Vipshop Reports Unaudited Second Quarter 2019 Financial Results

GUANGZHOU, China, Aug. 14, 2019 /PRNewswire/ -- Vipshop Holdings Limited (NYSE: VIPS), a leading online discount retailer for brands in China ("Vipshop" or the "Company"), today announced its unaudited financial results for the second quarter ended June 30, 2019.

Second Quarter 2019 Highlights

    --  Total net revenue for the second quarter of 2019 increased by 9.7% year
        over year to RMB22.7 billion (US$3.3 billion) from RMB20.7 billion in
        the prior year period.
    --  GMV([1]) for the second quarter of 2019 increased by 11% year over year
        to RMB35.1 billion from RMB31.6 billion in the prior year period.
    --  Gross profit for the second quarter of 2019 increased by 25.9% year over
        year to RMB5.1 billion (US$741.3 million) from RMB4.0 billion in the
        prior year period.
    --  Net income attributable to Vipshop's shareholders for the second quarter
        of 2019 increased by 19.3% year over year to RMB813.5 million (US$118.5
        million) from RMB681.6 million in the prior year period.
    --  Non-GAAP net income attributable to Vipshop's shareholders(([2])) for
        the second quarter of 2019 increased by 84.2% year over year to RMB1.1
        billion (US$154.8 million) from RMB576.9 million in the prior year
        period.
    --  The number of active customers([3]) for the second quarter of 2019
        increased by 11% year over year to 33.1 million from 29.8 million in the
        prior year period.
    --  Total orders([4]) for the second quarter of 2019 increased by 33% year
        over year to 147.8 million from 111.3 million in the prior year period.

Mr. Eric Shen, Chairman and Chief Executive Officer of Vipshop, stated, "We are delighted to have finished the second quarter of 2019 with strong operational and financial results. During the quarter, we continued to demonstrate healthy growth momentum in our total active customers, which increased by 11% year over year. In addition, we recently announced our strategic acquisition of Shan Shan Outlets, aiming to further enhance our ecosystem and explore opportunities in online-and-offline integration. Since we refocused on discount apparel and our profitability, we have seen substantial improvement in our financial results and key operating metrics, proving our strategy is very effective. We remain committed to executing on our merchandising strategy and further expanding our market share in China's discount apparel sector. We are confident that we can continue to deliver steady profitability improvement in the future."

Mr. Donghao Yang, Chief Financial Officer of Vipshop, further commented, "We delivered solid financial results this quarter with a substantial improvement in our bottom-line both sequentially and on a year-over-year basis. Additionally, we generated robust free cash flow of RMB1.2 billion during the quarter, which increased by RMB2.2 billion from the prior year period. We continue to focus on our merchandising strategy, particularly in apparel-related categories, in which the GMV grew by 19% year over year in this quarter. The focus on the high margin apparel category has and will enable us to deliver continuous improvement in our gross margin and overall profitability. Going forward, we will continue to closely monitor the return on investment from all our businesses, especially that of our investment in offline stores. We aim to achieve balanced top- and bottom-line growth and are committed to delivering long-term, sustainable shareholder return."

Second Quarter 2019 Financial Results

REVENUE

Total net revenue for the second quarter of 2019 increased by 9.7% year over year to RMB22.7 billion (US$3.3 billion) from RMB20.7 billion in the prior year period, primarily driven by the growth in the number of total active customers.

GROSS PROFIT

Gross profit for the second quarter of 2019 increased by 25.9% year over year to RMB5.1 billion (US$741.3 million) from RMB4.0 billion in the prior year period. Gross margin for the second quarter of 2019 increased to 22.4% from 19.5% in the prior year period.

OPERATING EXPENSES

Total operating expenses for the second quarter of 2019 were RMB4.2 billion (US$612.5 million), as compared with RMB3.9 billion in the prior year period. As a percentage of total net revenue, total operating expenses for the second quarter of 2019 decreased to 18.5% from 18.9% in the prior year period.

