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Vipshop (VIPS) to Report Q4 Earnings: What's in the Offing?

Zacks Equity Research
·4-min read

Vipshop Holdings Limited’s VIPS fourth-quarter 2019 results are likely to reflect strength in its discount retail business and merchandising strategy.

For the fourth quarter, the company expects total net revenues between RMB 26.1 billion and RMB 27.4 billion, indicating an improvement of 0-5% from the prior-year quarter.

The Zacks Consensus Estimate for revenues is pegged at $3.99 billion, suggesting growth of 5.23% from the year-ago reported figure.

Further, the consensus mark for earnings per share is pegged at 32 cents per share, which indicates an improvement of 68.42% year over year.

The company surpassed the Zacks Consensus Estimate in three of the trailing four quarters by 20.88%, on average.

Vipshop Holdings Limited Price and EPS Surprise

Vipshop Holdings Limited Price and EPS Surprise
Vipshop Holdings Limited Price and EPS Surprise

Vipshop Holdings Limited price-eps-surprise | Vipshop Holdings Limited Quote

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Factors at Play

The company’s persistent efforts toward strengthening product offerings and improving product procurement are likely to have benefited in fourth-quarter results given the secular trend in online shopping market.

Further, solid execution of Vipshop’s merchandising strategy is likely to have bolstered its total active customer base in the to-be-reported quarter.

Moreover, its successful transition to discount retailing remains a major positive. This is likely to have continued driving momentum across repeated customers and helped in attracting new customers.

Additionally, the company’s to-be-reported quarterly results are likely to reflect its deepening focus on high margin generating apparel related business, especially discount apparel business.

Moreover, this particular business is likely to have accelerated the company’s gross merchandise volume (GMV) in the quarter under review.  Furthermore, Vipshop’s deep discount channels are expected to have bolstered its online GMV in the to-be-reported quarter.

Further, strategic acquisition of Shan Shan Outlets that operates five outlets in Ningbo, Taiyuan,
Harbin, Zhengzhou and Nanchang, is expected to have contributed to the GMV growth in the fourth quarter.

Additionally, the company decided to discontinue its delivery business operated by Pinjun in the quarter under review and joined forces with SF Holding to leverage its delivery capabilities. This is likely to have helped the company in saving on its fulfillment costs in the to-be-reported quarter.

However, intensifying competition in the online shopping market, which has resulted in a hike in its sales and marketing spending, is likely to get reflected in the company’s fourth-quarter results.

What Our Model Says

Our proven model doesn’t conclusively predict an earnings beat for Vipshop this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Vipshop has an Earnings ESP of -4.76% and a Zacks Rank #1.

Stocks to Consider

Here are some stocks you may consider, as our proven model shows that these have the right combination of elements to post an earnings beat this quarter.
 
Broadcom Inc. AVGO has an Earnings ESP of +1.72% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Square, Inc. SQ has an Earnings ESP of +3.59% and a Zacks Rank #3.

Applied Optoelectronics, Inc. AAOI has an Earnings ESP of +8.12% and a Zacks Rank #3.

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