The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
In its second quarter earnings report, the Chinese fashion flash sales platform said its revenue reached 29.6 billion yuan ($4.59 billion), gross merchandise volume (GMV) exceeded 48.1 billion yuan ($7.41 billion) and net profit reached 1.5 billion yuan ($237 million), up 11.3 percent.
This marks 35 consecutive quarters of profitability for the New York-listed firm, the report added. Vipshop also saw strong user growth, with monthly active users increasing 32 percent to 51.1 million while paid “Super VIP” users increased 50 percent.
Chairman and CEO, Shen Ya, speaking to analysts in a call following the release, attributed Vipshop’s success to a strategy focussed on leading brands, core products and accessible price points. In particular, this strategy is resonating with male users, a segment Shen believes has a great deal of potential for Vipshop.
Like other Chinese tech firms, Vipshop is facing a tighter regulatory environment, particularly when it comes to anti-competitive practices. In February, it received a fine of 3 million yuan ($464,000) for unfair competition, which followed a 500,000 yuan ($77,000) fine last December for pricing irregularities.
The return of long-time brand partner Forever 21 to the Chinese market has been recent welcome news for Vipshop, with the fast-fashion player currently only available on its platform, as well as that of group-buying specialists, Pinduoduo, as the brand works towards rolling out a physical retail network in China.
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Forever 21 Makes China Market Comeback
Forever 21 is returning to China, following the brand’s high-profile exit from the country in 2019.
The French beauty giant’s two latest deals are part of a wider M&A push by global players to capture a larger slice of the China market, targeting buzzy high-end brands that offer products with distinctive Chinese elements.
Post-Covid spend by US tourists in Europe has surged past 2019 levels. Chinese travellers, by contrast, have largely favoured domestic and regional destinations like Hong Kong, Singapore and Japan.
While travel to Europe remains muted, Chinese shoppers are flocking to Singapore, Thailand and other Southeast Asian destinations where fashion retailers are hoping Lunar New Year marketing investments will pay off.
Local fashion designers experimenting with puffers and other down clothing have scored collaborations with outerwear companies like Moncler and attracted the attention of prominent international retailers like H.Lorenzo.