    --  Fulfillment expenses for the second quarter of 2019 were RMB2.2 billion
        (US$320.3 million), as compared with RMB1.9 billion in the prior year
        period. As a percentage of total net revenue, fulfillment expenses for
        the second quarter of 2019 were 9.7%, as compared with 9.1% in the prior
        year period, primarily attributable to a write-down of RMB275.5 million
        related to the Zhaoqing warehouse due to land subsidence during
        construction. Excluding the write-down, fulfillment expenses as a
        percentage of total net revenue for the quarter were 8.5%.
    --  Marketing expenses for the second quarter of 2019 decreased to RMB877.6
        million (US$127.8 million) from RMB899.6 million in the prior year
        period. As a percentage of total net revenue, marketing expenses for the
        second quarter of 2019 decreased to 3.9% from 4.3% in the prior year
        period.
    --  Technology and content expenses for the second quarter of 2019 decreased
        to RMB422.3 million (US$61.5 million) from RMB510.6 million in the prior
        year period. As a percentage of total net revenue, technology and
        content expenses for the second quarter of 2019 decreased to 1.9% from
        2.5% in the prior year period.
    --  General and administrative expenses for the second quarter of 2019 were
        RMB706.3 million (US$102.9 million), as compared with RMB615.2 million
        in the prior year period. As a percentage of total net revenue, general
        and administrative expenses for the second quarter of 2019 were 3.1%, as
        compared with 3.0% in the prior year period.

INCOME FROM OPERATIONS

Income from operations for the second quarter of 2019 increased by 141.2% year over year to RMB965.4 million (US$140.6 million) from RMB400.3 million in the prior year period. Operating margin for the second quarter of 2019 increased to 4.2% from 1.9% in the prior year period.

Non-GAAP income from operations([5]) for the second quarter of 2019, which excludes share-based compensation expenses and amortization of intangible assets resulting from business acquisitions, increased by 97.6% year over year to RMB1.2 billion (US$171.2 million) from RMB594.8 million in the prior year period. Non-GAAP operating income margin([6]) for the second quarter of 2019 increased to 5.2% from 2.9% in the prior year period.

NET INCOME

Net income attributable to Vipshop's shareholders for the second quarter of 2019 increased by 19.3% year over year to RMB813.5 million (US$118.5 million) from RMB681.6 million in the prior year period. Net margin attributable to Vipshop's shareholders for the second quarter of 2019 increased to 3.6% from 3.3% in the prior year period. Net income attributable to Vipshop's shareholders per diluted ADS([7]) for the second quarter of 2019 increased to RMB1.21 (US$0.18) from RMB0.99 in the prior year period.

Non-GAAP net income attributable to Vipshop's shareholders for the second quarter of 2019, which excludes (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from business acquisitions and equity method investments, (iii) tax effect of amortization of intangible assets resulting from business acquisitions, (iv) investment gain and revaluation of investments excluding dividends, (v) tax effect of investment gain and revaluation of investments excluding dividends, and (vi) share of gain in investment of limited partnership that is accounted for as an equity method investee, increased by 84.2% year over year to RMB1.1 billion (US$154.8 million) from RMB576.9 million in the prior year period. Non-GAAP net margin attributable to Vipshop's shareholders([8]) for the second quarter of 2019 increased to 4.7% from 2.8% in the prior year period. Non-GAAP net income attributable to Vipshop's shareholders per diluted ADS([9]) for the second quarter of 2019 increased to RMB1.58 (US$0.23) from RMB0.84 in the prior year period.

For the quarter ended June 30, 2019, the Company's weighted average number of ADSs used in computing diluted income per ADS was 673,241,463.

BALANCE SHEET AND CASH FLOW

As of June 30, 2019, the Company had cash and cash equivalents and restricted cash of RMB7.8 billion (US$1.1 billion) and short term investments of RMB238.3 million (US$34.7 million).

