Thank you, Operator. Hello, everyone, and thank you for joining Vipshop's third quarter 2024 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 US 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 and non-GAAP net income per ADS are not presented in accordance with US GAAP. Please refer to our earnings release for details relating to the reconciliations 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 third quarter 2024 earnings conference call. Our third quarter results largely meet our expectations aimed at still cautious customer segment. We moved quickly to adapt our merchandising and operation priorities to external challenges and took concrete measures to find the biggest opportunities for improvement. Consistent with recent industry trends, third quarter sales decline reflects softer results in our more discretionary categories as consumers are facing growing headwinds, which weigh on their discretionary spend. On the positive note, SVIP membership growth remained strong and in double-digits. In the third quarter, active SVIP customers grew 11% year-over-year, resulting in 49% of our online spending. This reflects that our value proposition is well appreciated by our most valuable customers through the best combination of merchandise, value, and service. So today, we remain focused on these longstanding factors that have made us a reliable place to shop, and also have been successful in driving top-line growth in the past. We are pushing them forward in a deeper way, being more relevant in our merchandising portfolio, highlighting even more value throughout our assortment, and increasing customer engagements through our wallet-free service. This area has been critically important to ensure we continue to differentiate our experience from others. Among the business highlights, we continue to emphasize merchandising capabilities. We believe it's the most impactful way to drive long-term growth. Our team demonstrates that they have the skill set to respond to changing customer behaviors and translate it into business results. Merchandising is in better shape. In the third quarter, we built an assortment more relevant to customer lifestyles and trend-right categories. We leaned into categories with still resilient demand, and we created a better mix of apparel and non-apparel products for family shoppers. As a result, we did see strength in categories like sports and outdoor goods and homeware, despite the broad-based weakness. As we enter the promotional season, we feel good about the size and depth of our supply. We are pleased that we have a strong inflow of quality brand supply, especially within the deep discount inventory. Through much more unique product offerings, some of our long-term brand partners achieved record sales with us through our major promotion channels like Super Brand Day and Super Category Day. Many more brands recognize us as a partner of choice, giving the generally lower cost to serve, higher sales efficiency, as well as a growing base of our hardcore customers. Within our merchandising, we are also encouraged by the momentum building in our Made for VIP line for customized products. In the third quarter, we worked with about 200 brand partners, adding some renowned global brands in women's wear and footwear to the line. Sales from these customized products extended solid growth from previous quarters. We see brand partners increasingly embrace Made for VIP, which has proven to be efficient in attracting more quality customers and repeat orders. More than half of the Made for VIP sales came from SVIP and other high-value customers. The majority of their customers actually came back for more purchases in the broader parallel categories. Turning to customers, we see spending behaviors that are still showing signs of being stretched. Against that backdrop, our team quickly adjusted to focus on providing really good value for them. We prioritized everyday low price and time-limited offers, highlighted compelling value for our SVIP members, and provided targeted incentives for family shoppers who tend to spend on high-frequency categories. Our team is working hard to find more ways to deliver more value for our customers. We also see some early results after we upgrade SVIP privileges, such as providing sales and special offers, which have carried on for a few quarters. Through both online access and ground events, we have clearly reinforced the trust and loyalty of SVIP members. We are planning these events to stay better aligned with customer interests and the purpose to best meet their multiple needs. As it relates to strengthening our business for the future, we continue to experiment and deploy technology in a wide range of user bases. One focus is to improve the relevancy and accuracy of our search and recommendations so that customers with different intents are more likely to browse and shop across categories. The other is to leverage AI capabilities to optimize content of all kinds to help customers find and buy what they are looking for. We do see opportunities for technology to become an important driver of both growth and efficiency. Recently, we started to see some marginal strength in customer demand. People have shown more growing needs to spend, and our customers continued to shop along the holidays and the seasonal momentum. While we are doing our best to get back to growth with customer spending yet to fully recover in the discretionary portfolio, we are laser-focused on the long-term strategy that is pivotal to our long-lasting success. That has always been a firm position in this kind of retail to bring in the best brand partners and create great value for customers. We are driving necessary change in a more aggressive way, so that we have all the right building blocks to compete and win. And through it all, we remain diligent in executing the retail fundamentals our customers expect from us and responding to their consumption shifts in a timely manner. This requires specialized and elaborated efforts in merchandise standout strengths we are continuing to build on. We believe this will help us increase the payload of our platform and ensure an engaging experience that keeps Vipshop top of mind in this very dynamic market. At this point, let me hand over the call to our CFO, Mark Wang, to go over our financial results.

