Operator: Ladies and gentlemen, good day, everyone, and welcome to Vipshop Holdings Limited Second Quarter 2026 Earnings Conference Call. At this time, all participants are in the listen only mode. I would now like to turn the call over to Ms. Jessie Zheng, Vipshop’s Head of Investor Relations. Please proceed.

Jessie Zheng, Head of Investor Relations, Vipshop Holdings Limited: Thank you, operator. Hello, everyone, and thank you for joining Vipshop’s Second 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.

Eric Shen, Co-founder, Chairman, and CEO, Vipshop Holdings Limited: Good morning and good evening, everyone. Welcome and thank you for joining our second quarter 2026 earnings conference call. The second quarter presents a challenging retail environment defined by a customer who is not just value conscious, but highly selective across the multi-media promotional landscape. Shoppers was intensely focused on clear utility and real value. Prioritize essentially meet great cautions in discretion categories like apparel, weighing on our near-term top-line performance. In this climate, rather than chasing unprofitable-

Jessie Zheng, Head of Investor Relations, Vipshop Holdings Limited: Unprofitable.

Eric Shen, Co-founder, Chairman, and CEO, Vipshop Holdings Limited: Rather than chasing unprofitable value growth, we stayed true to our core value proposition, delivering a highly curated select of high demand, deeply discounted brand products to our loyal customer base. While overall traffic was muted, our SVIP cohort served as a resilient anchor for our business. During the quarter, active SVIP grew by 8% year-over-year, driving 54% of our online spending, showing that as customer budget tighten, high intent shoppers

Jessie Zheng, Head of Investor Relations, Vipshop Holdings Limited: Prioritize

Eric Shen, Co-founder, Chairman, and CEO, Vipshop Holdings Limited: prioritize platforms offering trust, value, quality, and service. At the strategic level, our 1P model gives us a different edge. By leveraging deep category expertise, we built greater trust with brand partners to the point when they actively adjust that merchandise allocations for our platform. For instance, closer collaborations with key partners in fashion apparel has helped buffer against the broader market awareness. This level of brand integration strengthens our moat and protects our core business. On top of this, our merchandising team has been moving quickly to align our product mix with the more selective customers. We have sharpened our curation along the core apparel and lifestyle essentials, matching our assortment to real life occasions to capture immediate demand. This target approach ensures that we always deliver a clear utility, recognized brand, and compelling value. Our opportunities sourcing strategy adds another layers of inventory flexibility.

As brand partners manage inventory in a softer market, we serve as a reliable off-price partners, locking in unique, high-demand inventory at deep discounts. This reinforces our differentiated merchandise pipeline and forced deep brand collaborations. At the same time, we continue to advance the repositioning of our exclusive Made-for-Vipshop line to drive stronger customer mindshare and loyalty. By raising product standards and aligning the seasonal launches close with brand partners, we are seeing high-quality halo products emerging, lifting conversion rate, and support overall portfolio stability. As we kick off the upcoming season, we are pleased to see that our SVIP membership has hit the 10 million milestone. To continue the momentum, we are launch an integrated campaigns pair with the four collection and the major upgrade to provide sales.

At the core of this push, we are refresh our signature slogan, "Dress the best for 70% less," which has long resonant deep with our loyal base. To ensure we keep evolving alongside the modern Chinese shopper, we are refreshing our campaign reach to both younger and mature demographic while reinforced, enduring true across every market cycle. That shoppers consistently demand great high-quality fashion at unbeatable price. Grounding our mind share in smart value allow us to double down on our off-price advantage, attract high-value shoppers, and drive high-quality growth. Alongside our branding refresh, our customer engagement strategy focused on retention and lifetime value. Real 70% less, saving power our core apparel, delivering pleasant surprise affordability that convince new shoppers. Providing a tailored tiered service model to our SVIP allow us to capture greater wallet share over time.

Making SVIP loyalty as a primary engine of operational stability and profitable growth. Turning to our technology roadmap, we are deepening AI integration across our business. On the custom side, our AI product suites is driving tangible results. Virtual try on thickness is steadily up. Integrate customer

Mark Wang, Chief Financial Officer, Vipshop Holdings Limited: Intelligent.