For the quarter ended June 30, 2019, net cash from operating activities was RMB3.4 billion (US$500.9 million), and free cash flow([10]), a non-GAAP measurement of liquidity, was as follows:



     For the three months ended


                                                         
       Jun 30, 2018      
       Jun 30, 2019        Jun 30, 2019



                                                           
       RMB'000           
        RMB'000             US$'000

                                                                                                                ---


     Net cash from operating activities                             (502,235)              3,438,809        500,919



     Add: Impact from Internet financing activities[11]               469,515             (1,254,977)     (182,808)



     Less: Capital expenditures                                     (870,103)              (936,124)     (136,362)




     Free cash flow (out)/in                                        (902,823)              1,247,708        181,749








     For the trailing twelve months ended


                                                         
       Jun 30, 2018      
       Jun 30, 2019        Jun 30, 2019



                                                           
       RMB'000           
        RMB'000             US$'000

                                                                                                                ---


     Net cash from operating activities                               187,270              10,207,552      1,486,898



     Add: Impact from Internet financing activities[11]             1,990,180             (1,829,324)     (266,471)



     Less: Capital expenditures                                   (2,901,367)            (3,954,839)     (576,087)




     Free cash flow (out)/in                                        (723,917)              4,423,389        644,340

Business Outlook

For the third quarter of 2019, the Company expects its total net revenue to be between RMB17.8 billion and RMB18.7 billion, representing a year-over-year growth rate of approximately 0% to 5%. These forecasts reflect the Company's current and preliminary view on the market and operational conditions, which is subject to change.

Exchange Rate

The Company's business is primarily conducted in China and the significant majority of revenues generated are denominated in Renminbi. This announcement contains currency conversions of Renminbi amounts into U.S. dollars solely for the convenience of the reader. Unless otherwise noted, all translations from Renminbi to U.S. dollars are made at a rate of RMB6.8650 to US$1.00, the effective noon buying rate for June 28, 2019 as set forth in the H.10 statistical release of the Federal Reserve Board. No representation is made that the Renminbi amounts could have been, or could be, converted, realized or settled into U.S. dollars at that rate on June 28, 2019, or at any other rate.

Conference Call Information

The Company will hold a conference call on Thursday, August 15, 2019 at 8:00 am Eastern Time or 8:00 pm Beijing Time to discuss its financial results and operating performance for the second quarter 2019.



              United States:              
              +1-845-675-0437


               International Toll Free:    
              +1-866-519-4004



              China Domestic:             
              400-6208-038



              Hong Kong:                  
              +852-3018-6771



              Conference ID:              
              #9137629

The replay will be accessible through August 23, 2019 by dialing the following numbers:



              United States Toll Free:    
              +1-855-452-5696



              International:              
              +61-2-8199-0299



              Conference ID:              
              #9137629

A live and archived webcast of the conference call will also be available at the Company's investor relations website at http://ir.vip.com.

About Vipshop Holdings Limited

Vipshop Holdings Limited is a leading online discount retailer for brands in China. Vipshop offers high quality and popular branded products to consumers throughout China at a significant discount to retail prices. Since it was founded in August 2008, the Company has rapidly built a sizeable and growing base of customers and brand partners. For more information, please visit www.vip.com.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as Vipshop's strategic and operational plans, contain forward-looking statements. Vipshop may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Vipshop's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Vipshop's goals and strategies; Vipshop's future business development, results of operations and financial condition; the expected growth of the online discount retail market in China; Vipshop's ability to attract customers and brand partners and further enhance its brand recognition; Vipshop's expectations regarding demand for and market acceptance of flash sales products and services; competition in the discount retail industry; fluctuations in general economic and business conditions in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Vipshop's filings with the SEC. All information provided in this press release is as of the date of this press release, and Vipshop does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Use of Non-GAAP Financial Measures

