Vip.Com Responds To Offline Store Layout Progress: Still In Experimental Exploration Stage

Beijing time on May 23rd, vip.com disclosed the first quarter of 2019 unaudited financial results show that vip.com Q1 net revenue in 2019 of 21 billion 300 million yuan (about 3 billion 200 million U.S. dollars), an increase of 7.3% over the same period, Q1 GMV reached 33 billion 800 million yuan.

According to general accounting standards, vip.com's net profit attributable to shareholders was 872 million 300 thousand yuan (US $130 million), an increase of 64.7% over the same period last year, and gross profit of 4 billion 400 million yuan (US $649 million 100 thousand), an increase of 8.7% over the same period last year, resulting in a continuous 26 quarter profit.

In the first quarter, the total number of orders for vip.com was 116 million 500 thousand, representing an increase of 29% over the same period last year of 90 million 200 thousand.

The total number of active users reached 29 million 700 thousand, an increase of 14% over the same period last year.

As of March 31, 2019, the number of members of vip.com super VIP has reached 3 million 200 thousand.

After the release of the earnings report, the only product disclosed the progress of its offline store layout.

Vip.com said that the line store business is vip.com's innovation project launched according to the company's special sale strategy. Individual stores have begun trial operation recently, and are still in the experimental exploration stage.

It was learned that the first offline store in Hangzhou, vip.com, was put into trial operation in May 20th, located at the B1 level of Gongshu District canal in Hangzhou.

The store covers an area of about 750, of which footwear accounts for nearly 1/3 of the area.

The products mainly include clothing for men and women, shoes and accessories, sports and outdoor products, and all products are guaranteed by genuine products.

In view of the business model, the strategic cooperation with Jingdong and Tencent, the layout of the offline stores, and the ownership structure, vip.com answered the "union business network".

The following are the main points of the problem:

1, vip.com's earnings data have improved in Q4, so what are the highlights of this season's Q1 earnings report?

Q1 financial report data as a whole is good, showing a reverse trend.

With vip.com focusing on brand sales and activating the vitality of retail sales, the fundamentals of earnings data are growing steadily.

In 2019, the total net revenue of Q1 vip.com was 21 billion 300 million yuan, an increase of 7.3% compared with the same period last year. Gross profit was 4 billion 400 million yuan, an increase of 8.7% compared with the same period last year. According to general accounting standards, the net profit attributable to vip.com shareholders was 872 million 300 thousand yuan, up 64.7% over the same period last year.

Since the fourth quarter of 2018, vip.com has focused on wearing apparel products with high gross profit margins, reducing the proportion of standard items, and 2019 Q1 vip.com GMV is 33 billion 800 million yuan.

In 2019, Q1 clothing and apparel as the core category continued to increase in the proportion of GMV, accounting for over 50%, an increase of 16% over the same period.

Not only continue to deepen the clothing wear as the core category of moat advantages, improve profitability, but also to promote the overall business tends to be more healthy direction.

The vip.com sale mode fully bridged the contradiction between consumers' quality consumption upgrading and rational consumption concept, and the data from the trend of Q1 earnings report showed that the strategic effect of vip.com's return sale has been affirmed by the market.

2, why did vip.com choose to continue to focus on brand sales? How did Q1 explore new business models in 2019?

Sale is the core driving force of vip.com's differential competition.

Since refocusing on the brand sale, vip.com has upgraded through the sale promotion, upgrading from the aspects of goods, customers, channels, operation and cost performance. It is aimed at building a multilevel commodity digestion channel for broad-spectrum people, strengthening the ability of "looking for goods with goods" at the user level, and at the product level, "naked price in the end, refusing the routine". The upgraded vip.com sale mode has a sustained growth vitality.

Since the return of the sale, the results have shown that net profit growth has been reversed.

Keeping 26 consecutive quarters of profit and maintaining steady growth in basic data indicate that the business model of focused sales has been tested by the market.

Vip.com will focus on retail business, emphasizing the essence of business and returning to the fundamentals of business.

It does not blindly judge business form and development by the standard of scale business and simple growth, and returns to the concern of the quality of the business form itself.

Vip.com's retail business idea is to return the business focus to the basic elements of the business scenario: people, goods and venues, especially focus on the control of goods, and rebuild the new relationship between the people's freight yard through the "goods yard" and "goods for people", so as to drive vip.com to achieve new value growth and help the business condition healthier, higher profit rate and deeper moat.

Under the situation of the economic situation being limited and the environment unstable for a long time, special sale can play its anti cyclical advantage, bridge the cracks of consumers' quality consumption upgrading and rational consumption, and provide consumers with good quality goods that are "good goods not expensive", and constantly release the sale value.

In 2019, the macroeconomic situation is still challenged. The challenge of the inventory challenges facing the apparel industry will be more severe, which will be a good opportunity for vip.com.

Vip.com needs to seize the industry opportunities, and leveraging the apparel industry to inventory cycle, low cost of goods and supply chain resources, so that clothing and apparel products in vip.com platform really good goods are not expensive, deepen the advantages of its moat.

3, since the beginning of this year, vip.com's share price has gone out of its historical trough and its total increase has been about 40%. How can we explain this phenomenon?

Since the beginning of the year, in addition to the volatility of the US stock market as a whole, vip.com has shown the trend of rising share prices.

This is because the business model of vip.com focused on sale is releasing its value and is being verified by the market.

The growth of net profit is reversed, and the financial data show a positive growth. Clothing and wearing core commodities play a dominant role in the moat, which provides sufficient support for the growth of the stock price.

The rise in share prices confirms to some extent that the capital market recognised the business model of vip.com's return to sale and had confidence in vip.com's future growth.

4, how is the strategic cooperation between vip.com and Tencent Jingdong? What is the way forward in the next stage?

TJV strategic cooperation is now progressing steadily.

Strategic cooperation with Tencent and Jingdong helped vip.com enhance its ability to pull new customers. Small programs and Jingdong contributed about 25% of vip.com's new customers in the first quarter.

In the future, we will further strengthen cooperation with Tencent Jingdong in terms of traffic volume, establish a win-win cooperation ecosystem, and continuously deepen and enhance vip.com's leading business operators in clothing and apparel products and the advantages of female users.

At the same time, we will continue to explore different marketing gameplay and further develop small programs to bring higher value and better experience to vip.com users.

Together with Tencent, we will enhance the pformation effect and explore more room for development.

5, vip.com line stores in several major cities have opened, the current line shop performance, how to make a correct interpretation of offline shop?

For apparel wear products, offline stores have their unique advantages, not only in line with women's buying habits, but also in line with the trend of online and offline integration.

However, offline retailing also has its regularity. It needs to control rhythm and gradually explore operational experience.

The offline store business is an innovative project launched by vip.com according to the company's special sale strategy. Individual stores have started trial operations recently, and are still in the experimental exploration stage.

6, how to interpret the shareholding structure between Tencent and Jingdong (15.9%) over Shen Ya (12.7%)?

Shen Ya still has super voting power.

With regard to the issue of equity changes, according to the rules of AB shares, in all events requiring shareholders' voting, there are 1 votes per share of class a common shares issued by external investors, and 10 shares of voting rights are held by B class common shares held by management, while all B shares are held by Shen Ya, because Shen Ya has absolute control over vip.com.

Tencent's Tencent Mobility Limited holds 8.7% stake in vip.com, Jingdong's Windcreek Limited.

The shareholding is 7.2%, and it is meaningless to compare the two party equity proportion with Shen Asian shareholding.