Okay. Thanks, Eric, and hello, everyone. In the third quarter, we maintained disciplined financial management throughout the organization that delivered solid profitability against a weak top-line performance. Gross margin of 24.0% was driven by a small benefit from the increased contribution from the higher margin apparel categories, as well as other revenues on a year-over-year basis. This was more than offset by the deleveraging impact of lower revenue and continued investment in our team. As a result, on the bottom line, non-GAAP net margin attributable to Vipshop's shareholders came in at 6.3%, which was lower year-over-year, but within our expected range, thanks to our team's meticulous efforts to identify efficiency opportunities. Looking at a still challenging environment, we are laser-focused on a long-term roadmap to bring the business back into positive territory. We continue to invest in our merchandising capabilities, delve deeper category by category to add quality and value that best satisfy customer needs, while reallocating resources to maximize impact on customer mindshare and engagement. We're always capable of moving these initiatives with a clear picture of their financial implications. We believe we are more integrated in operations now to create a better balance of our focus on sales and profitability. Turning to capital allocation, our priorities have remained consistent. In addition to prudently investing in our own business and projects that meet our strategic and financial criteria, we look to support our shareholder return and build on our track record of consistency. In the first nine months of 2024, we have repurchased a total of nearly $500 million, with $55.3 million left in the existing $1 billion share repurchase program. Also, we have a new two-year buyback program of up to $1 billion in place. And as a reminder, for 2025, we plan to meet no less than 75% of our full-year non-GAAP net income attributable to Vipshop shareholders through discretionary share repurchases and dividend distributions. Now, moving to our detailed quarterly financial highlights. Before I get started, I would like to clarify that all financial numbers presented below are in Renminbi, and all the percentage changes are year-over-year changes unless otherwise noted. Total net revenue for the third quarter of 2024 was RMB20.7 billion compared with RMB22.8 billion in the prior year period. Gross profit was RMB5.0 billion, compared with RMB5.4 billion in the prior year period. Gross margin increased to 24.0%, from 23.6% in the prior year period. Total operating expenses decreased by 6.1% year-over-year to RMB3.8 billion from RMB4.0 billion in the prior year period. As a percentage of total net revenues, total operating expenses were 18.2%, compared with 17.6% in the prior year period. Fulfillment expenses decreased by 2.0% year-over-year to RMB1.7 billion, from RMB1.8 billion in the prior year period. As a percentage of total net revenues, fulfillment expenses were 8.4%, compared with 7.8% in the prior year period. Marketing expenses decreased by 7.7% year-over-year to RMB617.8 million from RMB669.6 million in the prior year period. As a percentage of total net revenues, marketing expenses were 3.0%, compared with 2.9% in the prior year period. Technology and content expenses increased by 4.3% year-over-year to RMB454.2 million, from RMB435.3 million in the prior year period. As a percentage of total net revenues, technology and content expenses were 2.2%, compared with 1.9% in the prior year period. General and administrative expenses decreased by 15.3% year-over-year to RMB957.8 million, from RMB1.1 billion in the prior year period. As a percentage of total net revenues, general and administrative expenses decreased to 4.6% from 5.0% in the prior year period. Income from operations was RMB1.3 billion compared with RMB1.5 billion in the prior year period. Operating margin was 6.4% compared with 6.7% in the prior year period. Non-GAAP income from operations was RMB1.7 billion, compared with RMB2.1 billion in the prior year period. Non-GAAP operating margin was 8.2% compared with 9.1% in the prior year period. Net income attributable to Vipshop's shareholders was RMB1.0 billion compared with RMB1.2 billion in the prior year period. Net margin attributable to Vipshop's shareholders was 5.1% compared with 5.3% in the prior year period. Net income attributable to Vipshop's shareholders per diluted ADS was RMB1.97 compared with RMB2.19 in the prior year period. Non-GAAP net income attributable to Vipshop's shareholders was RMB1.3 billion compared with RMB1.8 billion in the prior year period. Non-GAAP net margin attributable to Vipshop's shareholders was 6.3% compared with 8.1% in the prior year period. Non-GAAP net income attributable to Vipshop's shareholders per diluted ADS was RMB2.47, compared with RMB3.33 in the prior year period. As of September 30, 2024, the company had cash and cash equivalents, and restricted cash of RMB22.5 billion, and short-term investments of RMB1.6 billion. Looking forward to the fourth quarter of 2024, we expected our total net revenues to be between RMB31.2 billion and RMB32.9 billion, representing a year-over-year decrease of approximately 10% to 5%. Please note that these forecasts reflect our current and preliminary view of the market and operational conditions, which are subject to change. With that, I would now like to open the call to Q&A.