The condensed consolidated financial information is derived from the Company's unaudited interim condensed consolidated financial statements prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"), except that comparative consolidated statements of income and cash flows for the period presented and detailed footnote disclosures required by Accounting Standards Codification 270, Interim Reporting ("ASC270"), have been omitted. Vipshop uses non-GAAP net income attributable to Vipshop's shareholders, non-GAAP net income attributable to Vipshop's shareholders per diluted ADS, non-GAAP income from operations, non-GAAP operating income margin, non-GAAP net margin attributable to Vipshop's shareholders, and free cash flow, each of which is a non-GAAP financial measure. Non-GAAP net income attributable to Vipshop's shareholders is net income attributable to Vipshop's shareholders excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from business acquisitions and equity method investments, (iii) tax effect of amortization of intangible assets resulting from business acquisitions, (iv) investment gain and revaluation of investments excluding dividends, (v) tax effect of investment gain and revaluation of investments excluding dividends, and (vi) share of gain in investment of limited partnership that is accounted for as an equity method investee. Non-GAAP net income attributable to Vipshop's shareholders per diluted ADS is computed using non-GAAP net income attributable to Vipshop's shareholders divided by weighted average number of diluted ADS outstanding for computing diluted earnings per ADS. Non-GAAP income from operations is income from operations excluding share-based compensation expenses and amortization of intangible assets resulting from business acquisitions. Non-GAAP operating income margin is non-GAAP income from operations as a percentage of total net revenue. Non-GAAP net margin attributable to Vipshop's shareholders is non-GAAP net income attributable to Vipshop's shareholders as a percentage of total net revenue. Free cash flow is net cash from operating activities adding back the impact from Internet financing activities and less capital expenditures, which include purchase and deposits of property and equipment and land use rights, and purchase of other assets. Impact from Internet financing activities added back or deducted from free cash flow contains changes in the balances of financial products, which are primarily consumer financing and supplier financing that the Company provides to customers and suppliers. The Company believes that separate analysis and exclusion of the non-cash impact of (a) share-based compensation, (b) amortization of intangible assets, (c) investment gain and revaluation of investments excluding dividends, and (d) share of gain in investment of limited partnership that is accounted for as an equity method investee adds clarity to the constituent parts of its performance. The Company reviews these non-GAAP financial measures together with GAAP financial measures to obtain a better understanding of its operating performance. It uses these non-GAAP financial measures for planning, forecasting and measuring results against the forecast. The Company believes that non-GAAP financial measures are useful supplemental information for investors and analysts to assess its operating performance without the effect of (1) non-cash share-based compensation expenses, (2) amortization of intangible assets, (3) investment gain and revaluation of investments excluding dividends, and (4) share of gain in investment of limited partnership that is accounted for as an equity method investee. Free cash flow enables the Company to assess liquidity and cash flow, taking into account the impact from Internet financing activities and the financial resources needed for the expansion of fulfillment infrastructure and technology platform. Share-based compensation expenses and amortization of intangible assets have been and will continue to be significant recurring expenses in its business. However, the use of non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that they do not include all items that impact the Company's net income for the period. In addition, because non-GAAP financial measures are not measured in the same manner by all companies, they may not be comparable to other similar titled measures used by other companies. One of the key limitations of free cash flow is that it does not represent the residual cash flow available for discretionary expenditures.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Vipshop Holdings Limited Reconciliations of GAAP and Non-GAAP Results" at the end of this release.


     [1] "Gross merchandise value (GMV)" is defined as
      the total Renminbi value of all products and
      services sold through the Company's online sales
      business, online marketplace platform, and
      offline stores during the relevant period,
      including through the Company's websites and
      mobile apps, third-party websites and mobile
      apps, as well as Vipshop offline stores and
      Vipmaxx offline stores that were fulfilled by
      either the Company or its third-party merchants,
      regardless of whether or not the goods were
      delivered or returned. GMV includes shipping
      charges paid by buyers to sellers. For prudent
      considerations, the Company does not consider
      products or services to be sold if the relevant
      orders were placed and canceled pre-shipment and
      only included orders that left the Company's or
      other third-party vendors' warehouses.


                    [2]
                 Non-GAAP net income attributable
                     to Vipshop's shareholders is a non-GAAP
                     financial measure, which is defined as net income
                     attributable to Vipshop's shareholders excluding
                     (i) share-based compensation expenses, (ii)
                     amortization of intangible assets resulting from
                     business acquisitions and equity method
                     investments, (iii) tax effect of amortization of
                     intangible assets resulting from business
                     acquisitions, (iv) investment gain and
                     revaluation of investments excluding dividends,
                     (v) tax effect of investment gain and revaluation
                     of investments excluding dividends, and (vi)
                     share of gain in investment of limited
                     partnership that is accounted for as an equity
                     method investee.


     [3] "Active customers" is defined as registered
      members who have purchased from the Company or
      the Company's online marketplace platforms at
      least once during the relevant period.


     [4] "Total orders" is defined as the total number
      of orders placed during the relevant period,
      including the orders for products and services
      sold through the Company's online sales business
      and the Company's online marketplace platforms,
      net of orders returned.


