Clothing consumption is leading the recovery of consumption, demand for wearable products is rebounding, and online retail is also continuing to recover vitality. Vip.com (NYSE: VIPS), a specialty e-commerce platform, has released a stable and positive signal in its performance.
On February 28th, Vipshop released its 2023 annual report, which showed that for the entire year of 2023, Vipshop achieved a net revenue of 112.9 billion yuan, a year-on-year increase of 9.4%; Non GAAP's net profit was 9.5 billion yuan, a year-on-year increase of 39.1%. Among them, Q4 achieved a net revenue of 34.7 billion yuan, a year-on-year increase of 9.2%; Non GAAP's net profit was 3.2 billion yuan, a year-on-year increase of 43.4%. On the day of the performance announcement, Vipshop's stock price rose by over 16% at one point.
Vipshop's impressive performance is mainly due to its strong sales performance in clothing. In addition, the differentiated positioning of the brand's special sale has attracted and retained more high-value users. In 2023, the company's GMV was 208 billion yuan, a year-on-year increase of 18.7%; The number of active users was 87.4 million, a year-on-year increase of 3.9%; The number of orders was 812.3 million, a year-on-year increase of 9.8%.
More than 20 securities firms, including Citigroup, JPMorgan Chase, CITIC Securities, and China Merchants Securities, have given Vipshop a "buy" or "strongly recommend" rating. At the same time, several institutions have raised the target price of Vipshop after the performance announcement, among which China Merchants Securities has raised the target price to $25.06 per share. Huatai Securities pointed out that Vipshop is expected to further enhance its valuation attractiveness.
The growth rate of optional consumption is relatively fast, and Vipshop Wear has strong sales performance
As an eternal sunrise industry, clothing consumption first regains elasticity after the end of the epidemic, and consumers have a preference for this type of product. According to Magic Mirror's insight, in 2023, there will be more differentiation in various categories of social zero, and the growth rate of optional consumption (clothing, jewelry, sports goods) will still maintain a relatively fast level.
According to data from the National Bureau of Statistics, the total retail sales of consumer goods in 2023 reached 47149.5 billion yuan, an increase of 7.2% compared to the previous year. Among them, the retail sales of clothing, shoes and hats, and needle textiles increased by 12.9% year-on-year, significantly better than the overall level of retail sales of consumer goods in society. In the online retail sales of physical goods, clothing products increased by 10.8%.
The answer sheet handed over by Vipshop is a direct reflection of the rebound in demand. In 2023, the GMV of Vipshop's wearable products increased by 24% compared to 2022, boosting the company's annual GMV to exceed 200 billion yuan for the first time. Thanks to this, core columns such as Super Brand Day, Super Category Day, and Today's Big Brand achieved historic highs in sales. In terms of brand introduction and content innovation, Vipshop's buyer team has introduced over 1500 new brands throughout the year by exploring market opportunities; The activities launched on Super Category Day, such as the New School Season, National Sports Festival, and Winter Warmth Festival, all achieved sales of over 100 million yuan within 24 hours.
Huatai Securities believes that Vipshop will continue to deepen its high-quality supply strength, which is expected to further promote consumer cross category purchases. By increasing the frequency of user purchases and per capita consumption (ARPU), it will help the company's GMV and revenue grow steadily.
Cost performance consumption is on the rise, and "brand specials" may continue to generate revenue
The scar effect brought about by the epidemic has to some extent reshaped people's consumption views, and the pursuit of cost-effectiveness and frugality has become one of the most popular trends at present. On social media platforms, the joke that "it's not that xx can't afford it, but that xx is more cost-effective" is a true portrayal of consumer behavior patterns.
In the trend of cost-effective consumption, more consumers are showing a characteristic of "both price beauty and quality" when purchasing clothing, and Vipshop, a brand with strong special selling mentality, has become one of the priority choices. From the perspective of paid membership scale, in 2023, the number of active VIP (SVIP) users of Vipshop increased by 13% year-on-year to 7.6 million, contributing 45% of online consumption. At the same time, the renewal rate of SVIP members has significantly increased, and per capita consumption has also increased.
In addition, major e-commerce platforms have joined the price power competition, attempting to use price reduction strategies such as full reduction promotion and holiday subsidies to win the favor of consumers. In 2023, Vipshop will launch lower discount offers during events such as the 618 Mid year Special Sale Festival, the 11.11 Special Sale Carnival, and the annual special sale conference, combining limited time and quantity, and the Kuang seconds PLUS program. Many popular products have set new lows in prices for the year.
Shen Ya, Chairman and CEO of Vipshop, emphasized, "In 2023, we will deeply cultivate retail, embrace change, and constantly adjust. While continuing to implement the strategy of good goods and good prices, we will further deepen the user mentality of 'buy clothes first, come to Vipshop'."
Looking ahead to 2024, there is a clear trend of high-end consumption stratification, and the outdoor trend is still ongoing. Chinese style enthusiasts are also constantly heating up the trend. The 2024 Vipshop Clothing Industry Spring/Summer Trend White Paper shows that among Vipshop's clothing industry users, the growth rate of the "high-quality", "outdoor sports", and "trendy fashion" demographic is significant, with strong consumption power.
According to Statista's forecast, global clothing consumption growth will continue to improve from 2024 to 2027, with an expected average growth rate of 2.8%. Under this trend, Vipshop is expected to fully benefit and release performance growth.
According to the perspective of China Merchants Securities, the Vipshop special sale model has strong anti cyclical properties, and the platform has achieved steady growth higher than the e-commerce market. It is expected that in the future, as the trend of rational consumption among residents continues, the Vipshop brand discount special sale positioning will continue to benefit.