Ladies and gentlemen, good day everyone, and welcome to Vipshop Holdings Limited fourth quarter and full year 2021 earnings conference call. At this time, I would like to turn the call to Ms. Jessie Zheng, Vipshop's Head of Investor Relations. Please proceed. Thank you, operator. Hello, everyone, and thank you for joining Vipshop fourth quarter and full year 2021 earnings conference call. With us today are Eric Shen, our Co-founder, Chairman, and CEO, and David Cui, 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 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 the 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 U.S. 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 fourth quarter and full year 2021 earnings conference call. We are delighted with our solid business performance in 2021, despite a slow fourth quarter impacted by the challenging external environment. For the full year, total active customers increased by 12% year-over-year to 93.9 million. GMV rose by 16% to RMB 191.5 billion. Notably, Super VIP active customers grew by 50% to 6 million, and contributed 36% of online net GMV. Driven by steady growth in both customer base and average revenue per customer, our total revenue for the year increased by 15% year-over-year to RMB 117.1 billion. Non-GAAP net income for the year exceeded RMB 6 billion and net margin remained above 5%. Our solid operational and financial performance was led by continuous business upgrade based on our strategic position as a discount platform for branded products at exceptional value. To further enhance our core competence, during the second half of 2021, we focused more on core brands and high-value customers to further strengthen our value proposition with them. Among many things, we rely and upgrade various channels on our platform to better empower brand partners and enhance shopping experience for customers. We are encouraged by the business synergy generated from these initiatives. For example, multiple brands recorded their highest single day GMV in recent years during the Super Brand Day and today's top brand sales events. Many more brands came to us, providing our customers with more unique and price competitive products. We are pleased to see that the contribution from core brands for the past year significantly improved from a year ago, with their GMV growing faster than the overall GMV on our platform. Through their deepened relationship with our brand partners, we were able to better cooperate with core brands on Made for Vipshop products. In addition to address the needs of younger customers, we also consistently added new and trendy brands to our platform. As we brought in more quality brands and products, we were better positioned to leverage integrated operations to improve customer stickiness and ARPU. In particular, Super VIP member outperformed in almost all operation metrics. They have a very high retention rate with their annual ARPU at around eight times than that of non-SVIP customers. We expect this paid membership program to cover more high-value customers on our platform. Looking into 2022 and beyond, we will firmly execute on our merchandising strategy to secure an increasing share of quality products from carefully selected brand partners. To achieve this, we will keep allocating more resources to accelerate the closing of the core brands. Differentiate our offering further through Made for VIP products and introduce more popular and high-end brands. In addition, we will continue to optimize our operations. We will improve the effectiveness of customer acquisition through personalized recommendation, enrich the shopping experience and effectively target marketing for new and existing customers. We expect these efforts to collectively drive the quality and sustainable growth of our customers and revenue for the long term, while consistently delivering steady and healthy profits. At this point, let me hand over the call to our CFO, David Cui, who will go over our financial results. Thanks, Eric. Hello, everyone. 2021 was a year of challenge and uncertainty. Despite this, we achieved a solid performance thanks to our continuous efforts in executing the merchandising strategy and refining operations. Our total revenue for 2021 increased by 15% year-over-year, driven by steady growth in both customer base and average revenue per customer. Although the fourth quarter came under some pressure, net income attributable to Vipshop's shareholders for the year remained resilient with sequential improvement in the fourth quarter due to disciplined operations, evidenced by more prudent marketing strategy through integrated customer acquisition. Going forward, we remain committed to delivering steady profitability with quality top line growth and creating long-term value to 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 RMB and all the percentage changes are year-over-year changes, unless otherwise noted. Total net revenue for the fourth quarter of 2021 was RMB 34.1 billion as compared with RMB 35.8 billion in the prior year period, primarily attributable to soft consumer demand for discretionary categories impacted by the macroeconomy and COVID-19 pandemic. Gross profit was RMB 6.7 billion as compared with RMB 7.8 billion in the prior year period. Gross margin was 19.7% as compared with 21.9% in the prior year period. Total operating expenses decreased to RMB 5.0 billion from RMB 5.4 billion in the prior year period. As a percentage of total net revenue, total operating expenses decreased to 14.6% from 15.2% in the prior year period. Fulfillment expenses was RMB 2.2 billion, which