Eric Shen, Co-founder, Chairman, and CEO, Vipshop Holdings Limited: intelligent customer service with AI voice interactions and predictive capabilities is lifting conversion rate, and AIGC is enabling faster discovery. Marketing remains our most impactful up case to date. Our upgraded AI marketing agent now enables optimized from placement planning to AIGC creative matching across the right channels. We see clear room for this integrated approach to further drive acquisitions efficiency while improving customer quality. Operationally, we are scaling AI beyond individual tools into a unified, secured intelligence layer across the business. We are already seeing early win in supply chain optimizations, and daily operational workflows. Overall, we remain focused on disciplined execution today while building towards our long-term vision. While we continue to navigate near term macro headwind with caution, I have full confidence in our proven model, solid foundations, and team.

As we sharpened our merchandising, elevate the customer experience, and scale technology, we are firmly positioned on the pace back to the sustainable growth. Finally, I would like to brief cover Shan Shan Outlet, a key part of our omni-channel discount retail strategy. Since our acquisitions in 2019, we have driven disciplined expansion across emerging tier 1, tier 2, and key cities. Today, Shan Shan has scaled from 5 to 22 operational outlets mall, becoming China’s largest outlet chain by store count, and maintain a top-tier position by total GMV. In the first half, Shan Shan Outlet continue its strong scale momentum with over 20% year-over-year growth, capitalizing on the value-seeking trend and the unique in-person shopping experience of offline retail. Looking ahead, we expect its business contributions to the group to increase steadily.

At this point, let me hand over the call to our CFO, Mark Wang, to go over our financial results.

Mark Wang, Chief Financial Officer, Vipshop Holdings Limited: Thanks, Eric, and hello, everyone. In the second quarter, our top line came in at the lower end of our guided range, reflecting broad-based softening in consumer sentiment. Despite ongoing pressures, we maintain disciplined execution, which provided strong visibility into our operational trajectory, enabling us to preserve core operating profitability and margin health. As noted in our earning release, our non-GAAP net income was temporarily impacted by a one-time withholding tax adjustment. I will elaborate on shortly. Adjusting for this non-recurring item, our underlying non-GAAP net profit remained solid at RMB2.0 billion, with a net margin of 7.9%, demonstrating our underlying profitability and the core cash generation remains fully intact. As Eric mentioned, quality sustainable growth remains our core priority. While micro headwinds persist, we continue to focus on strengthening our competitive moat and strategically reinvesting to fortify our fundamentals for profitable and long-term expansion.

During the first half, we distributed approximately $400 million to shareholders through a combination of cash dividends and a share repurchase, reflecting the anticipated utilization of our existing authorization. The board of directors has approved a new $1 billion share repurchase program. This underscores our firm commitment to returning no less than 75% of our full year 2025 non-GAAP net income to shareholders, supported by solid business fundamentals and a resilient underlying cash generation. We remain fully confident in our capacity to achieve this capital return target. In addition, to unlock the value of our high-quality assets and optimize capital efficiency, we successfully launched two public REITs backed by three mature Shan Shan Outlet properties, a consumer infrastructure REIT, and a commercial REIT.

This not only improves the quality of our outlet portfolio and their market valuation, but also creates a capital recycling loop that allow us to reinvest the proceeds from mature assets directly into disciplined expansion. We believe this model maintains our financial flexibility while supporting the sustainable growth of our outlet business, driving asset revaluation, and creating sustainable value for our shareholders. 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 change are year-over-year change, unless otherwise noted. Total net revenues for the second quarter of 2026 were RMB24.7 billion, compared with RMB25.8 billion in the prior year period. Gross profit was RMB5.8 billion, compared with RMB6.1 billion in the prior year period. Gross margin was 23.3%, compared with 23.5% in the prior year period.

Total operating expenses decreased by 2.4% year-over-year to RMB4.5 billion from RMB4.6 billion in the prior year period. As a percentage of total net revenues, total operating expenses were 18.0%, compared with 17.7% in the prior year period. Fulfillment expenses were RMB2.14 billion, compared with RMB2.11 billion in the prior year period. As a percentage of total net revenues, fulfillment expenses were 8.7%, compared with 8.2% in the prior year period. Marketing expenses were RMB760.3 million, compared with RMB715.9 million in the prior year period. As a percentage of total net revenues, marketing expenses were 3.1%, compared with 2.8% in the prior year period. Technology and content expenses were RMB486.2 million, compared with RMB442.0 million in the prior year period. As a percentage of total net revenues, technology and accounting expenses were 2.0%, compared with 1.7% in the prior year period.

