Ladies and gentlemen, good day everyone, welcome to Vipshop Holdings Limited's first quarter 2026 earnings conference call. At this time, I would like to turn the call to Ms. Jessie Zheng, Vipshop's Head of Investor Relations. Please proceed.
Thank you, operator. Hello, everyone, and thank you for joining Vipshop's first quarter 2026 earnings conference call. With us today are Eric Shen, our Co-founder, Chairman, and CEO, and Mark Wang, our CFO. Before management begins their prepared remarks, I would like to remind you that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our safe harbor statements in our earnings release and public filings with the Securities and Exchange Commission, which also applies to this call to the extent any forward-looking statements may be made.
Please note that certain financial measures used on this call, such as non-GAAP operating income, non-GAAP net income attributable to Vipshop shareholders, and non-GAAP net income per ADS are not presented in accordance with U.S. GAAP. Please refer to our earnings release for details relating to the reconciliation of our non-GAAP measures to GAAP measures. With that, I would now like to turn the call over to Mr. Eric Shen.
Good morning and good evening, everyone. Welcome and thank you for joining our first quarter 2026 earnings conference call. Our first quarter performance reflected a significant calendar-driven shift caused by the later Chinese New Year. This led to a successful holiday surge in activity that effectively pulled forward demand, resulting in a softer March. What's important to highlight is the sustained health of our customer base. Our holiday results were outstanding, driven by customers who actively sought out our seasonal collection and value promotions. The strength of that demand, especially in apparel, confirms that we remain a top priority for their spending and gives us real confidence in their long-term resilience. Our custom metrics this quarter further prove that resilience. Total active customers show the positive momentum led by our SVIP members, who grew by 9% year-over-year, with paid members accounting for 55% of our online spending.
We remain focused on the quality of our growth as we move further into the year. We are making steady progress in how we optimize merchandising portfolio, engage with customers, and integrate AI to reshift our off-price retail model. Since realigning our team last year, we are seeing the benefits of the faster, more fluid approach to merchandising. By staying focused on customer relevance and deepening category expertise, we have been able to move from market insight to product on shelf more quickly to ensure our deep discount brand inventory hits when demand peaks. We are also driven better cross-category engagement as we create our selection around the broad needs of our customers and develop more effective analytics and marketing tools for brand partners. We are helping shoppers easily discover products across apparel, childcare, and home categories.
Following our last update, we have transitioned our Made-for-Vipshop line into the new phase of growth by raising the bar for quality, style, and value. At the same time, we have tightened our planning with brand partners' seasonal calendars to stay in sync with real-time fashion trends. This approach ensures our lineup is always created and on-trend. Looking ahead, we will continue to evolve the exclusive offering into the primary driver of customer mindshare and brand loyalty. Building on our optimistic buying strategy, we have successfully sped up our buying cycle. Over the past few months, our teams have locked in a high value of exclusive low-priced inventory that is now flowing through the platform. This has enhanced the treasure hunt experience for our customers. We are seeing strong daily habits from our high-value shoppers, who are returning more frequently to discover our latest arrivals.
This differentiated merchandising approach directly feeds into the strength of our SVIP program. By offering exclusive access to private sales and unique inventory, we are driving both member acquisitions and loyalty. A great example is our recent event with a global athletic brand, where a curated selection delivered a surge in new SVIP sign-ups, particularly among young male shoppers, and sales value many times above the baseline. In line with the push of high-value engagement, we have shifted towards a more targeted acquisitions model using refined targeting that identifies members with the highest long-term value. By replacing generic benefits with a tiered service system, we are directly rewarding higher spending with exclusive product access, deepened discount, one-stop customer support, and value-added benefits. This will further optimize conversions and individual spend. These integrated efforts ensure the SVIP program remains our primary engine for sustainable revenues and earnings growth.