largely stayed flat as compared with the corresponding period in 2020. As a percentage of total net revenue, fulfillment expenses was 6.4% as compared with 6.1% in the prior year period. Marketing expenses decreased to RMB 1.1 billion from RMB 1.7 billion in the prior year period. As a percentage of total net revenue, marketing expenses decreased to 3.4% from 4.8% in the prior year period, primarily attributable to a more prudent marketing strategy. Technology and content expenses increased to RMB 443.0 million from RMB 272.4 million in the prior year period. As a percentage of total net revenue, technology and content expenses was 1.3% as compared with 0.8% in the prior year period. General and administrative expenses were RMB 1.2 billion as compared with RMB 1.3 billion in the prior year period. As a percentage of the total net revenue, general and administrative expenses was 3.5%, which stayed flat as compared with the corresponding period in year 2020. Income from operations was RMB 1.8 billion as compared with RMB 2.6 billion in the prior year period. Operating margin was 5.4% as compared with 7.2% in the prior year period. Non-GAAP income from operations was RMB 2.1 billion as compared with RMB 2.8 billion in the prior year period. Non-GAAP operating income margin was 6.1% as compared with 7.9% in the prior year period. Net income attributable to Vipshop's shareholders was RMB 1.4 billion as compared with RMB 2.4 billion in the prior year period. Net margin attributable to Vipshop's shareholders was 4.1% as compared with 6.8% in the prior year period. Net income attributable to Vipshop's shareholders per diluted ADS was RMB 2.07 as compared with RMB 3.51 in the prior year period. Non-GAAP net income attributable to Vipshop's shareholders was RMB 1.8 billion as compared with RMB 2.6 billion in the prior year period. Non-GAAP net margin attributable to Vipshop's shareholders was 5.3% as compared with 7.2% in the prior year period. Non-GAAP net income attributable to Vipshop's shareholders per diluted ADS was RMB 2.64 as compared with RMB 3.70 in the prior year period. As of December 31, 2021, the company had cash and cash equivalents and restricted cash of RMB 17.2 billion and short-term investments of RMB 1.4 billion. Now, I will briefly walk through the highlights of our full year results. Total net revenue for the full year of 2021 increased by 14.9% year-over-year to RMB 117.1 billion from RMB 101.9 billion in the prior year, primarily driven by the growth in the number of total active customers. Gross profit increased by 8.6% year-over-year to RMB 23.1 billion from RMB 21.3 billion in the prior year. Gross margin was 19.7% as compared with 20.9% in the prior year. Income from operations for the full year of 2021 was RMB 5.6 billion as compared with RMB 5.9 billion in the prior year. Operating margin was 4.8% as compared with 5.8% in the prior year. Non-GAAP income from operations was RMB 6.6 billion as compared with RMB 6.8 billion in the prior year. Non-GAAP operating income margin was 5.6% as compared with 6.7% in the prior year. Net income attributable to Vipshop's shareholders was RMB 4.7 billion as compared with RMB 5.9 billion in the prior year. Net margin attributable to Vipshop's shareholders was 4.0% as compared with 5.8% in the prior year. Net income attributable to Vipshop's shareholders per diluted ADS was RMB 6.75 as compared with RMB 8.56 in the prior year. Non-GAAP net income attributable to Vipshop's shareholders was RMB 6.0 billion as compared with RMB 6.3 billion in the prior year. Non-GAAP net margin attributable to Vipshop's shareholders was 5.1% as compared with 6.2% in the prior year. Non-GAAP net income attributable to Vipshop's shareholders per diluted ADS was 8.67 RMB as compared with 9.08 RMB in the prior year. Looking forward to the first quarter of 2022, we expect our total net revenue to be between RMB 27.0 billion and RMB 28.4 billion, representing a year-over-year decrease rate of approximately 5% to 0%. Please note that this forecast reflects our current and preliminary review of the market and operational conditions, which is subject to change. With that, I would now like to open the call to Q&A. Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to withdraw your request, please press the pound or hash key. Our first question comes from the line of Thomas Chong from Jefferies. Please ask your question. Hi, good evening. Thanks, management, for taking my questions. My first question is relating to the consumer sentiment that we are seeing right now. Can we comment about how it is different in Q4 and so far right now in Q1? Because when I look at the guidance, it seems that it is a -5%-0%, which is similar to the guidance in Q4. Just want to see if any changes in terms of our thoughts on macro or headwinds. Secondly, I also want to get a sense about how we should think about the recovery momentum 在 Q2 和 coming quarters. Finally, that is more relating to competition. 