Thank you to management for addressing my question. I'm interested in the recent consumer sentiment following government support measures. Could management provide insights into the monthly GMV trends for the fourth quarter and expectations for the 2025 outlook regarding GMV and margins? Given the solid margin profile we observed in the third quarter, particularly the 24% GP margin, what should we anticipate for 2025? Additionally, when can we expect GMV to return to a positive year-on-year growth trend? Thank you.

Okay. First of all, regarding the recent business trends for this quarter, we've been in for over 50 days, and October showed strong performance, likely due to the earlier Double 11 promotion that increased consumption. If we look at both October and November so far, we remain within our guidance. Consumer sentiment has been positively impacted by government-sponsored trading programs introduced at the end of September, which have benefited certain electronics and home appliance categories. However, since our primary focus is on apparel, we haven’t gained much from those programs. Overall, it seems that consumer sentiment has stabilized following the recent stimulus package, though the environment feels rational to us. Customers are still feeling financially stressed, making trade-offs in their budgets, seeking value, prioritizing essentials, and postponing purchases until necessary. Therefore, we haven't observed a significant recovery in consumer sentiment compared to previous quarters. Looking ahead to 2025, we find the outlook unpredictable and will proceed with caution. It hinges on various factors like the recovery of the macroeconomic environment and consumer confidence, which remain uncertain. We anticipate that the trends we're observing in Q4 will likely continue into part of 2025. We're committed to returning to growth, especially in terms of GMV, aiming to reverse the small decline we expect in 2024. Regarding margins, we have no major concerns. Our focus will be on increasing profit dollars, and we expect to maintain relatively stable margin levels. As for costs and expenses, we will remain disciplined, and while there may be some adjustments to certain cost structures, we do not anticipate significant changes compared to our 2024 approach. That's all.

Thank you.

Hi, good evening. My question is a follow-up on the overall performance during Single's Day and the guidance for Q4. During the Single's Day period of over 30 days, were you able to achieve positive growth? Regarding your guidance, is it conservative due to uncertainty about December trends? Are you projecting a decline of 5% to 10% because of this lack of visibility in December? Additionally, could you compare the return rate for this Single's Day to last year's and to this year's June 18? Thank you.

Okay. First of all, regarding our performance during Double 11, most platforms that are looking at it over a full cycle note that we ran 28 days of promotions compared to about 20 days last year. On this full-cycle basis, we are performing very well, with GMV growth exceeding 20% and our customer and revenue metrics surpassing expectations. However, if we compare the promotional campaigns directly for 20 days, the results align with our expectations. We believe that Q4 will be a challenging quarter, and we have provided guidance that is fairly conservative. One reason for this is the weather; we are starting from a high base since, in last year’s Q4, we experienced extended cold waves that unexpectedly benefited our business. This year, we do not expect the same level of cold. We have factored this weather impact into our Q4 guidance, which is why we anticipate some challenges. Lastly, concerning our return rate, we have maintained a stable return policy and services for approximately five to six years. Currently, return rates are primarily influenced by structural factors such as the contribution of apparel and SVIP. During Double 11, our return rate was in line with expectations, reflecting an increase of only 2 percentage points, unlike other platforms that faced a sudden change in their return policies resulting in dramatically higher return rates.