As the pace of the change in retail accelerate, we were excited to embrace the broad opportunities AI offers. Our initial journey focused on putting the customer first, enhancing experiences through virtual try-ons, smarter search, and the recommendations, and automate customer support. We also leveraged AIGC to reach potential customers more effectively with automated content. Having proven this use case, we are now shifting our focus towards scaling that capabilities for greater operational impact. For example, we are using generative AI to scale personalized marketing. By combining our operational expertise with real-time customer feedback, our AI marketing agent effectively generates tailored creative across video, photo, and text forms. This has already driven a clear lift in our customer acquisition efficiency. Beyond the marketing, AI is increasingly empowering our brand partners with advanced business analytics, deeper customer cohort insights, and optimized merchandising strategy.
By anchoring our strategy in the off-price model and leveraging best-in-class technology, we have identified more effective ways to serve our customers, from dynamic merchandising to the smart supply chain. This allows us to continue earnings customer loyalties through every interaction. We remain committed to investing in our people and our platform. We are confident that by continuously optimizing our operational strategies, we will drive steady profitable growth for the long term. At this point, let me hand over the call to our CFO, Mark Wang, to go over our financial results.
Thanks, Eric, and hello, everyone. Our latest results landed within our guided range, reflecting a dynamic quarter that was heavily influenced by late Chinese New Year. The holiday period triggered a concentrated surge in demand for winter and early spring apparel categories, where our merchandise strength resonates well with a broader base of consumers. By successfully capturing these peak season opportunities, we proved the effectiveness of our coordinated efforts across merchandising, customer engagement, and operations. This operations synergy directly fed into our bottom line. Margins remain healthy and stable, underpinned by a highly favorable category mix and our continued operational discipline. As Eric outlined, we maintained focused strategic investment in our key growth drivers, expanding differentiated merchandise offerings, deepening SVIP's engagement, and scaling AI integration across our operations.
At the same time, we continue to manage our broader resource pool with strict prudence, dynamically shifting spend to our most productive activities. This balanced approach ensures we sustain solid baseline profitability by prioritizing high-quality, profitable revenue today. Simultaneously, it allows us to systematically strengthen our foundations for the long term, even as we navigate an uncertain macroeconomic backdrop. Turning to shareholder returns, we remain firmly on track to deliver on our 2026 commitment of returning no less than 75% of full-year 2025 non-GAAP net income to shareholders. In April, we complete our annual dividend, distributing approximately $300 million. For the quarters ahead, we look forward to executing the remaining balance of our shareholder return program. Our free cash flow outlook is robust. We have the full financial capacity to meet our full-year allocation targets. Moving to our detailed quarterly financial highlights.
Before I get started, I would like to clarify that all financial numbers presented below are in RMB, and all the percentage changes are year-over-year change, unless otherwise noted. Total net revenues for the first quarter of 2026 increased by 1.2% year-over-year to RMB 26.6 billion from RMB 26.3 billion in the prior year period. Gross profit increased by 6.8% year-over-year to RMB 6.5 billion from RMB 6.1 billion in the prior year period. Gross margin increased to 24.4% from 23.2% in the prior year period. Total operating expenses were RMB 4.2 billion, compared with RMB 4.0 billion in the prior year period. As a percentage of total net revenues, total operating expenses were 15.7%, compared with 15.3% in the prior year period. Fulfillment expenses were RMB 2.0 billion, compared with RMB 1.9 billion in the prior year period.
As a percentage of total net revenues, fulfillment expenses were 7.7%, compared with 7.2% in the prior year period. Marketing expenses decreased by 1.8% year-over-year to RMB 719.3 million from RMB 732.1 million in the prior year period. As a percentage of total net revenues, marketing expenses decreased to 2.7% from 2.8% in the prior year period. Technology and content expenses decreased by 0.2% year-over-year to RMB 448.2 million, while RMB 449.1 million in the prior year period. As a percentage of total net revenues, technology and content expenses was 1.7%, which stays slight as compared with that in the prior year period. General and administrative expenses were RMB 950.5 million, compared with RMB 950.8 million in the prior year period. As a percentage of total net revenues, general and administrative expenses were 3.6%, which stayed flat as compared with that in the prior year period.