General and administrative expenses decreased by 17.5% year-over-year to RMB 1.1 billion, compared with RMB 1.3 billion in the prior year period, primarily due to higher share-based compensation expenses for Shan Shan Outlet recorded in the prior year period. As a percentage of total net revenues, general and administrative expenses decreased to 4.3% from 5.0% in the prior year period. Income from operations was RMB 1.5 billion, compared with RMB 1.7 billion in the prior year period. Operating margin was 6.2%, compared with 6.6% in the prior year period. Non-GAAP income from operations was RMB 2.0 billion, compared with RMB 2.4 billion in the prior year period. Non-GAAP operating margin was 8.1%, compared with 9.3% in the prior year period. Income tax expenses were RMB 3.3 billion, compared with RMB 407.2 million in the prior year period. The increase was primarily driven by two items.

The first one is the income tax expense of RMB 1.63 billion relating to the one-off investment gain recognized by Shan Shan Commercial Group, the original holder of the underlying assets on the issuance of a commercial REIT. The second one is an accrued withholding tax expenses of RMB 1.56 billion, reflecting the withholding tax treatments of historical dividend distributions from mainland China to Hong Kong regarding applicable policies on tax treaty benefits. Excluding the tax impact of this discrete and non-operating items, the company’s normalized effective tax rate for the second quarter of 2026 remained stable year-over-year. Here, I would like to emphasize that our company has always operated and it continues to operate in full compliance with applicable tax laws and regulatory guidelines. The withholding tax adjustment reflects the adjustment of historical dividend distributions and expected to be settled in the third quarter.

Going forward, the company will continue to accrue dividend withholding tax at a statutory rate for any onshore earnings allocated for offshore repatriation. While this will increase the cost of direct onshore to offshore equity remittance, we view tax repatriation as step one tool in our broader capital structure toolkit. Net income attributable to Vipshop shareholders increased by 189.1% year-over-year to RMB 4.3 billion from RMB 1.6 billion in the prior year period, primarily due to a one-off investment gain of RMB 5.79 billion from the listing of a commercial REIT. Net margin attributable to Vipshop’s shareholders increased to 17.4%, from 5.8% in the prior year period. Net income attributable to Vipshop’s shareholders per diluted ADS increased to RMB 8.82 from RMB 2.91 in the prior year period. Non-GAAP net income attributable to Vipshop shareholders was RMB 392.2 million, compared with RMB 2.1 billion in the prior year period.

Non-GAAP net margin attributable to Vipshop shareholders was 1.6%, compared with 8.0% in the prior year period. Non-GAAP net income attributable to Vipshop shareholders per diluted ADS was RMB 0.80, compared with RMB 4.06 in the prior year period. As of June 30, 2026, the company had cash and cash equivalents and restricted cash of RMB 29.9 billion. Short-term investments of RMB 3.6 billion. Looking forward to the third quarter of 2026, we expect our total net revenues to be between RMB 20.3 billion and RMB 21.4 billion, representing a year-over-year decrease of approximately 5%-0%. Please note that this forecast reflects our current and preliminary view of the market and our operational conditions, which is subject to change. With that, I would now like to open the call to Q&A.

Operator: Thank you. We will now begin the question and answer session. To ask a question, please press star 1 1 and wait for your name to be announced. If you wish to ask the management your questions in English, kindly translate them in Chinese. One moment for our first question. The first questions will come from the line of Thomas Chong of Jefferies. Please go ahead.

Thomas Chong, Analyst, Jefferies: Hi. Good evening. Thanks management for taking my question. My question is about the consumer sentiment. Can management comment about how we are seeing the sentiment so far? On that front, can we comment about the monthly revenue trend that we are seeing since April till now? Given that we are already 2 months in the quarter, are we actually seeing our revenue hitting the low end or the high end of the guidance? Finally, can management comment about the second half outlook? Thank you.

Jessie Zheng, Head of Investor Relations, Vipshop Holdings Limited: Okay, in terms of the general consumer sentiment, we find consumers are not particularly enthusiastic. They are actually not buying into everything. They are very value seeking and they are very budget conscious, and they are very selective. As we enter into Q3, across our sector, we continue to observe pressure quarter to date from July to August. We do see some recovery in terms of sales momentum, but it is only slightly better. It is far from being good. That is why we think that for the second half and for the full year, we may see a similar consumer sentiment as we have seen in the first half. That will bring our total revenue for the full year to be slightly negative from last year.

Operator: Please hold for our next question. Our next questions will come from the line of Alicia Yap of Citigroup. Please go ahead.