We have maintained a very stable return policy and services for about five to six years. Currently, our return rates are primarily influenced by structural factors such as apparel and SVIP contributions. Specifically, during the Double 11 event, our return rate has aligned with our expectations, showing only an additional 2 percentage points increase, unlike other platforms that experienced abrupt changes in their return policies resulting in significantly higher return rates.

You’re welcome.

Thank you, management. I have two questions. First, your gross margins reached a record high in the third quarter, while last year's fourth quarter gross margins were even higher. Considering the apparel mix, which typically supports gross margins, what is the outlook for gross margins in Q4? Second, your unit profit decline was greater than operating profit, along with a 30% increase in tax expenses. Is this due to the transfer of cash from onshore to offshore to fund shareholder returns? How should we view the outlook for this income line? Thank you.

So, in terms of our gross margin outlook for Q3, we achieved 24%, which was supported by a slight benefit from apparel contributions and an increase in other revenue. However, as we look ahead to Q4, we will continue to invest for growth. Given the current competitive landscape, if we identify an opportunity to allocate a portion of our current profit margin to achieve sustainable growth in revenue, we will pursue that. For GP margin in Q4, we anticipate it will be slightly lower than Q3, but still within the range of 23%.

Okay. Okay. Thanks for your question. And regarding the first question, you talked about the gross margin. Let me give you some supplementary comments. For the third quarter, the gross margin expansion was primarily driven by the following reasons. The first one is the higher margin apparel categories, which had a higher contribution year-over-year. The second one is we have many cost-saving initiatives to improve gross margin, including optimizing the merchandising portfolio and well-managed customer incentives, and so on. The third is higher contribution from higher margin other revenues because of the net revenue recognition for the sanction or less income. That means we recognize the rental income for the sanction or less income, which means the gross margin is higher, which was booked in the other revenues. Okay? So, those are the main three reasons for the gross revenue higher than before. And for your second question, that's a very good question; it's regarding the effective tax rate, and non-GAAP expenses. Just as you mentioned, we distributed some of the dividends from the entities in Mainland China to the entities in Hong Kong. The reason is that we need to do the share buyback, as we mentioned before. Okay, this quarter we remitted around RMB3.5 billion, which means we have RMB175 million withholding income tax expenses. Okay? So, exclude that factor; I mean, the withholding income tax expense, the ETR would have been around 17% to 18%. I think for the long-term, excluding the withholding income tax impact, the ETR could still be around 17% to 18%. Thank you.

Thank you, Mark.

Thank you to management for taking my question. I have two questions. First, regarding the third quarter, can management share insights on the performance across different product categories? It appears that apparel has increased its contribution to GMV in this quarter. My second question is about SVIP users. Can management provide any updates on changes in consumer behavior this quarter, specifically related to shopping frequency or average spending? Thank you.

Okay. First, during the third quarter, we observed a slight decrease in GMV for apparel, while standardized items experienced a more significant decline, although it has not worsened compared to previous quarters. The decrease continues to be influenced by competitive pricing from other platforms. We are implementing a series of adjustments, including targeted incentives, particularly for family shoppers to encourage purchases across various categories, especially daily essentials. We are starting to see some positive early results from this approach, and we aim to gradually reduce the losses related to standardized items. Regarding SVIP, we are experiencing strong momentum. In the third quarter, we had 7.5 million active Super VIP customers, making up about 49% of our online spending, which reflects an 11% year-over-year growth in our customer base. It's important to note that new SVIP customers tend to take some time to increase their shopping frequency and thus their average revenue per user, which impacts the overall SVIP base. However, when examining a consistent group such as our two-year SVIP customers, we find their performance remains relatively stable. There has been a slight decline in ARPU, primarily due to a reduction in shopping frequency, while the average ticket size has remained steady. Additionally, we do not see any further loss in consumer health among our SVIP customers.

Due to time constraints, this concludes today's Q&A session. At this time, I'll turn the call 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 all for participating. You may now disconnect your lines.