Income from operations increased by 9.7% year-over-year to RMB 2.5 billion from RMB 2.3 billion in the prior year period. Operating margin increased to 9.4% from 8.7% in the prior year period. Non-GAAP income from operations increased by 3.5% year-over-year to RMB 2.7 billion from RMB 2.6 billion in the prior year period. Non-GAAP operating margin increased to 10.2% from 10.0% in the prior year period. Net income attributable to Vipshop shareholders increased by 13.6% year-over-year to RMB 2.2 billion from RMB 1.9 billion in the prior year period. Net margin attributable to Vipshop shareholders increased to 8.3% from 7.4% in the prior year period. Net income attributable to Vipshop shareholders per diluted ADS increased to RMB 4.48 from RMB 3.72 in the prior year period. Non-GAAP net income attributable to Vipshop shareholders
was RMB 2.31 billion, compared with RMB 2.31 billion in the prior year period. Non-GAAP net margin attributable to Vipshop's shareholders was 8.7%, compared with 8.8% in the prior year period. Non-GAAP net income attributable to Vipshop shareholders per diluted ADS increased to RMB 4.68 from RMB 4.43 in the prior year period. As of March 31st, 2026, we had cash and cash equivalents and restricted cash of RMB 28.3 billion and short-term investments of RMB 2.7 billion. Looking forward to the second quarter of 2026, we expect our total net revenues to be between RMB 24.5 billion and RMB 25.8 billion, representing a year-over-year decrease of approximately 5%-0%. Please note that this forecast reflects our current and the preliminary view of the market and operational conditions, which is subject to change. With that, I would now like to open the call to Q&A.
Thank you. If you would like to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Please kindly translate your question into Chinese if you are bilingual. Please stand by while we compile the Q&A roster.
Thank you. We'll now take the first question today. This is from Thomas Chong from Jefferies. Please go ahead.
晚上好。谢谢管理层接受我的提问。我的问题是，第一个是关于我们现在看到4月份，还有5月份，现在我们看到GMV的趋势可以分享一下吗？因为我们也看到在物流行业那边，也看到行业的单量其实都在放缓。所以想看一下我们GMV未来一段的趋势。第二个是关于618的。想问一下我们对今年的618跟去年的话，觉得会有什么不一样？另外的话就是，如果是现在看的消费情绪的话，我们应该怎么看下半年第一个展望？谢谢。
Let me translate into English.
Thanks management for taking my question. My first question is about the monthly GMV trend. Given that we have seen some softness in industry parcel volume in the past few weeks or even last month. How is our monthly GMV so far? My second question is relating to 618. How should we think about the events this year versus last year? On top of that, how is the consumer sentiment these days that we should think about the outlook for the second half? Thank you.
好，我来回答。我们其实整个Q1是表现不错的，尤其是一二月份。中国因为放假的时候，春节是有错位，所以我们一般都把一二月份放在一起看。一二月份其实涨得非常好。这里面其实也有像，比如说我们去年因为暖冬，导致很多用户其实没买东西，所以放到一二月份买了。一二月份非常好，但是三月份我们看到有下跌。我们也问了各个行业，其实大家都差不多，三月份觉得特别差。另外从四月份开始以来，我们的Q1还不错，因为一二月份涨得非常好，哪怕三月份跌一点，整体的表现还可以。但是四月份我们就看到生意也不好，四月份其实跌幅比三月份还大一点，但不是很吓人的大。我们觉得整体情况没有我们想象的这么好。到五月，我们目前为止觉得其实也是负增长，但是也不是负得很多，会比四月份好一些。所以我们这次对Q2，因为四月五月已经过了一半时间了，我们觉得没有这么乐观，所以我们觉得我们报guidance还是报一个0到负。对未来的618，我们自己觉得总体来讲也不会有太好的，也不会有太差，反正基本差不多。还有可能因为现在618大家时间拖得比较长，其实从五月份就开始了。所以我们认为618相对平稳，我们对Q2是做了一个保守的预估。另外就是我们对全年，其实Q1还可以，Q2跌了一些，我们自己想在Q3、Q4争取保证相对平稳。所以我们总体对下半年的展望，我们认为希望尤其是消费，包括对衣服的消费，我们希望大家还是在下半年会有一些好的情况。但是我们对总体全年的展望，我们认为也相对稳健。
Okay. We actually started the year on a very strong note. We have seen holiday surge during the January to February period, when consumers are actually concentrate their buying activities, and that effectively pulled forward demand. Following the holiday period, we saw a very apparent moderation of sales in March. As we enter the second quarter, the April data does not turn out very well. It's not improving from March. Into May to date, still very challenging. Actually, we saw a slight pickup in consumer activity. As we have been through half of the quarter, it seems that we have relatively low visibility on consumer sentiment and activity. How the rest of the quarter will turn out still depends on the month-long industry promotion, which we also don't have very big expectations.
