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Vipshop Holdings (NYSE: VIPS) Q3 Results, beat Analyst Estimates, Q4 Guidance Impressive

Category: Investment


Miami, FL - November 20, 2012 ( newswire), a leading digital financial media company, Comments on Vipshop Holdings (NYSE: VIPS)

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Vipshop Holdings Limited (NYSE: VIPS) reported strong quarter with sales beating analyst estimates by nearly $9 million. The Chinese internet services provider reported $155.9 million worth of sales, beating Wall Street estimates of $147 million. Additionally, the earnings per share beat the Street estimate by more than 50% at ($0.03) per shares compared to ($0.07).

Vipshop Holdings faces competition from the privately held Chinese e-commerce company, Alibaba Group Holdings Limited. It also competes against E-Commerce China Dangdang Inc. (NYSE: DANG), which operates as a business-to-consumer e-commerce company in China, and Shanghai-based Zuoan Fashion Limited (NYSE: ZA), which engages in the design and distribution of fashion menswear.

The company's revenues were driven by the increase in the number of active users during the quarter, which rose by 174 percent year-on year. Total orders rose by 158 percent for the same period while their gross margin was up by 50 basis points, due to better pricing. On the other hand, fulfillment expenses decreased by 130 basis points, driven by warehouse location and the use of regional carriers for delivery.

Vipshop Holdings' December quarter guidance was equally impressive. The company provided guidance of $237.5 million in revenue, which beat analyst expectations by 18 percent. Piper Jaffray analysts increased their estimates to be in-line with the guidance. The analysts also revised their Q4 earnings per share estimate from ($0.06) to ($0.01) per share.

In a report published Wednesday, Piper Jaffray analysts Gene Munster and Matthew E. Lebo maintained their Overweight rating on the stock and increased their price target from $9.00 to $15 per share. The analysts noted, “Overall, we see a beat and rise as a positive, especially given the June quarter's beat and guide down. The bottom line is Vipshop's model is working as it grows market share and margins despite a highly competitive environment. We remain Overweight and increase our price target from $9 to $15."

The company also reported some major improvements from Q2 results. The 1.7 million active users represented 13 percent increase from the 1.5 million reported in the June-12 quarter. Orders were also up 15 percent from the June-12 quarter to 5.4 million.

The analysts' 2013 revenue estimate is now up by $50 million from $1.15 billion to $1.2 billion. The EPS is also up from the initial $0.19 per share to $0.25 as the analysts factored in, better revenues and improved margins. The company's margins were up across the board as gross margin increased from 21.8 percent to 22.3 percent, from June-12 while; operating loss fell from 15.2 percent, or $5.4 million in June-12 to 13.9 percent or $3.3 million in Sep-12. The shift to regional delivery continued to lower expenses.


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