Ladies and gentlemen, good day everyone, welcome to Vipshop Holdings Limited second quarter 2023 earnings conference call. At this time, I'd like to turn the call over to Ms. Jessie Zheng, Vipshop Head of Investor Relations. Please proceed. Thank you, operator. Hello, everyone, and thank you for joining Vipshop second quarter 2023 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 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, 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 reconciliation 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, thank you for joining our second quarter 2023 earnings conference call. We delivered strong second quarter results on the top line, with profitability well ahead of expectations. Our value proposition in discount retail is resonating with brand partners and customer lead by the well-executed merchandising strategy, which has been the key to driving the growth. The second quarter performance continued to be fueled by apparel category, which delivered over 30% GMV growth, reflecting broad-based strength. At a time when consumers are making more rational decisions based on value for money, customers are coming back more and shopping with us more often. Paid membership growth remained robust. By the end of the second quarter, active Super VIP members increased by 23%, contributing to about 44% of our online spending. We are also pleased with the build-out of merchandising capabilities and the optimizations of business processes throughout our organization. They have helped drive great efficiency. Profitability hit another new record high in the second quarter. More people look to us for value. More partners want to work with us to target their desired customers. This provides new levels for us to capture great mindshare. In everything we do, we put the customer at the center. We hope that discount retail for branded products is the one that Vipshop stands for, and when people feel like buying clothes online, Vipshop is the first place to go. With that in mind, we are committed to enhancing our core competence to offer a rich and diverse selection of great value, as well as worry-free customer service and experience. On merchandising, we have secured more much more quality supply from core brands. We are constantly consistently adding new brands, more popular products, and a range of trendy categories. More high-end international brands become available. Our ability to present new, fresh, and fashionable items, the one our customers long expect from us, has meaningfully improved. As a long-standing discount retailer, we were able to provide great pricing across every category, giving our best-in-class service to brand partners. It's far beyond that. Differentiated merchandising is also pivotal- Pivotal. Pivotal to create value for customers. We are doing so through unique and customized offerings, which have better conversions. There's a lot more we can do with the Made for Vipshop line. Our buyers team continue to deepen that knowledge and expertise. They have put in place a set of rules and process, making it more efficient for brand partners to increase the quality supply at competitive pricing to cater for customer needs. We are moving steadily towards our goal to help every customers find what they need on our platform. On service commitment, we keep listening to our customers, analyze and understand their evolving needs. We are determined to deliver a worry-free experience by leveraging our merchandising, customer service, and the supply chain capabilities. For example, we are enhancing our merchandising efforts to make sure that everything is reliable sources, every product is our guaranteed quality, and every step along the value chain is properly monetized. We want every customer to feel that the experience of shopping with us is worry-free enough to prioritize their spending here. We keep looking at where we can deepen engagement with our customers, personalize the experience, channel efficiency, and quality customer growth and the top priorities. We have been deep mining customer and product insights to improve accuracy and the prediction in personalized recommendations. We have also made several upgrades to our app to increase the efficiency of different channels. Engagement with SVIP customers has been quite encouraging. Penetrations into different cohorts of spending has improved year-over-year. As we navigate the external changes, we believe that our business model is structurally sound. The discipline and the dedication inherent in our day-to-day execution allow us to stand firm as a unique player in e-commerce. As long as we continue to optimize our merchandise portfolio, putting the customer at the center of every decision we make, we will attract quality customers and benefit from deeper customer loyalty and engagement. That will result in sustainable revenue and earning growth for the long term. At this point, let me hand over the call to our CFO, Mark Wang, to go over our financial results. Okay. Thanks, Eric. Hello, everyone. We are pleased to finish another quarter with strong, profitable growth. During the second quarter, total net revenue increased by 13.6% year-over-year, and non-GAAP net income attributable to Vipshop's shareholder increased by 15.8%, leading to margin expansions across the board. This set of results was achieved through our enhanced merchandising capability to offer quality products at great value. Our diligent execution to grow customer engagement, as well as the company-wide efforts to optimize the efficiency of our business. Overall, gross margin expanded to over 22% for the first time in three years, benefiting from much stronger momentum and a greater contribution from apparel, and very healthy category