     [5] Non-GAAP income from operations is a non-
      GAAP financial measure, which is defined as
      income from operations excluding share-based
      compensation expenses and amortization of
      intangible assets resulting from business
      acquisitions.


     [6] Non-GAAP operating income margin is a non-
      GAAP financial measure, which is defined as non-
      GAAP income from operations as a percentage of
      total net revenues.


     [7] "ADS" means American depositary share, each of
      which represents 0.2 Class A ordinary share.


     [8] Non-GAAP net margin attributable to Vipshop's
      shareholders is a non-GAAP financial measure,
      which is defined as non-GAAP net income
      attributable to Vipshop's shareholders, as a
      percentage of total net revenues.


     [9] Non-GAAP net income attributable to Vipshop's
      shareholders per diluted ADS is a non-GAAP
      financial measure, which is defined as non-GAAP
      net income attributable to Vipshop's
      shareholders, divided by the weighted average
      number of diluted ADS outstanding for computing
      diluted earnings per ADS.


     [10] Free cash flow is a non-GAAP financial
      measure, which is defined as net cash from
      operating activities adding back the impact from
      Internet financing activities and less capital
      expenditures, which include purchase and deposits
      of property and equipment and land use rights,
      and purchase of other assets.


     [11] Impact from Internet financing activities
      represents net cash flow relating to the
      Company's financial products, which are primarily
      consumer financing and supplier financing that
      the Company provides to customers and suppliers.


                                                                                                                                                  
              
                Vipshop Holdings Limited


                                                                                                                                   
        
          Unaudited Condensed Consolidated Statements of Income and Comprehensive Income


                                                                                                                                          
         
                (In thousands, except for share and per share data)


                                                                                                                                                                                      
              
                Three Months Ended



                                                                                                                                                                                        
              
                June 30, 2018              
        
        March 31, 2019       June 30, 2019       June 30, 2019

                                                                                                                                                                                                                                                                                                        ---

                                                                                                                                                                                           
              
                RMB'000                    
        
         RMB'000      
     
        RMB'000      
     
        USD'000





              Product revenues                                                                                                                                                                                                 20,103,555                 20,459,633          21,721,951            3,164,159



              Other revenues(1)                                                                                                                                                                                                   634,820                    858,983           1,021,767              148,837



              Total net revenues                                                                                                                                                                                               20,738,375                 21,318,616          22,743,718            3,312,996




              Cost of revenues                                                                                                                                                                                               (16,694,602)              (16,962,283)       (17,654,577)         (2,571,679)



              Gross profit                                                                                                                                                                                                      4,043,773                  4,356,333           5,089,141              741,317




              Operating expenses:



              Fulfillment expenses(2)                                                                                                                                                                                         (1,897,097)               (1,761,770)        (2,198,543)           (320,254)



              Marketing expenses                                                                                                                                                                                                (899,581)                 (780,920)          (877,573)           (127,833)



              Technology and content expenses                                                                                                                                                                                   (510,603)                 (382,956)          (422,314)            (61,517)



              General and administrative expenses(3)                                                                                                                                                                            (615,169)                 (668,920)          (706,252)           (102,877)




              Total operating expenses                                                                                                                                                                                        (3,922,450)               (3,594,566)        (4,204,682)           (612,481)




              Other operating income                                                                                                                                                                                              278,960                    101,404              80,904               11,785




              Income from operations                                                                                                                                                                                              400,283                    863,171             965,363              140,621



              Investment gain and revaluation of investments                                                                                                                                                                      309,059                    214,085              15,012                2,187



              Interest expense                                                                                                                                                                                                   (39,003)                  (31,983)           (12,194)             (1,776)



              Interest income                                                                                                                                                                                                      62,272                     70,560              41,732                6,079



              Foreign exchange gain(loss)                                                                                                                                                                                          79,557                   (41,631)             30,920                4,504



              Income before income tax expense and share of gain of equity method investees                                                                                                                                       812,168                  1,074,202           1,040,833              151,615



              Income tax expenses(4)                                                                                                                                                                                            (125,486)                 (243,897)          (213,392)            (31,084)



