--- title: "VIPS (Trans): Q2 under pressure; expect H2 improvement" type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/40995195.md" description: "Below is Dolphin Research's Trans of the FY26 Q1 earnings call for $Vipshops(VIPS.US). For our earnings take, please see 'Vipshop: Profit Without Topline Growth, but 2Q Could Be a Hurdle'. I. Key financial takeaways recap. 1) Shareholder returns: the company reiterates its 2026 shareholder return plan to return a cumulative amount approx. 75% of FY25 non-GAAP net income via dividends and buybacks. It paid about $300 mn as the annual dividend in Apr, with the remaining authorization to be executed over subsequent quarters. FCF remains ample..." datetime: "2026-05-21T14:02:48.000Z" locales: - [en](https://longbridge.com/en/topics/40995195.md) - [zh-CN](https://longbridge.com/zh-CN/topics/40995195.md) - [zh-HK](https://longbridge.com/zh-HK/topics/40995195.md) author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)" --- # VIPS (Trans): Q2 under pressure; expect H2 improvement **Below is Dolphin Research's Trans of** $Vipshops(VIPS.US) **FY26 Q1 earnings call. For our take on the results, see** [**'Vipshop: Profit Up Without Top-line Growth, but Q2 Looks Tricky'**](https://longbridge.com/en/topics/40994158)**.** **I. Key takeaways** 1\. **Shareholder returns**: The company reaffirmed its FY26 shareholder return plan, targeting an aggregate payout of ~75% of FY25 non-GAAP net income via dividends and buybacks. The annual dividend of approx. US$300 mn was paid in Apr, with the remaining authorization to be executed over coming quarters. Strong FCF supports the full-year capital return target. 2\. **Q2 guidance**: Management guides total revenue of RMB24.5–25.8 bn in Q2, implying -5% to 0% YoY. The tone is conservative, reflecting continued soft demand since Mar and a neutral stance on 618 contribution. On a full-year view, management remains in 'steady operations' mode and expects improving consumer sentiment to help in 2H. 3\. **Key financials**: Q1 revenue was RMB26.6 bn (+1.2% YoY), with GPM at 24.4% (+120 bps YoY) on favorable mix. OPM was 9.4% (+70 bps YoY), non-GAAP OPM 10.2% (+20 bps YoY), and non-GAAP NPM 8.7% (slightly below 8.8% last year). GAAP net income attributable to shareholders was RMB2.2 bn (+13.6% YoY), while non-GAAP net income was RMB2.31 bn, roughly flat YoY. 4\. **Cash and short-term investments**: As of Mar 31, 2026, cash, cash equivalents and restricted cash stood at RMB28.3 bn. Short-term investments were RMB2.7 bn, bringing the total to approx. RMB31.0 bn. 5\. **Policy change (Shanshan Outlets REIT impact)**: The Vipshop Commercial REIT received CSRC and SSE approvals at end-Apr and completed bookbuilding on May 19. The underlying assets are two Shanshan Outlets in Zhengzhou and Harbin (each operated ~10 years and holding leading local share), with the company subscribing to 49% of the units. From Q2, the two outlets will shift from consolidation to equity-method accounting (deconsolidation and investment recognition), with a one-off GAAP investment gain of ~RMB5.3 bn and a related income tax expense of ~RMB1.7 bn recognized in Q2; on a cash basis, Q2 net inflow will increase by ~RMB1.7 bn. Beyond the injected assets, the company operates 18 other outlets, which could be added to the REIT over time subject to market conditions. **II. Earnings call details** **2.1 Management commentary** 1\. **Quarterly cadence and user base** a. Q1 operations were materially affected by the later Lunar New Year, with concentrated pre-holiday demand in Jan–Feb and a sharp pullback in Mar. The active buyers during Jan–Feb were core users seeking in-season goods and strong promo values, underscoring the health of the core user base. b. Total active users continued to grow. SVIP users rose 9% YoY and now account for 55% of online GMV, with apparel (especially in-season womenswear and menswear) remaining a high-penetration category among SVIPs. 2\. **Merchandise and differentiated supply** a. Following last year's org changes, the merchandising cadence is faster and more agile: from market sensing to listing, lead times are shorter, enabling deeper access to discounted brand inventory during peak demand windows. This improves matching of supply with demand peaks. b. 'Made for VIP' private-label has entered Phase 2, upgrading quality, design and value standards. It is more tightly integrated with partners' seasonal plans to keep SKUs aligned with trends. c. Exclusive campaigns with several global sports brands converted strongly in SVIP channels. New SVIP additions were notably younger, and GMV during campaigns was multiple times the baseline, validating the synergy between differentiated supply and the SVIP model. 3\. **SVIP program** a. The model is shifting from broad-based benefits to a **tiered service system**. General perks are giving way to spend-linked exclusive assortments, deeper discounts, 1:1 service and add-on benefits, directly rewarding high-spend users to drive repeat and ticket size. b. SVIP remains the most important engine for revenue and profit. 