We think it's more prudent for us to give a conservative guidance and reset our second quarter expectations. Turning to our outlook for the full year, we think we still have opportunities in the second half. We believe as consumer sentiment may be improving marginally, we should be able to capture opportunities in discretionary spending, especially apparel. We look forward to making the best effort to maintain steady operational performance for the second half. For the full year, I will continue to believe that we will maintain steady outlook.
Thank you.
Thank you. We will now take the next question. This is from Vicky Wu from CICC. Please go ahead.
感谢管理层接受我的提问。我想请教一下关于杉杉奥莱的一些进展，一个是想能不能帮我们拆一下杉杉奥莱一季度的一些表现？另外一个的话，我们也是关注到唯品会商业REIT也即将发售了，也想了解一下这个REIT在发行之后的话，会怎样影响一下这个报表端？
I will translate by myself. Thanks management for taking my question. I would like to ask for some updates regarding Shan Shan Outlets. First, would you walk us through Shan Shan's first quarter performance?
Second, we've noticed that the Vipshop commercial REIT is about to be launched. How should we assess its subsequent impact on the financial statements? Thank you.
Well, thanks for your question. Actually, Shan Shan Outlets business is quite strong in the first quarter, and the GMV grows around 30% year-over-year. Thanks for your question regarding the REIT. I think some of the investors may be aware that Vipshop commercial REIT obtained official approval from the CSRC and the Shanghai Stock Exchange in late April, and complete the pricing process on May 19th. There are two underlying assets, Shan Shan Outlets in Zhengzhou and Harbin. Both material outlets operate for around 10 years. Both outlets hold leading position in their regional markets. Zhengzhou outlet is the highest grossing outlet in Henan province, while the Harbin outlet ranks first in Heilongjiang province. The commercial REITs issued feature more flexible policy regarding the fund usage and expansion mechanism.
Actually, in addition to these three outlets already used as underlying assets for the REIT, we also hold another 18 outlets projects demonstrating strong potential for future expansion. We will conduct further evaluation based on our strategy and market conditions. For the accounting treatment for this Zhengzhou and Harbin, we subscribed for 49% of the total shares in the commercial REIT. In simple terms, we will lose control and we will deconsolidate the investment from our financials and recognize the related investment again accordingly. More specifically, on a GAAP basis, we will book a one-time investment gain of around RMB 5.3 billion in the second quarter, an increase of RMB 1.7 billion income tax expenses. Cash flow wise, we [Foreign language] see a significant increase in net cash inflow of RMB 1.7 billion in the second quarter. Thanks.
Thank you. We will now take the next question. This is from Alicia Yap from Citigroup. Please go ahead.
Hi, 管理层晚上好, 谢谢接受我的提问. 我有2个问题, 第1个问题是, 刚刚我们管理层说到4月份, 其实我们看到的是一个负增长, 5月份到此为止, 可能也应该是一个负增长. 上周的社零, 看到4月份社零的总额在服饰其实是增长3.6%. 想管理层大概说一下, 是不是有大部分的销售转到了线下? 另外就是说, 如果不是的话, 或者是其他线上的平台, 是不是从我们这里抢走了一些市场份额? 这个是第1个问题. 第2个问题其实也是跟第1个问题有关的, 就是杉杉奥莱. 我们刚刚说到这个 quarter 是涨了30几, 黄宜晨是不是看到从消费者的这个行为, 是比较往线下购物呢? 还是说是因为杉杉提供了一些品类, 或者是一些商品在我们唯品会线上是没有的, 所以就导致了更多的消费者转移到去线下购物? 我自己翻译一下.