              Share of gain (loss) of equity method investees                                                                                                                                                                       2,092                     46,659             (9,572)             (1,394)




              Net income                                                                                                                                                                                                          688,774                    876,964             817,869              119,137



              Net gain attributable to noncontrolling interests                                                                                                                                                                   (7,130)                   (4,682)            (4,351)               (634)




              Net income attributable to Vipshop's shareholders                                                                                                                                                                   681,644                    872,282             813,518              118,503





              Shares used in calculating earnings per share(5):



              Weighted average number of Class A and Class B ordinary shares:



              --Basic                                                                                                                                                                                                         132,138,434                133,037,380         133,403,777          133,403,777



              --Diluted                                                                                                                                                                                                       140,270,995                139,290,699         134,648,293          134,648,293





              Net earnings per Class A and Class B ordinary share



              Net income attributable to Vipshop's shareholders -- Basic                                                                                                                                                             5.16                       6.56                6.10                 0.89



              Net income attributable to Vipshop's shareholders -- Diluted                                                                                                                                                           4.97                       6.33                6.04                 0.88





              Net earnings per ADS (1 ordinary share equals to 5 ADSs)



              Net income attributable to Vipshop's shareholders -- Basic                                                                                                                                                             1.03                       1.31                1.22                 0.18



              Net income attributable to Vipshop's shareholders -- Diluted                                                                                                                                                           0.99                       1.27                1.21                 0.18



              
                (1) Other revenues primarily consist of revenues from third-party logistics services, product promotion
    and online advertising, fees charged to third-party merchants which the Company provides platform
    access for sales of their products, interest income from microcredit and consumer financing services,
    and inventory and warehouse management services to certain suppliers.



              
                (2) Fulfillment expenses include shipping and handling expenses, which amounted RMB 1.14
    billion, RMB 1.1 billion and RMB 1.21 billion in the three month periods ended June 30,2018, March
    31,2019 and June 30,2019, respectively.



              
                (3) General and administrative expenses include amortization of intangible assets resulting from
    business acquisitions, which amounted to RMB 0.6 million, RMB 0.6 million and RMB 0.5 million in the
    three month periods ended June 30,2018, March 31,2019 and June 30,2019, respectively.



              
                (4) Income tax expenses include income tax benefits of RMB 0.2 million, RMB 0.2 million and RMB 0.1
    million related to the reversal of deferred tax liabilities, which was recognized on business acquisitions
    for the three month periods ended June 30,2018, March 31,2019 and June 30,2019, respectively.



              
                (5) Authorized share capital is re-classified and re-designated into Class A ordinary shares and Class B
    ordinary shares, with each Class A ordinary share being entitled to one vote and each Class B ordinary
    share being entitled to ten votes on all matters that are subject to shareholder vote.






                                                                                                                                                                                      
              
                Three Months Ended


                                                                                                                                                                                        
              
                June 30, 2018              
        
        March 31, 2019       June 30, 2019       June 30, 2019

                                                                                                                                                                                                                                                                                                        ---

                                                                                                                                                                                           
              
                RMB'000                    
        
         RMB'000      
     
        RMB'000      
     
        USD'000



              Share-based compensation expenses included are as follows



              Fulfillment expenses                                                                                                                                                                                                 21,217                     19,466              37,497                5,462



              Marketing expenses                                                                                                                                                                                                   11,501                     10,843              10,970                1,598



              Technology and content expenses                                                                                                                                                                                      62,542                     52,605              58,010                8,450



              General and administrative expenses                                                                                                                                                                                  98,658                     89,813             103,048               15,011



              Total                                                                                                                                                                                                               193,918                    172,727             209,525               30,521







                                                                                                                                                  
              
                Vipshop Holdings Limited


                                                                                                                                            
         
                Unaudited Condensed Consolidated Balance Sheets


                                                                                                                                          
         
                (In thousands, except for share and per share data)




                                                                                                                                                                                      
              
                December 31, 2018             
        
        June 30, 2019       June 30, 2019



                                                                                                                                                                                           
              
                RMB'000                    
        
         RMB'000      
     
        USD'000



              
                ASSETS



              CURRENT ASSETS



              Cash and cash equivalents                                                                                                                                                                                         9,540,556                  6,836,990             995,920