Alicia Yap, Analyst, Citigroup: Hello, thank you. 王誉腾晚上好，谢谢接受我的提问。我先用中文问一下。我想请教一下，因为我看到我们二季度整体的营业利润率是否从一个同比看，其实有一个下降的趋势。我们应该如何看待第三季度跟四季度的毛利率、运营的支出，还有营业利润率的这个趋势？能够跟我们量化一下吗？我自己翻译一下。Thanks management for taking my questions. Have a questions on the operating income.

We notice that it seems that there is, you know, the operating margin seems to be declining on a year-over-year trend. How should we be thinking about the gross margins, operating expenses, and also operating margin trend for the third quarter and the fourth quarter? Thank you.

Eric Shen, Co-founder, Chairman, and CEO, Vipshop Holdings Limited: 我回答一下，就是看到Q2的经营利润率，其实比去年少了一些。我们其实主要是因为退货率，我说每年会持续上升，那么导致我们的仓储费用会比过去增加一些。那么整体我们自己在前端没有太大的变化，比如说我们的毛利率其实应该跟过去持平，甚至可以微增的。那么另外呢，就有可能是包括我们的生意如果是负了，那么所有的什么人员费用啊，这些，其实我们说的这个消耗会比较大。所以总体我们认为运营的利润率目前没有什么意外，只是说是这两个方面的影响。另外在整体我们说的在未来的Q3及Q4的利润方面，我们其实还是有信心的，包括外面其实搞补贴搞了很多，那么我们其实从来也不补贴。那么我们认为还是把健康的利润做好，包括企业要健康地发展。所以说我们自己认为在Q3、Q4，能跟过去的这种叫每个季度的净利润率比较，我们认为其实会做得都会差不多，不会有什么太大的变化。

Jessie Zheng, Head of Investor Relations, Vipshop Holdings Limited: On margin, in terms of operating margin, we do see a slight decline year-over-year for Q2. That is primarily because we see a certain level of deleverage from fulfillment expenses, which is increasing proportionally as return rate are still going up. Actually, when we look at our GP margin, it is flattish and it is even growing, which implies that we have strong management on managing the gross margin and the gross profit. In addition, we do see a certain operating leverage from fixed cost and expenses as the revenue scale becomes smaller due to macro pressure. But overall, we expect operating margin will continue to be quite resilient given our structural cost and expense discipline. For the second half, for Q3 and Q4, we are pretty confident in managing the structural health of our business.

As you look externally, you see a lot of industry players actually investing in unprofitable subsidies. That is not what we are going to do. Our focus remains steadfastly on maintaining a healthy level of profitability and margin. So we do expect our margins, especially the NP margins, will remain relatively stable for the second half. Thank you.

Operator: Please hold for our next question. The next question will come from the line of Vicky Wu of CICC. Your line is open.

Vicky Wu, Analyst, CICC: 感谢王誉腾接受我的提问。看到这次withholding tax其实有一个比较大的调整项，刚刚其实Max也稍微解释了一下，这边想再问一下更具体的一些原因，是否涉及到一些类似税务机关对于公司的处罚？然后长期来看的话，对公司未来的经营的利率的预测会有一些什么影响？以及对于这个股份回购以及分红计划会有一些什么影响吗？那我自己来翻译一下。We’ve noticed an adjustment regarding the withholding tax this quarter.

Could management elaborate more on the reasons for this, and is this a result of a penalty imposed by the tax authority? Looking ahead, will this affect your plans for share buybacks and dividend payouts? Thank you.

Mark Wang, Chief Financial Officer, Vipshop Holdings Limited: Okay, thanks for your question. Mark, first of all, this is absolutely not a penalty. The company is, and has always been in full compliance with applicable tax laws and regulatory guidelines. This adjustment represents a prudent step in the company’s continuous enhancement of its compliance framework. Through a proactive reassessment aligned with prevailing best practice, we are mitigating compliance risk and providing greater tax certainty. This is not a compliance finding or penalty. Withholding tax on dividend is a transaction cost associated with capital mobility, not an operational expense. Our operating margin and the pre-tax cash flows remain fully intact. The company maintains multiple avenues to optimize offshore liquidity, and cash repatriation is just one of them. Accordingly, we anticipate an impact on our future net margin to be minimal. The company remains fully committed to our long-term shareholder return promise. Thank you.

Operator: Thank you for the questions. Please hold for our next question. The next questions will come from the line of Sedona Fung from UBS. Your line is open. Please go ahead.

Sedona Fung, Analyst, UBS: Thank you, management, for taking my question.

