The Chinese off-price e-commerce platform’s headline net income surged in the second quarter even as revenue, active customers, orders and its own non-GAAP profit measure all declined.
Vipshop Holdings reported second-quarter GAAP net income up 189% year over year, to roughly $634.7 million. Total net revenue declined to roughly $3.6 billion. Active customers fell to 42.3 million from 43.5 million. Total orders fell to 182.4 million from 193.0 million. Non-GAAP net income, the measure the company itself typically emphasizes, fell 81%, to RMB 392.2 million from RMB 2.1 billion.
The gap between the two profit measures runs to roughly RMB 3.9 billion, or about $576 million at the exchange rate implied by the company’s own GAAP conversion. That direction is unusual: companies more often report a one-time gain that flatters GAAP while a cleaner non-GAAP figure shows a softer underlying business. Vipshop’s release does not identify, by name or amount, the item responsible for this quarter’s gap. Until that item is identified, the GAAP figure alone does not describe the operating trends the rest of the release shows: shrinking revenue, a shrinking customer base, fewer orders.
Gross margin held roughly flat, easing to 23.3% from 23.5%. Chief Executive Eric Shen pointed to “the solid performance of our active SVIPs” as validating the company’s business model, a comment about one loyalty tier that sits alongside declines in total active customers and orders.
Vipshop guided third-quarter revenue to a range implying a decline of 5% to flat year over year.