              Restricted cash                                                                                                                                                                                                     497,916                    995,255             144,975



              Short term investments                                                                                                                                                                                            2,321,244                    238,302              34,713



              Accounts receivable, net                                                                                                                                                                                          5,674,731                  3,999,549             582,600



              Amounts due from related parties                                                                                                                                                                                     17,475                     78,919              11,496



              Other receivables and prepayments,net                                                                                                                                                                             3,594,736                  2,583,560             376,338



              Loan Receivables,net                                                                                                                                                                                                310,873                    763,360             111,196



              Inventories                                                                                                                                                                                                       5,368,106                  4,489,339             653,946



              Total current assets                                                                                                                                                                                             27,325,637                 19,985,274           2,911,184




              NON-CURRENT ASSETS



              Property and equipment, net                                                                                                                                                                                       8,531,483                  9,194,037           1,339,262



              Deposits for property and equipment                                                                                                                                                                                 176,556                    130,076              18,948



              Land use rights, net                                                                                                                                                                                              3,885,578                  4,466,116             650,563



              Intangible assets, net                                                                                                                                                                                              353,108                    351,333              51,178



              Investment in equity method investees                                                                                                                                                                               667,427                    717,376             104,498



              Other investments                                                                                                                                                                                                 1,470,551                  1,790,343             260,792



              Other long-term assets                                                                                                                                                                                              396,447                    806,760             117,518



              Goodwill                                                                                                                                                                                                            367,106                    356,050              51,865



              Deferred tax assets, net                                                                                                                                                                                            388,770                    447,254              65,150



              Operating lease right-of-use assets(1)                                                                                                                                                                                    0                    988,655             144,014



              Total non-current assets                                                                                                                                                                                         16,237,026                 19,248,000           2,803,788




              
                TOTAL ASSETS                                                                                                                                                                                        43,562,663                 39,233,274           5,714,972






              
                LIABILTIES AND  EQUITY



              CURRENT LIABILITIES



              Short term loans                                                                                                                                                                                                  1,343,160                    637,494              92,861



              Accounts payable                                                                                                                                                                                                 11,630,172                 10,762,058           1,567,670



              Advance from customers                                                                                                                                                                                            1,473,134                    783,655             114,152



              Accrued expenses and other current liabilities                                                                                                                                                                    5,512,605                  4,985,198             726,176



              Amounts due to related parties                                                                                                                                                                                      323,108                    399,082              58,133



              Deferred income                                                                                                                                                                                                     367,512                    387,002              56,373



              Securitization debt                                                                                                                                                                                                 969,000                    494,000              71,959



              Convertible senior notes                                                                                                                                                                                          4,327,268                          0                   0



              Operating lease liabilities(1)                                                                                                                                                                                            0                    257,524              37,513



              Total current liabilities                                                                                                                                                                                        25,945,959                 18,706,013           2,724,837




              NON-CURRENT LIABILITIES



              Deferred tax liability                                                                                                                                                                                                4,960                     51,267               7,468



              Deferred income-non current                                                                                                                                                                                         400,951                    455,468              66,346



              Operating lease liabilities(1)                                                                                                                                                                                            0                    720,484             104,950



              Total non-current liabilities                                                                                                                                                                                       405,911                  1,227,219             178,764




              
                TOTAL LIABILITIES                                                                                                                                                                                   26,351,870                 19,933,232           2,903,601






              
                EQUITY:



              Class A ordinary shares (US$0.0001 par value, 483,489,642 shares authorized,                                                                                                                                             75                         76                  11
    and 116,395,883 and 117,022,836 shares issued and outstanding as of
    December 31, 2018 and June 30,2019, respectively)



              Class B ordinary shares (US$0.0001 par value, 16,510,358 shares authorized,                                                                                                                                              11                         11                   2
    and 16,510,358 and 16,510,358 shares issued and outstanding as of December
    31, 2018 and June 30,2019, respectively)



              Additional paid-in capital                                                                                                                                                                                        9,385,216                  9,767,477           1,422,793



              Retained earnings                                                                                                                                                                                                 7,907,396                  9,593,197           1,397,407



              Accumulated other comprehensive loss                                                                                                                                                                               (30,883)                  (21,181)            (3,083)



              Noncontrolling interests                                                                                                                                                                                           (51,022)                  (39,538)            (5,759)



              Total shareholders' equity                                                                                                                                                                                       17,210,793                 19,300,042           2,811,371




              
                TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                                                                          43,562,663                 39,233,274           5,714,972






              
                
                  (1) On January 1, 2019, the Company adopted ASU 2016-02, "Leases (Topic 842)" and associated
    ASUs related to Topic 842 using the modified retrospective transition, under which the new standard
    was applied to leases existing at the date of initial adoption, and prior periods were not restated.