4\. **AI applications** a. User side: virtual try-on, smart search and recommendations, and automated customer service are live. These improve user experience and conversion. b. Marketing: AIGC supports content creation, and an in-house AI marketing agent generates personalized creatives at scale across video, images and text, significantly enhancing acquisition efficiency. c. Merchant side: AI delivers deeper customer segmentation insights and optimizes assortment strategies, empowering brand partners. This strengthens joint merchandising decisions. d. Strategically, the focus is moving from 'CX-first' to 'scaled operating enablement', with AI becoming a middle-platform capability spanning merchandising, supply chain and marketing. 5\. **Shanshan Outlets and the REIT platform** a. Q1 GMV for Shanshan Outlets (offline outlet business) grew 30%+ YoY. Performance was robust. b. The Vipshop Commercial REIT was approved by the CSRC and SSE at end-Apr and priced on May 19. The underlying Zhengzhou and Harbin outlets, each operated for ~10 years, rank No.1 locally by market share. c. The company subscribed to 49% of the REIT units. From Q2, the two outlets will be equity-accounted (deconsolidated), with a one-off GAAP investment gain of ~RMB5.3 bn and an associated tax expense of ~RMB1.7 bn; on a cash basis, Q2 net inflow will rise by ~RMB1.7 bn. d. Beyond the injected assets, the company operates 18 other outlet projects. The REIT platform has meaningful expansion potential. **2.2 Q&A** **Q: How is monthly GMV trending amid softer apparel parcel volumes industry-wide? How do you view 618 vs. last year, and what is your 2H outlook on sentiment?** A: The year started strong, with concentrated holiday purchases in Jan–Feb that effectively pulled demand forward. **Post-holiday sales fell noticeably in Mar, and Apr did not improve vs. Mar, with May to date still challenging**, though we saw a slight pickup in activity in recent days. For more than half of the quarter, visibility into consumer sentiment and activity was low, and the rest of the period depends on the promo calendar, where we are not overly optimistic. Therefore, management **opted for a conservative Q2 guide** to reset expectations. **On a full-year view, we still see opportunities in 2H as sentiment may improve at the margin,** especially in discretionary categories like apparel, and we will strive to maintain steady execution. We continue to guide for a 'stable' full-year outcome. **Q: You flagged negative growth in Apr and ongoing weakness into May, yet NBS reported +3.6% YoY apparel retail in Apr. Where is the gap coming from—offline shift or online share loss? Also, is the 30%+ growth at Shanshan Outlets due to offline shift, or specific merchandise unavailable online?** A: The NBS +3.6% apparel retail figure blends online and offline. We observed a clear online slowdown, broadly in line with the online industry trend, while **offline growth was very strong**. **The gap reflects different consumer behaviors online vs. offline—online has higher return rates, depressing net sales/revenue more visibly,** and some spending is shifting to outlet channels, with partners allocating more resources to offline outlets. Part of this is holiday-effect driven and needs further monitoring for sustainability. Additionally, the offline outperformance benefited from category concentration—especially sportswear and outdoor, which align with current lifestyles and thus stand out. Online shows the same pattern: even amid broad apparel softness in Apr–May, sports and outdoor continued to outperform, while **more discretionary, fashion-driven womenswear and menswear weakened**. It will take more time to see when discretionary demand rebounds. **Q: What drove the widening gap between GMV and revenue growth (Shanshan impact or return rates)? Given soft trends in Mar–May and an easy base in Q3 last year, what does this imply for 2H?** A: **Two factors widened the gap between Q1 revenue and GMV growth: first, higher mix of apparel and SVIP contribution nudged return rates up YoY,** and second, **Shanshan Outlets' higher GMV mix** coupled with its **commission-based model, which recognizes revenue on a net basis,** increased the GMV–revenue spread. As for the full year, while Mar–May pressures are real, they remain manageable. Our Q2 guide of -5% to 0% YoY is a range we are confident to hold, with recent softness linked to weather, the spring–summer seasonal transition, and sentiment volatility. We need more time to assess the trend, but we still believe we can meet full-year goals and at least deliver steady performance through ongoing operational optimization. **Risk disclosure and statements for this article:**[**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)