margins. With continuous focus on managing control, controllable costs and achieving expenses, leverage where we could, profitability took a meaningful step up and non-GAAP net margin attributable to Vipshop's shareholders hit another record high at 8.6%. In addition, we continue to unlock value for our shareholders with $348.5 million of our ADS being repurchased during the quarter. We will keep executing the remaining amount of our $1 billion buyback program from time to time. Looking ahead, as Eric mentioned, we are operating in a retail environment where consumers place value at the top of their list, and we see the opportunity to gain customers' mind share. Our team is working hard to ensure our operations are ready to deliver on our long-term vision. In addition to addressing near-term priorities, we are committed to maintaining quality and healthy growth in both top and bottom lines. 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 revenues for the second quarter of 2023 increased by 13.6% year-over-year to RMB 27.9 billion, from RMB 24.5 billion in the prior year period. primarily attributable to the growth in active customers and spending, driven by the recovery in consumption of discretionary categories. Gross profit increased by 23.4% year-over-year to RMB 6.2 billion from RMB 5.0 billion in the prior year period. Gross margin increased to 22.2% from 20.5% in the prior-year period. Total operating expenses increased by 13.7% year-over-year to RMB 4.5 billion from RMB 3.9 billion in the prior-year period. As a percentage of total net revenues, total operating expenses was 16.1%, which stayed flat as compared with the prior-year period. Fulfillment expenses increased by 22.8% year-over-year to RMB 2.2 billion from RMB 1.8 billion in the prior-year period. As a percentage of total net revenues, fulfillment expenses was 7.8% as compared with 7.2% in the prior-year period. Marketing expenses increased by 60.86% year-over-year to RMB 892.5 million from RMB 555.6 million in the prior year period. As a percentage of total net revenues, marketing expenses was 3.2% as compared with 2.3% in the prior year period. Technology and accounting expenses increased by 7.6% year-over-year to RMB 443.0 million from RMB 411.8 million in the prior year period. As a percentage of total net revenues, technology and accounting expenses decreased to 1.6% from 1.7% in the prior year period. General and administrative expenses decreased by 19.4% year-over-year to RMB 963.1 million from RMB 1.2 billion in the prior year period. As a percentage of total net revenues, general and administrative expenses decreased to 3.5% from 4.9% in the prior year period. Income from operations increased by 51.1% year-over-year to RMB 1.9 billion from RMB 1.3 billion in the prior year period. Operating margin increased to 6.9% from 5.2% in the prior year period. Non-GAAP income from operations increased by 48.2% year-over-year to RMB 2.3 billion from RMB 1.6 billion in the prior year period. Non-GAAP operating margin increased to 8.2% from 6.3% in the prior year period. Net income attributable to Vipshop's shareholders increased by 63.5% year-over-year to RMB 2.1 billion from RMB 1.3 billion in the prior year period. Net margin attributable to Vipshop's shareholders increased to 7.5% from 5.2% in the prior year period. Net income attributable to Vipshop shareholder per diluted ADS increased to RMB 3.75 from RMB 1.97 in the prior year period. Non-GAAP net income attributable to Vipshop's shareholder increased by 50.8% year-over-year to RMB 2.4 billion from RMB 1.6 billion in the prior year period. Non-GAAP net margin attributable to Vipshop's shareholders increased to 8.6% from 6.5% in the prior period. Non-GAAP net income attributable to Vipshop's shareholders per diluted ADS increased to RMB 4.30 from RMB 2.45 in the prior year period. As of June 30, 2023, the company had cash and cash equivalents and the restricted cash of RMB 18.3 billion, and short-term investments of RMB 1.5 billion. Looking forward to the third quarter of 2023, we expected our total net revenue to be between RMB 21.6 billion and RMB 22.7 billion, representing a year-over-year increase of approximately 0%-5%. Please note that this forecast reflects our current and the preliminary view of the markets and operational conditions, which is subject to change. With that, I would now like to open the call to Q&A. Thank you. To ask a question, please press star one one on your telephone keypad. You would then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Once again, that's star one one for questions. Our first question comes from the line of Thomas Chong from Jefferies. Please ask your question, Thomas. Hi, good evening. Thanks management for taking my questions. I have two questions. The first question is regarding the consumer sentiment. Can management comment about how we think about it and the monthly GMV trend recently, as well as our expectations in coming quarters? My second question is about our margin outlook. Given the strong margin in Q2, how should we think about it in coming quarters? Thank you. [Foreign language] Okay. In terms of GMV trend, as we enter into the third quarter, until now, it's been one and a half months. Everything is on track, and it's tracking in line with our guidance of 0%-5% revenue growth. We are pretty confident that the total GMV will continue to be on track. Especially for Q4, we still see a very good opportunity to ramp up the GMV growth, because, as you know, Q3 is typically a slow season for apparel, and summer apparel has lower ticket size. While entering into Q4, when people are going for winter clothes, which are typically a higher ticket size, and that presents a better opportunity for us to grow the GMV better, because