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Vipshop Responds To Recent Allegations

Stocks in this article: VIPS

GUANGZHOU, China, May 28, 2013 /PRNewswire/ -- Vipshop Holdings Limited (NYSE: VIPS) ("Vipshop" or the "Company"), China's leading online discount retailer for brands, today issued the following statement in response to recent allegations made by short sellers. Vipshop believes that these allegations contain numerous errors, unsupported speculation and a general misunderstanding of the Company's business model. The Company would like to clarify certain key errors contained in the allegations.

User Traffic Data: 

The allegations stipulate that user traffic, as measured by Alexa, does not match with the data provided by the Company. Alexa tracks internet traffic through browser based tool-bar plug-ins, but many Chinese internet users do not have Alexa plug-ins on their computers. Therefore, Alexa's user traffic data cited in the allegations under-estimate Vipshop.com's actual user traffic, which has grown rapidly.     

Revenue Growth:

The allegations question the Company's rapid growth without the number of website visitors increasing. This conclusion is very misleading in that it failed to take into account the Company's actual user traffic growth as well as other factors in the Company's operation that drive business growth, including growth in total active customers and increase in the average order size, which was in turn due to the Company's continued efforts to optimize brand and product selection, increase the number of sales events and increase the number of SKUs available on the Company's website, all in an effort to enhance customer experience.

Fulfillment Expenses:  

The allegations challenge the Company's decreased fulfillment expenses as a percentage of total revenues despite its opening of new regional logistics centers. All these logistics centers are leased and the related expenses have been recognized in fulfillment expenses. In addition, the Company continued to shift more fulfillment needs to quality regional and local couriers, which generally have lower average delivery charges than national delivery companies. The above factors coupled with the Company's improved operational efficiency have led to the decrease in the fulfillment expenses as a percentage of total revenues.

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