Vipshop Swings To Q2 Profit, But Shares Plunge On Weak Q3 Outlook

(RTTNews) - Vipshop Holdings Ltd. (VIPS), Wednesday reported a swing to profit in the second quarter from a loss last year, as revenues surged and gross margins improved. Nevertheless, the Chinese online retailer's stock plunged 11 percent in extended trade after providing a weak revenue outlook for the third quarter.

For the third quarter, Vipshop expect revenues in the range of $365 million to $370 million. Analysts polled by Thomson Reuters currently expect third-quarter revenues of $376.12 million.

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.

Vipshop's revenues for the second quarter soared 159.7 percent to $351.3 million from $135.3 million last year. Analysts expected revenues of $340.37 million for the quarter.

The number of orders surged to 11.0 million from 4.7 million while the number of active customers rose to 3.5 million from about 1.5 million last year.

Gross margin increased to 23.5 percent from 21.8 percent in the prior year period, attributed to increased Vipshop's bargaining power with its suppliers due to increased purchasing scale.

Guangzhou, China-based Vipshop's second-quarter profit was $9.0 million, compared to a loss of $5.8 million last year. On a per-ADS basis, earnings were $0.16, compared to a loss of $0.11 last year.

Adjusted earnings for the quarter were $0.20 per ADS compared to a loss of $0.08 per ADS last year. Analysts expected earnings of $0.19 per share for the quarter. Analysts' estimates typically exclude special items.

Chief Executive Eric Shen said, "We are proud to report another solid quarter with strong revenue growth and margin expansion. We believe that these results attest to our growing market leadership and brand reputation as China's leading online discount retailer for brands."

VIPS closed Tuesday at $45.96, up $0.60 or 1.32%, on the Nasdaq. The stock, however, plunged $4.96 or 10.79% in after-hours trade.