of the strength in apparel categories. For the longer term, we're, we are very confident about the consistent and the sustainable GMV growth, because nowadays we don't have the COVID and everything is in normal operation. We are pretty confident about our merchandising capability to grow the GMV for the longer term. In terms of the margin trend, in Q2, we did a pretty good job, and we think we now have a very good handle on all the margins, including GP margin, OP margin, NP margin, and it's a, it's a, a long-term capability that we have built out, because of the discipline and dedication in our daily operations. We are confident that we will maintain a consistent earnings growth and keep the all the margins on a very healthy level. Right. Thank you, Thomas. Our next question comes from Alicia Yap, from Citigroup. Please ask your question, Alicia. Hi. Good evening, Eric, Mark, and Jessie. Thanks for taking my questions. I have two questions. First, can management share with us the reason for the improved gross margin this quarter. I mean, usually during the promotional period, gross margins tends to trend a little bit lower, but this quarter is actually exceptionally good. Could this improved margins be sustainable that this is a new gross margin level going forward? Second question is the consumption pattern. Specifically within your apparel, what type of like, you know, fashions or kind of, you know, the, the design or anything that is particularly doing well? You know, just kind of wanted to get a sense of, you know, what the consumers are spending. Are they more caters towards, you know, apparel that is have a big discount or actually more on the sports, sportswear, or any color you can share within the apparel category would be appreciated. Thank you. [Foreign language] Okay, going back to our first question on GP margin. We, we did have a very good performance on GP margin, even during the promotional period in Q2. As we mentioned earlier, we have a very good cost control to help our GP margin grow. For example, we don't actually blindly participate in the industry-wide subsidy campaigns. You know, we don't, we don't want to waste the money on delivering unnecessary coupons or vouchers to our customers. Still, we are able to achieve a very good gross margin profile. We are confident that we would maintain this level of a gross margin of a longer term. We wouldn't expect big swings from quarter to quarter, no matter whether we have promotional big promotions or not. In terms of the performance within the apparel categories, we, we had a very, very strong growth in the second quarter, partially because, because of the pent-up demand, as compared to last year. Today we, we don't have COVID, and everybody is going out for traveling and dining out, etc. Given such active social activities, we did see a very good momentum within the power categories, and we actually see broad-based strength across different categories, including women's wear, men's wear, kids wear, underwear etc. For mix match, mix and match purposes, consumers also spend a lot on shoes and bags, which are also going very well. of course, for deep discount products, we think consumers are more susceptible to these product offerings, because they now place value on the top of their list, and they make very rational decisions and look for value for money products. If we look at more details within the power categories, as you mentioned, the fashion of sportswear, a trend which started a couple of years ago, has been growing very well. For women's wear, we do see a very diverse trend for different styles, designs, and some of the designer brands are growing very well. Of course, some are not that popular. Basically, I think we're seeing very good momentum in apparel categories. Thank you. next question comes from the line of Natalie Wu from Haitong International. Please ask your question, Natalie. Hi, thank you for taking my question. I have one regarding the future growth prospects. For the 0%-5% year growth guidance of the third quarter, is it mainly affected by macro or competition, or simply the base effect? If the latter, is it safe to say this number could indicate a similar normalized growth rate entering into 2024? You will shift your strategy to increase sales and marketing for better growth by then. [Foreign language] [Foreign language] OK, terms of the guidance for Q3, the 0%-5% revenue growth is primarily because of the slow momentum in slow relatively slow season for apparel categories. You know we are a pretty strong in apparel, and when we enter into Q3, we will have a slower GMV, slower growth. The GMV growth is actually much better. You know apparel naturally carry higher our return rates. Partially and of course, we also find that consumers are more cautious about their spending. When they place their orders, they have to think over and over and then the return rate would be trending higher. Another reason for return rate is that we provide a worry-free services for returns exchanges, a lot of customers appreciate our service. This is this is a part of our initiative to actually to provide excellent services to customers for the long term, to gain their customer mind, to gain their mind share. It's already building our business model, we actually don't care too much about its short-term impact. Going into Q4, we're definitely are returning to a stronger growth rate. The base effect is also in play, as I mentioned, because last year, COVID impact was actually not that meaningful in the third quarter. We probably don't have an easy count to compare. For the longer term, of course, we are looking at a very much healthier growth rate. We still want to leverage our value proposition in discount retail for branded products