谢谢管理层接受我们的提问。我想先问一下这个山山奥莱，2Q有一个非常强的增长表现，那管理层对于下半年的增长展望会是怎么样？然后随着早前两个REIT完成上市之后，后续剩余的奥莱项目的这个推进节奏会是怎么样的？然后第三个问题是关于股东回报，看到公司在2Q恢复了这个回购，并在八月也新增了这个十亿美元的回购计划，我们怎么展望下半年股东回报的水平，还有节奏。I’ll translate myself.

Congrats on the strong Shan Shan 2Q GMV growth performance of over 20%. What is management outlook for the second half? Now that the two REITs have already completed their listing, what would be the pace of progress on the securitization of the remaining outlet projects that management can share? Lastly, on shareholder return, noted that the company resumed buybacks in second quarter, and management also announced a new buyback program in August of $1 billion. How should we think about the level and pace of shareholder return for the second half? Thank you.

Eric Shen, Co-founder, Chairman, and CEO, Vipshop Holdings Limited: 对，我先回答第一个问题，然后Mark回答第二个问题。第一个问题就是，杉杉我们看到它的增长趋势都不错。那么整体呢，Q1其实还更好，因为整个我们说的在中国的整个大消费环境里，Q1其实还算不错的，那么Q2增长也可以，所以说Q1、Q2加在一起是20%。我们那个期望是在Q3、Q4，那么也能实现20%的增长。但据我们判断应该是能做得到的。那么包括我们其实对他们还要求，就是说除了那个，因为他们有新开门店吧，就是说如果是同店，同门店，过去的门店我们希望都要有两位数的增长。所以说整体我们对整个杉杉的发展，我们认为还是比较放心的。那么另外刚刚他有问是不是接下来的REITs计划，对吧？对，这个包括REITs计划也一样，由Mark来回答。对。

Jessie Zheng, Head of Investor Relations, Vipshop Holdings Limited: We are quite optimistic about Shan Shan Outlet growth momentum in the first half. Shan Shan Outlet grew by over 20% in terms of GMV. Actually, the first quarter turned out to be much better and followed by a very decent second quarter, given the general soft consumer sentiment today. We continue to expect a similar growth momentum for the second half, and we do believe that over 20% GMV growth is completely achievable. Actually, we have higher standards for comparable same-store sales for the existing Shan Shan Outlets, which we believe will grow at least double digits.

Mark Wang, Chief Financial Officer, Vipshop Holdings Limited: Okay, Mark. Let me answer your second and third questions. Your second question is regarding the REIT status and planning. On June 18, 2026, we successfully listed our commercial REIT on the Shanghai Stock Exchange. The listing makes a significant strategic milestone for Vipshop, expanding our presence from consumer infrastructure REITs into the broader commercial REIT arena. The REIT with a total of RMB 7.7 billion, making it the largest commercial REIT in terms of the fund raising scale among the first batch of commercial REITs listed on China’s capital market. There are two underlying assets, Shan Shan Outlets in Zhengzhou and Harbin in the commercial REIT. Both are mature outlets operate for around 10 years. Both outlets hold leading position in their regional markets. The Zhengzhou outlets is the highest grossing outlets in Henan province, while the Harbin outlets ranks first in Heilongjiang province.

In addition to the three outlets already used as underlying assets for the REIT issuance, we also hold another 18 outlets projects, demonstrating strong potential for future expansion. We will conduct future evaluation based on our strategy and the market conditions. Your third question is regarding the buyback. During the 2021 to 2025, we have already returned $3.7 billion to shareholders. Our long-term returns to shareholder is built on our strong business model and health cash flow. External factors may cause short-term volatility in our business. Our corporation are managed to deliver stable and robust profitability across economic cycles. This strength let us keep providing sustainable returns to our shareholders over time. For 2026, we remain fully committed to our full year shareholder return policy, which targets total payout ratio of no less than 75% of our 2025 non-GAAP net income.

In first half, we have distributed approximately $400 million U.S. through dividend and buyback. Reflecting the anticipated utilization of our existing authorization, the board of directors have approved a new $1 billion U.S. share repurchase program. We will continue the buyback opportunistically in the quarters ahead. Thanks.

Jessie Zheng, Head of Investor Relations, Vipshop Holdings Limited: Thank you.

Operator: Thank you for the questions. Due to time constraint, that concludes today’s Q&A session. At this time, I will turn the conference back to Jessie for any closing remarks.

Jessie Zheng, Head of Investor Relations, Vipshop Holdings Limited: 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.

Operator: That concludes today’s conference call. Thank you for your participation. You may now disconnect your line.