14.08.2014 00:01:25

Vipshop Profit Surges, Details Strong Outlook, But Stock Down 6%

(RTTNews) - Vipshop Holdings Ltd. (VIPS) on Wednesday reported a surge in profit for the second quarter, driven largely by higher number of orders and active customers as results trounced Wall Street expectations.

Moving ahead, the Chinese online discount retailer detailed a strong revenue outlook for the third quarter.

Nonetheless, shares of the company slipped nine percent in after-hours trade, probably on reports that China State Administration of Taxation is mulling an online sales tax with plans to introduce it before 2015.

Guangzhou, China-based Vipshop's second-quarter profit rose to $26.4 million or $0.44 per ADS from $9.0 million or $0.16 per ADS last year.

Adjusted earnings for the quarter rose to $0.72 per ADS from $0.20 per ADS last year. On average, 11 analysts polled by Thomson Reuters expected a profit of $0.64 per share for the quarter. Analysts' estimates typically exclude special items.

Vipshop's revenues for the second quarter surged to $829.4 million from $351.3 million a year ago. Analysts had a consensus revenue estimate of $791.55 million for the quarter.

Revenue growth was driven largely by growth in the number of active customers, which grew 167.9 percent to 9.3 million, and total orders increasing to 26.3 million, up 138.4 percent over the prior-year period.

Gross margin for the quarter advanced to 24.8 percent from 23.5 percent last year.

Looking forward to the third quarter, the company expects revenues of $850 million to $860 million, indicating a year-over-year growth of about 122 to 124 percent. Analysts currently expect third-quarter revenues of $824.85 million, or up 115 percent.

Vipshop Holdings, which operates e-commerce site vipshop.com, offers branded products to consumers in China through flash-sale format, i.e. offering limited quantity of branded products for a limited period of time. The flash sale format drives consumer interest but at same time keeps inventory and operating costs low for the retailer.

VIPS closed Wednesday's trading at $229.18, up $9.58 or 4.36%, on the Nasdaq. The stock further dropped to $12.64 or 5.52% in after-hours trade.

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