                                                                                                                                                  
              
                Vipshop Holdings Limited


                                                                                                                                             
         
                 Reconciliations of GAAP and Non-GAAP Results




                                                                                                                                                                                      
              
                Three Months Ended



                                                                                                                                                                                        
              
                June 30, 2018               
        
        June 30, 2019       June 30, 2019



                                                                                                                                                                                           
              
                RMB'000                    
        
         RMB'000      
     
        USD'000



              Income from operations                                                                                                                                                                                              400,283                    965,363             140,621



              Share-based compensation expenses                                                                                                                                                                                   193,918                    209,525              30,521



              Amortization of intangible assets resulting from business acquisitions                                                                                                                                                  607                        511                  74



              Non-GAAP income from operations                                                                                                                                                                                     594,808                  1,175,399             171,216








              Net income                                                                                                                                                                                                          688,774                    817,869             119,137



              Share-based compensation expenses                                                                                                                                                                                   193,918                    209,525              30,521



              Investment gain and revaluation of investments excluding dividends                                                                                                                                                (309,059)                   (2,198)              (320)



              Share of gain in investment of limited partnership that is accounted for as an equity                                                                                                                                     0                     24,218               3,528
    method investee



              Tax effect of investment gain and revaluation of investments excluding dividends                                                                                                                                      9,967                     17,150               2,498



              Amortization of intangible assets resulting from business acquisitions and equity                                                                                                                                       607                        511                  74
    method investments



              Tax effect of amortization of intangible assets resulting from business acquisitions                                                                                                                                  (152)                     (128)               (19)



              Non-GAAP net income                                                                                                                                                                                                 584,055                  1,066,947             155,419








              Net income attributable to Vipshop's shareholders                                                                                                                                                                   681,644                    813,518             118,503



              Share-based compensation expenses                                                                                                                                                                                   193,918                    209,525              30,521



              Investment gain and revaluation of investments excluding dividends                                                                                                                                                (309,059)                   (2,198)              (320)



              Share of gain in investment of limited partnership that is accounted for as an equity                                                                                                                                     0                     24,218               3,528
    method investee



              Tax effect of investment gain and revaluation of investments excluding dividends                                                                                                                                      9,967                     17,150               2,498



              Amortization of intangible assets resulting from business acquisitions and equity                                                                                                                                       597                        501                  73
    method investments



              Tax effect of amortization of intangible assets resulting from business acquisitions                                                                                                                                  (149)                     (125)               (18)





              Non-GAAP net income attributable to Vipshop's shareholders                                                                                                                                                          576,918                  1,062,589             154,785








              Shares used in calculating earnings per share:



              Weighted average number of Class A and Class B ordinary shares:



              --Basic                                                                                                                                                                                                         132,138,434                133,403,777         133,403,777



              --Diluted                                                                                                                                                                                                       140,270,995                134,648,293         134,648,293





              Non-GAAP net income per Class A and Class B ordinary share



              Non-GAAP net income attributable to Vipshop's shareholders -- Basic                                                                                                                                                    4.37                       7.97                1.16



              Non-GAAP net income attributable to Vipshop's shareholders -- Diluted                                                                                                                                                  4.22                       7.89                1.15







              Non-GAAP net income per ADS (1 ordinary share equal to 5 ADSs)



              Non-GAAP net income attributable to Vipshop's shareholders -- Basic                                                                                                                                                    0.87                       1.59                0.23



              Non-GAAP net income attributable to Vipshop's shareholders -- Diluted                                                                                                                                                  0.84                       1.58                0.23

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SOURCE Vipshop Holdings Limited