[caption id="attachment_77880" align="aligncenter" width="668"] Source: Company reports/Coresight Research[/caption] 4Q18 Results Vipshop reported revenue of ¥26.1 billion for the fourth quarter 2018, up 8.1% year over year, versus 16.4% in 3Q18. Revenue growth was driven by the increase in the number of total active customers and the apparel category. However, revenue missed the consensus estimate of ¥26.7 billion. GMV grew by 15% year over year to ¥41.8 billion. Gross profit for the quarter increased 2.8% year over year to ¥5.4 billion (US$783.1 million) from ¥5.2 billion in the prior year period. Gross margin decreased 110 basis points to 20.6%. Non-GAAP diluted EPS fell 6% to ¥1.33. Total operating expenses for 4Q18 were ¥4.6 billion (US$664.2 million), up 3.1% year over year. The increase was driven by increased technology and content expenses and general and administrative expenses. Total operating expenses increased in absolute numbers, but decreased to 17.5% as a percentage of total net revenue 4Q18 from 18.4% in 4Q17.

• The number of active customers increased 13% year over year to 32.4 million. The partnership with Tencent and JD.com brought in new customers from Tencent’s social media app WeChat and WeChat mini program, contributing around 23% of the new customers.
• Total orders increased 35% year over year to 140.3 million. 

Business Highlights Over the quarter, more customers enrolled in the company’s membership program, participated in Singles’ Day, there are more brands participating anniversary sales, the company added warehousing space for its business expansion and shifted certain standardized categories to the marketplace platform. 

• As of December 31, 2018, approximately 3.2 million customers enrolled in the company’s Super VIP Paid Membership Program, an increase of 38% quarter over quarter. The initial membership renewal rate for customers who joined the program before December 31, 2017 was over 70%.
• The number of total active customers who participated in the 2018 Singles' Day Promotional Event increased 23% year over year.
• More than 5,500 brands participated in the 12.8 Anniversary Sale in 2018, representing a 14% year-over-year increase. New customers from WeChat mini programs accounted for over 20% of total new customers during the promotional period, demonstrating the contribution of the WeChat mini programs to customer acquisition.
• The company added approximately 86,000 square meters of warehousing space. As of December 31, 2018, Vipshop has approximately 3.0 million square meters of total warehousing space, of which around 1.9 million square meters is owned by the company.
• Starting 4Q18, the company shifted certain standardized categories from its first-party business onto the marketplace platform. 

Outlook The company expects total revenue to be ¥19.9–20.9 billion in the first quarter of 2019, equivalent to a year-over-year growth rate of around 0–5%.