可以 management comments about the live streaming online shopping competition in China and how it affects our business. Any thoughts how whether we can separate out or quantify the impact on competition and macro headwinds to internationally. Thank you. [Non-English content] [Non-English content] Mm-hmm. [Non-English content] [Non-English content] [Non-English content] Mm-hmm. [Non-English content] Mm-hmm. [Non-English content] [Non-English content] [Non-English content] [Non-English content] [Non-English content] [Non-English content] In terms of your first question on consumer sentiment, actually we have seen that it's really weak in the fourth quarter because of the warmer weather as well as sporadic COVID-19 cases. In the first quarter, it's getting slightly better because of the weather is getting colder but still we are naturally impacted by the COVID-19 cases here and there. Seasonality still plays some role in our business performance because we are pretty much apparel category focused platform. [Non-English content] [Non-English content] In terms of the recovery trend in the coming quarters, it's really hard to predict for now, given the many uncertainties going on, especially we see that there are still cases of COVID-19, and it's still too early to tell whether the consumer trend is going, whether when the consumption is coming back. Overall, we should see a relatively stable growth for 2022. We don't expect too much swing in our business performance, it's going to be quite stable [Non-English content] Mm-hmm. [Non-english content] Mm-hmm. [Non-English content] [Non-English content] [Non-English content] [Non-English contetnt] In terms of competition, we haven't seen too much change recently, we believe it's getting relatively stable. We think that, you know, live streaming platforms they have taken what they can take in the past from shelf-based e-commerce platforms. We didn't see competition getting worse. We are actually not worried, because as long as we get the right merchandise for our customers, they will always come to us. In terms of the impact from macro and competition, it's really hard to you know quantify, because you cannot predict reliably on whether macro is going to play out. On the competition side, we are pretty sure that the impact is already there. Thank you. Our next question comes from Alicia Yap from Citigroup. Please ask your question. Hi. Good evening, management. Thanks for taking my questions. I have a couple questions here. The first one is a question related to the inventory status for the Winter Olympics merchandising. So have you know, been discussing with your brand partners or maybe your merchandising partners regarding the demand and the inventory situation? Do you see any opportunity that VIPshop can get some of this product that is kind of left over? Given the timing, do you think you will benefit more for the fall and winter season later in late 2022? Or do you think there could be some winter clearance activity that you can leverage later in March or the April promotion period? In terms of the inventory related to the Winter Olympics, we haven't seen a very strong buildup in such inventory. We do see that both companies have been growing their business on our platform very fast in recent years. They do not provide any dedicated inventory in terms of, you know, such as skiing or sportswear, et cetera. We think that they have a normal level of inventory for sportswear. There is no anticipation that we are going to benefit from any excess inventories related to Winter Olympics. Thank you. Can I follow up on one question on user growth strategy? Can you elaborate what are the current plans that you are thinking in terms of, you know, to help boost your new user acquisitions later this year? Thank you. In terms of our user growth strategy, I think from the fourth quarter of last year, we have been focused on acquiring quality users in a more efficient and effective way. We don't want to blindly spend money in all the channels to acquire low quality customers. Instead, we are trying to do it in a balanced and a prudent way through integrated customer acquisition. This year we are going to continue to invest a lot of efforts in acquiring new customers, but at the same time, we are going to improve the retention of our existing customers. We will maintain a decent level of marketing spend in new user acquisition. Mm-hmm. I- Okay. Thank you, Jessie. Alicia, I had a couple more things. Number one is, we've seen the number of our Super VIP increase year-over-year. That's one of the key indicators that the quality of our customer base is getting better. We've also seen that our ARPU stabilize and have a slight increase actually starting last quarter. We've seen that trend. I see. Okay. Thank you, David, for the additional color. Thank you. As a reminder, if you wish to ask a question, please press star one on your telephone and please ask your questions in English and Mandarin. Thank you. Our next question comes from Ronald Keung from Goldman Sachs. Please ask your question. Okay. Thank you, Eric Shen, David Cui. Thank you taking my question. My first question is on growth margins. Fourth quarter is traditionally a high margin quarter with apparel, higher apparel mix. Given this year is not the highest kind of quarter, margin quarter, just wanna hear how are we thinking about the growth margin trends and the implications for 2022. My second question is, as our business reaches a more mature stage, we have very strong net cash balance sheet and a sizable earnings per share. We would love to hear management's thoughts on whether there could be any potential plans even for rewarding shareholders like paying dividends. Thank you. In terms of the gross margin, although Q4 is a relatively lower level as compared to the same quarter of last year. It's really because of the promotions and the subsidies we did during the quarter. During the quarter, the weather was relatively warmer, and it didn't effectively motivate consumers to, you know, spend more on winter clothing. So the return on this marketing spend is not desirable. But the current level of gross margin is not something that we want for the long term. We will gradually, you know, bring our gross margin to a more normal