade and the tough base rolls off. A stabilization would help VIPS sustain earnings momentum. On valuation, with revenue growth guided to roughly 0%–5%, and despite limited visibility into 2H, the lower base should make mid-single-digit profit growth achievable. That implies FY26 net profit of about RMB 8bn. This supports a still-attractive earnings yield. Shares have pulled back ~27% from the peak, implying only ~5.8x FY26 PE, the low end of the sector's ~6–8x range. The company did not repurchase stock this quarter, reserving cash for the Apr full-year dividend (~US$300mn). Management has reiterated a 75% payout of FY25 adj. profit via dividends and buybacks, roughly RMB 6.5–6.6bn, implying a near-14% total shareholder return on the current market cap for FY26 and offering strong downside support. We maintain our view: upside may be limited, but for low-risk investors prioritizing capital preservation over outsized gains, VIPS is worth considering when the multiple is ~6x or below. Risk-reward skews better near the lower end of the range. Selective entry makes sense. **Core charts and details below:** **I. GMV has bottomed, with some mix blemishes** **GMV rose nearly 9% YoY, a sharp improvement from 0.6% in 4Q**, and beat Bloomberg's ~5% view. Consistent with industry prints and peers, VIPS showed a clear recovery in 1Q vs. 4Q. This confirms a bottoming in growth momentum. There are mix issues. **Active buyers were ~41.7mn, up only 0.9% YoY**, and **orders grew 3%**, slightly below Bloomberg consensus. Volume indicators were therefore lukewarm. Thus, **growth relied more on an ~5% YoY increase in ASP**. Per management, this reflected **strong CNY sales of high-priced, higher-margin winter wear**. The mix tailwind was notable. **II. Revenue–GMV gap widened again, but GPM moved higher** Although GMV recovered to nearly 9% YoY, **revenue grew only 1.2%**, near the low end of guidance and **in line with conservative expectations**. This underscores the growing gap between flow and recognized revenue. It also reflects returns and mix headwinds. By mix, self-operated retail grew just 0.2%, while ads/commission/fulfillment rose 14%, a clear scissors spread. Historically, a large gap between revenue and GMV often coincides with higher return rates. Hence, **a higher 3P contribution (incl. Shanshan outlets) plus more returns** likely drove revenue growth well below GMV. In a 're-reversal', while revenue lagged, **gross profit growth was stronger and tracked GMV**. Specifically, **GPM was 24.4% (+120bps YoY)**, ahead of expectations, and **GP reached RMB 6.5bn (+~7%)**, about RMB 330mn above the Street. Margin quality improved with mix and pricing. As for **the GPM uplift**, it reflects **higher ASP and a modest increase in higher-margin 3P**. Both factors supported profitability. The margin trajectory looks healthier than revenue trends suggest. **III. Flat revenue, growing profits** With GMV and biz growth rebounding, **opex ticked up slightly**. Total opex was ~RMB 4.16bn (+3.6% YoY), above revenue growth, modestly diluting margins. Expense discipline remains broadly intact. Specifically, **fulfillment costs, mechanically tied to volume, rose 8% YoY**, lifting total opex, while other expenses stayed restrained. Marketing fell 2%, and G&A and R&D were roughly flat YoY. Cost control outside logistics remains tight. Thus, the beat was driven by stronger GP on better ASP and GMV, and despite slightly lower operating leverage, **OPM rose 70bps YoY** (GPM +120bps, opex rate -40bps drag). **OP reached RMB 2.5bn (+~10% YoY), above the RMB 2.29bn consensus**. Profit growth broadly matched, if not exceeded, underlying GMV growth. Revenue barely grew, but profit delivery was solid and aligned with GMV momentum, even a touch higher. This underscores mix-driven profitability. The earnings profile improves even with subdued top-line. **Past Dolphin Research on VIPS:** Feb 26, 2026 note: [**VIPS: Back to negative growth again? Fear not, 10% shareholder returns to the rescue**](https://longbridge.com/en/topics/38920500) Nov 20, 2025 note: [VIPS: After finally bottoming and warming, what is next?](https://longportapp.cn/en/topics/36563115) Nov 20, 2025 call Trans: [**VIPS (Trans): Expect 4Q user growth to top 3Q**](https://longbridge.com/en/topics/36569189) Aug 15, 2025 note: [**VIPS: Small yet refined out of the trough, watching giants' life-or-death battle**](https://longportapp.cn/en/topics/33008100) Aug 15, 2025 call Trans: [**VIPS (Trans): Expect revenue growth to be positive in both 3Q and 4Q**](https://longbridge.com/en/topics/33011595) May 20, 2025 call Trans: [**VIPS (Trans): Targeting a 75% payout of 2025 profit to shareholders, hoping to return to positive growth in 2H**](https://longportapp.cn/en/topics/29851832) May 20, 2025 note: [**VIPS: Sliding toward the bottom again — will buybacks provide a floor?**](https://longportapp.cn/en/topics/29849385) Feb 21, 2025 note: [**VIPS: Despite volatile results, shareholder returns provide support**](https://longportapp.cn/en/topics/27421950) Feb 21, 2025 call Trans: [**VIPS (Trans): Striving for profit growth in 2025**](https://longbridge.com/en/topics/27424078) Risk disclosure and disclaimer: [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)