Thanks management for taking my questions. I wanted to follow up. I think management earlier mentioned that seems like you guys saw April is a negative growth for your platform, maybe May that also so far month to date is also seems to be negative. I think last week we have the China retail sales data is a total apparel sales is actually grew 3.6% in April. Just wanted to see where is the disconnect. Is it a lot of these spending been shifting to offline? Or is it there are some of the market share, our market shares are losing to other online platform? Related to that is also on the Shan Shan Outlets. I think management mentioned the platform grew like 30+%. I also wanted to know is this because of the consumer behavior that you observe started to shift more to the offline shopping? Or is it because Shan Shan actually have certain merchandise that Vipshop online doesn't have? Thank you.
我来回答一下。我们也看到统计局的数字是3.6，社零，服饰类。我们看到去年全年也是3.6。但是如果拆开看的话，线上其实会跌的，反而是线下比线上的趋势会好。所以说我们最近也在看这个问题，我们在想是不是因为可能现在的线上的退货率高，包括很多用户也回到线下，包括商家也在线下投入。但是我们估计可能是这么一段时间，但是我们希望也会有好转。那么另外像我们这一块的话，比如说杉杉它增长得蛮快，因为杉杉的体用，它的占比还是蛮高的。所以说尤其体用户外的占比蛮高的话，它的增长更明显。像我们，比如说我们四月份跌的时候，但是我们的体用品类也没跌，是增长。只是我们说的在尤其我们的核心的男女服装，男装、女装、童装，这些跌。所以说我们自己看到其实消费者需求还是有，可能在品类方面做一些转移。所以说可能像整体的，我们说的线上服装的生意，可能我们要再过一些时间，我们才能看到一些趋势。
The NBS data, the apparel sales, the growth of 3.6% you have mentioned, actually refers to both online and offline. Based on our observation, actually online we have seen a very notable decline, and we are actually quite in line with the industry trend. Offline, we do see very strong growth. We believe it could be the difference of consumer activity with online and offline shopping. When they do online shopping, they tend to return a lot, so that would make the sales and after revenue data are more compressed. With offline, our consumers do shift.
Part of their spending increasingly to outlet channels. It is actually the same with merchants, with brand partners. They have been shifting a little bit more resources to offline outlet channels as well. We think it's still partially holiday driven. Going forward, we have to see whether the momentum can be sustained. In addition, the offline outlet, the outperformance, is actually benefiting from a higher concentration of certain categories, especially sportswear and outdoor products. That makes their sales performance exceptionally strong because consumers tend to shop into these categories as just fitting in with their lifestyle. It's actually the same thing with the online category performance. Even in April and May, when we do see a broader weakness in apparel categories, sportswear and outdoor products continue to outperform.
I think the real weakness is actually going into more discretionary apparel categories like womenswear and menswear, which are pretty much fashion driven. I think we still need some time to see whether the discretionary spending will turn out better than expected going forward.
Thank you.
Thank you. We will now take the next question. This is from Ronald Keung from Goldman Sachs. Please go ahead.
In terms of our full year outlook, even when we face near-term pressure from March to May to date, we think it's still within our control. It's just from -5% to 0%. That's the range we are confident to maintain. The recent softness is related to a number of factors, weather condition, seasonal transition to spring and the summer apparel. Of course, there is a bit of uncertainties on consumer sentiment and behavior, et cetera. We may need more time to see whether the trend will be improving going forward. For the full year, we think our full-year target is still achievable, and by continuously optimizing our operational strategies, we should be able to maintain at least a steady business performance. Thank you.
Thank you. Due to time constraints, that concludes today's Q&A session. At this time, I will turn the conference back to Jessie for any closing remarks.
Thank you for taking the time to join us today. If you have any questions, please don't hesitate to contact our IR team. We look forward to speaking with you next quarter.
This concludes today's conference call. Thank you for participating, and you may now disconnect.