level in the coming quarters. You don't have to worry about the growth margin going ahead. In terms of the cash use, as you know, our board has approved a share buyback plan last year. We have executed it partially last year. Given that we made quite good profit in the year and then we still see a healthy profitability in the coming year, in this year, 2020. The board and the management is considering alternatives among the share buyback and distribution of the dividends. It is within the process, and we are considering and evaluating the options right now. Thank you, Eric Shen and David. Thank you. Our next question comes from the line of Natalie Wu from Haitong International. Please ask your question. Hi. Good evening. Thanks for taking my question. I have two here. First one is following up with Alicia's last question about the user acquisition. Can management elaborate more on your latest user acquisition strategy? For last quarter, we can see that your sales marketing is quite controlled, especially considering seasonal pattern. Just wondering any particular spending channel has been typically changed — branding performance-based ad or whatever. Overall, kind of the sales marketing budget you're preparing for this year, could it be more of an absolute number or a fixed revenue ratio depending on the timing of the improvement of the economy or the consumer confidence? Just curious how should we see the trend? The second one is related with your Super VIP. Just wondering what's the current percentage of your Super VIP? Also the related gross profit margin profile contributed by them, because they obviously have a higher ARPU, which I think is favorable to the gross profit margin maybe. In the meanwhile they are enjoying a deeper discount. It would be great if management can share some color on that. [Non-English content] OK。 [Non-English content] [Non-English content] In terms of latest update on user acquisition strategy, I think what we do differently from the fourth quarter is that we strictly follow the LTV model to evaluate the marketing efficiency of our spending and as well as how many days to recover in terms of new customers as well as existing customers. In the past we tend to see it takes longer time for us to recover the spend on new customers We did less. For the e-commerce, we tended to send out many coupons and did a lot of advertising, but it turns out not to be very effective. We also did less on that front. In general, we applied this LTV model in all the channels, including branding, as well as TV drama sponsorships, as well as advertising on short videos, et cetera. We actually did see some positive results from the fourth quarter. This year, we will continue to use the LTV model to manage our marketing spend across different channels. We do not look at a certain absolute number of marketing spend, as well as a certain percentage of the total net revenue. As long as the LTV model shows this is a healthy way to acquire customers, we will keep doing so. We are going to take this balanced and a prudent approach to our marketing strategy. [Non-English content] In terms of the margin profile for SVIP members, we've just mentioned the SVIP already accounted for roughly 36% of our online net GMV last year. In the future, we are going to continue to convert more high-value customers into SVIP members. In terms of the gross margin, SVIP members have a slightly lower gross margin than the overall level of our gross margin for the company, and a slightly higher return rate. SVIP proves to be spend much more than a non-SVIP member. It is definitely a very profitable model for the company. We expect, as long as more high-value customers are successfully becoming SVIP members, they tend to come to shop more and spend more. That's very helpful. Thanks Angela and Jessie. Thank you. Our next question comes from Eddy Wang from Morgan Stanley. Please ask your question. [Non-English content] Thank you for taking my question. My first question is also about the inventory de-stocking. Eric Shen, you mentioned that for the non-sport you know apparel, there's no inventory issue. But I just want to ask if there's any, you know, the inventory for the women's apparel or branded apparel given the weak sentiment of the apparel in China since the second half of last year. If that's the case, do we have any, you know, the opportunity for de-stocking in the coming quarters? The second question is about if there's any plan for the category expansion on top of the apparel, given that apparel sentiment is quite weak, and if we have more SVIP on our platform so we can, you know, meet their demands of a different category, not just about apparel. If that is the case, what's the impact on the margin profile as a whole? Thank you. Among our sales, you know our business model is the sales of consignment inventory, so majority of our business was done through consignment. On our balance sheets, the inventory balance is quite small as compared to our total annual GMV. You can also see the inventory balance is decreasing thanks to our effort to clear some of our aged inventory. To add some color to this, among the inventory balance, quite big portion of that is coming from our shops and mass offline stores, so they have to carry some inventories. Take out that, and then the real inventory we carry for our online business is quite immaterial, I would say. Yeah. [Non-English content] Adding to David's point in terms of the inventory from non-sportswear apparel, we do see some buildup in inventory from the fourth quarter because of the, you know, weather conditions as well as COVID-19 