Vipshop NYSE: VIPS reported lower second-quarter revenue and operating profit as management cited a challenging retail environment in which consumers remained highly selective and focused on value. The company said it is prioritizing profitability, curated merchandise and customer retention rather than pursuing unprofitable growth.
Total net revenue for the second quarter of 2026 was RMB24.7 billion, down from RMB25.8 billion a year earlier. Gross profit declined to RMB5.8 billion from RMB6.1 billion, while gross margin was 23.3%, compared with 23.5% in the prior-year period.
Income from operations fell to RMB1.5 billion from RMB1.7 billion, and operating margin narrowed to 6.2% from 6.6%. Non-GAAP income from operations was RMB2.0 billion, compared with RMB2.4 billion a year earlier, with non-GAAP operating margin declining to 8.1% from 9.3%.
Selective Consumer Demand Pressures Revenue
Co-founder, Chairman and CEO Eric Ya Shen said the quarter was marked by customers who were “value conscious” and highly selective across promotional channels. Shoppers were prioritizing essential purchases and exercising greater caution in discretionary categories such as apparel, he said.
Rather than chase sales through unprofitable promotions, Shen said Vipshop remained focused on its off-price model of selling curated branded merchandise at deep discounts. He pointed to the company’s Super VIP, or SVIP, members as a source of resilience: Active SVIP customers increased 8% year over year and accounted for 54% of online spending during the quarter.
Vipshop said its SVIP membership base has reached 10 million. Management plans to support member engagement with seasonal campaigns, a service upgrade and a refreshed version of its “Dress the best for 70% less” slogan.
In response to a softer demand environment, Shen said the company has sharpened its merchandise curation around apparel and lifestyle essentials and has worked more closely with brand partners on inventory allocations. Vipshop also continues to reposition its Made-for-Vipshop exclusive product line, seeking to improve product standards, conversion rates and customer loyalty.
During the question-and-answer session, Head of Investor Relations Jessie Zheng said consumer enthusiasm has remained limited through July and August, although sales momentum has shown a slight recovery. She said the improvement remained far from strong and that management expects consumer sentiment in the second half to resemble conditions seen in the first half. As a result, the company expects full-year revenue to be slightly below the prior year.
Tax Items Affect Reported Non-GAAP Income
Net income attributable to Vipshop shareholders rose 189.1% year over year to RMB4.3 billion, primarily because of a RMB5.79 billion one-time investment gain related to the listing of a commercial real estate investment trust, or REIT. Net income per diluted ADS increased to RMB8.82 from RMB2.91.
Non-GAAP net income attributable to Vipshop shareholders was RMB392.2 million, down from RMB2.1 billion a year earlier. Non-GAAP net income per diluted ADS was RMB0.80, compared with RMB4.06 in the prior-year period.
CFO Mark Wang said non-GAAP income was temporarily affected by a one-time withholding-tax adjustment. Excluding discrete, non-operating tax items, Wang said underlying non-GAAP net profit was RMB2.0 billion and the associated net margin was 7.9%.
Income tax expense increased to RMB3.3 billion from RMB407.2 million. Wang attributed the increase primarily to RMB1.63 billion in tax expense related to the one-time investment gain recognized by Shan Shan Commercial Group upon issuance of a commercial REIT, as well as RMB1.56 billion of accrued withholding tax associated with historical dividend distributions from mainland China to Hong Kong.
Responding to an analyst question, Wang said the withholding-tax adjustment was “absolutely not a penalty” and stated that the company has operated in compliance with applicable tax laws and regulatory guidance. He said the adjustment is expected to be settled in the third quarter and that Vipshop expects a minimal effect on future net margin.
Margins, AI and Outlet Expansion
Vipshop’s operating expenses declined 2.4% to RMB4.5 billion, but rose as a percentage of revenue to 18.0% from 17.7%. Fulfillment expenses increased to RMB2.14 billion, while marketing expenses increased to RMB760.3 million and technology and content expenses rose to RMB486.2 million. General and administrative expenses declined 17.5% to RMB1.1 billion.
Zheng said operating-margin pressure reflected fulfillment-cost deleverage as return rates continued to rise, along with lower revenue scale. However, she said gross margin was broadly stable and that the company expects its margins, particularly net-profit margins, to remain relatively stable in the second half. Management said it does not intend to participate in unprofitable subsidy spending seen elsewhere in the industry.
Shen also discussed expanded artificial-intelligence deployment across customer service, virtual try-on, marketing, supply-chain optimization and daily operational workflows. He said the company’s AI marketing tools are being used for placement planning and matching creative content to appropriate channels, with the aim of improving acquisition efficiency and customer quality.
The company’s Shan Shan Outlet business, meanwhile, grew more than 20% year over year in gross merchandise value during the first half, according to management. Shen said the outlet chain has expanded from five malls at the time of its 2019 acquisition to 22 operating outlet malls and is now China’s largest outlet chain by store count.
Management expects Shan Shan Outlet to sustain similar growth momentum in the second half, with GMV growth above 20% considered achievable and comparable same-store sales expected to increase by at least double digits.
Capital Returns and Third-Quarter Outlook
Vipshop had RMB29.9 billion in cash, cash equivalents and restricted cash as of June 30, along with RMB3.6 billion in short-term investments. During the first half, the company returned about $400 million to shareholders through dividends and share repurchases.
The board approved a new $1 billion share-repurchase program. Wang said Vipshop remains committed to returning no less than 75% of its full-year 2025 non-GAAP net income to shareholders and will conduct repurchases opportunistically.
For the third quarter, Vipshop forecast total net revenue of RMB20.3 billion to RMB21.4 billion, representing a year-over-year decline of approximately 5% to 0%.
About Vipshop (NYSE:VIPS)
Vipshop Holdings Limited NYSE: VIPS is a leading online discount retailer in China, offering high-quality branded products at competitive prices through a time-limited, flash-sales model. The company provides consumers with access to a rotating selection of merchandise, combining the excitement of limited-time offers with curated brand partnerships to drive customer engagement and loyalty.
Vipshop’s platform features a diverse range of product categories, including apparel, footwear, cosmetics, home furnishings, digital electronics and other lifestyle goods.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Continue following MarketBeat
Add MarketBeat as your preferred source on Google to see our latest stories in your feed.
Before you consider Vipshop, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Vipshop wasn't on the list.
While Vipshop currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
The space race is growing fast, and you don’t have to have gotten in early on SpaceX to profit. This report shows seven space stocks you can buy today that may grow as rockets, satellites, defense, space internet, and new space technology become more important.
Get This Free Report