cases. It's going to be a good thing for us. On top of clearing excess inventories for brands, we also, you know, custom product offerings with some of those core brands. We are trying to secure the best supply from our brand partners. [Non-English content] [Non-English content] [Non-English content] In terms of the category expansion, in the past we did really well in apparel category related categories, but it's not enough to meet the diversified needs of a vast range of consumers. We are really investing additional efforts in bringing more standardized products to our platform such as for example, we've already built up SVIP special store, we have a dedicated channel for standardized products, we have a very good cosmetics channel, we have the 疯抢 channel to attract a lot of consumers to come to us to look for a unique offerings with competitive pricing to look for blockbuster standardized products. We're definitely going to increase our efforts on this front. In terms of the gross margin for standardized products, probably some of them may have a relatively lower gross margin, but it's really helping expand our brand portfolio and especially improve customer stickiness and repeat orders. The increase in the proportion of standardized products, if any, will have limited impact on the overall level of our gross margin. Adding to that, actually the conversion for standard products is actually higher than that of apparel related categories for the same amount of traffic. That's something we'll look at this year. [Non-English content] Thank you. Our next question comes from Andre Chang from J.P. Morgan. Please ask your question. [Non-English content] I will answer the first question. In this year 2021, our capital expenditure is about RMB 3.5 billion. A little bit over half of that are actually for Shanshan. We also have some payments for completion of our existing warehouses, which is work in progress, and also some upgrades of our technology and servers and the like. That's pretty much the ballpark. There's no additional, other, you know, other expenditures. Yeah. [Non-English content] [Non-English content] [Non-English content] In terms of expansion plan for Shanshan Outlets. Actually, the Shanshan business is really doing very well. Although last year our same store performance was relatively weaker because of the COVID-19 pandemic. Excluding that impact the same store performance is actually trending very healthy. We believe that offline outlets is going to present a large addressable market and is going to grow very fast in the next couple of years. We are going to continue our expansion plan, trying to add 2-3 offline outlets each year to capture the increasing consumer demand offline. We think this offline outlet business model is very solid, sustainable and very healthy for the long term. [Non-English content]Jessie。 Thank you. Our next question comes from the line of Jialong Shi from Credit Suisse. Please ask your question. [Non-English content] Thanks, management, for taking my question. The first question is about our strategy shift to focus on the core brands. Is there any impact on some users' stickiness and purchasing frequency? My second question is related to the shipping and handling expense. We are seeing that the per order expense is increasing both Q-on-Q and year-over-year. Should we take this new level as a future reference? Is it driven by the structural trend in the industry? Thank you. [Non-English content] They actually have a higher repurchase rate than ordinary promotions. We see this trend, and we are more determined to focus on key brands. We will continue to do so in the future, because we believe that customers recognize well-known brands, good products, and good prices. This is the main reason users come to Vipshop. In terms of the customer behavior, since actually the second half of last year, especially from the fourth quarter, we began to focus more on core brands. We provided those core brands with certain support in a time of a lot of uncertainties. We do see many positive developments. For example, customers who attended the sales event in our Super Brand Day sales or Today's Top Brand Sales, they tend to have much higher retention rate than those customers who didn't have the opportunity to join this event. That actually gave us very strong confidence to continue to focus on the core brands, to provide our customers with good high quality merchandise with competitive pricing. As long as we have the right, you know, brand, supply for our customers, they will come more and spend more. Yeah. We have been trying to improve our efficiencies over our fulfillment expenses over years. The more volume we can achieve and then the more efficiencies we can get. As you can see, the number of orders in 2021 has increased, you know, as compared to year 2020. Also, that includes, we try to find ways to improve our efficiency in the warehouses, and then try to reduce the number of returns and then exchanges. Those will all affect the efficiencies. Having said all this, we have been trying this for years, and we believe that we pretty much achieved the optimized, you know, efficiency and we should be able to find ways, but it's gonna be limited in future. Yeah. Right. Thank you. Now that concludes today's question and answer session. At this time, I'll turn the conference back to Jessie for any closing remarks. Thank you for taking the time to join us today. If you have any questions or follow-up, please don't hesitate to contact me. We look forward to speaking with you next quarter. Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.