and to grow our business. Already in this quarter, we are well starting to prudently increase our spending, our marketing spending, to try to capture the opportunity to grow more customers. We are confident that we can grow better than the guidance we provided. Thank you. Our next question comes from Eddy Wang from Morgan Stanley. Please ask your question, Eddy. [Foreign language] Thank you management for taking my question. My question is also regarding the return rate. Can you share with us the trend of the return rate in first quarter, second quarter and the third quarter so far? Because we have seen that if you look at the fulfillment rate in the second quarter, actually we see a little bit higher than the first quarter. So we expect that this fulfillment rate, fulfillment expense ratio to, you know, be a little bit higher going forward. Thank you. [Foreign language] Okay, in terms of the gap between revenue and GMV, actually we have seen our return rate has starting to trend up from the first quarter, and in the second quarter is going up quite significantly. We expect that Q3 would maintain a similar level as Q2 and the Q4. It's hard to tell, but potentially could be higher, but should not be much higher, because we have started to take some initiatives to bring the return rate to a much more normalized level. Having said that, the gap between our revenue and the GMV that we have seen for the past several quarters could be the benchmark for your estimate for future revenue versus GMV. It's going to be a little bit different than the level we have seen in the past several years. The return rate we have mentioned earlier, one of the reasons is that consumer, many consumers as VIPs, they love they love to shop on our platform, they enjoy trying on, and if they are not satisfied, they would just return or exchange through our worry-free services. Another reason is that, potentially consumers are more cautious, lay on spending nowadays, because they manage their household budgets more carefully. In terms of fulfillment expense, return rate is part of the reason that fulfillment may tended higher in the second quarter, but it's the cost associated of return for exchanges, mostly delivery costs, back and forth. It's just a part of the model, the business model we have built in. It's for the full year or for the longer term, we think fulfillment expense ratio is still manageable, it's not going to be extremely high. Probably in some low, slower seasons, it's going to be high, but in peak season, especially for apparel, it is totally manageable. Thank you. Our next question comes from the line of Andre Chang from J.P. Morgan. Please ask your question, Andre. [Foreign language] I have a question for shareholder return and share buyback. I noticed that the company has bought back $350 million a round of ADS this quarter. You know, first is current program of $1 billion over two years, so the pace is significantly faster than the average pace of the program. Also the buyback amount is equivalent to our free cash flow. My question is about the w hat's the philosophy and the, the strategy of our share buyback and shareholder return? Now, can management share with us what the principle for you to buy at what kind of level, what kind of pace, so investors can understand the shareholder return you can get from here? Thank you. [Foreign language] Yeah, OK, OK, Actually, we don't have a specific philosophy or rules as to the buyback program. We just buy back when the share price is much deep under appreciated as compared to fair value. We don't have specific pace, we are just very committed. OK, this is Mark, thanks for your question. Yeah, we would like to return value to our shareholders, so we have been steadily executing our buyback programs. As of Q2, we have utilized around $435 million of our current $1 billion share repurchase program. That means starting from Q2 2021, we have returned a total of about $2 billion to our shareholders as of Q2 2023. I think we will continue to execute this program from time to time. Yes, so another thing that just mentioned by Eric, that we will also focus on the share price and also our enterprise values. OK, if we believe that the share price, if we believe the market cap is really below the value, then we will do our share buyback from time to time. Thank you. Thank you. Next question comes from Jialong Shi from Nomura. Please ask your question, Jialong. Thank you very much, Eric, Mark, Jessie for taking my questions and good evening. [Foreign language] I have two questions, the first one is a follow up questions on this return rate. So just wondering how VIP's return rate for the apparel category compared to those of the peers or compared to the apparel industry the average return rate for the apparel industry in China during the same period. Also for this increasing return rate since this year, other than this you know consumers cautiousness, just wondering whether or not the competition may have also played a role in this increasing return rate for the apparel category. My second question is about the Super VIP member, just wonder what is the latest number of quarterly Super VIP members and how much of your GMV in second quarter was contributed by Super VIP? Thank you. [Foreign language] In terms of return rate, as to the Vipshop versus peers, you know, we are, are a shelf-based, e-commerce player, and our business model is quite unique. We are a discount retailer, and we all often offer flash sales, and consumers have to make real-time decisions. Their shopping cart, if they put any, you know, product, put any products in it, they only have 20 minutes to decide whether to buy or not. Our peers, they have some ways to motivate their customers not to return. For example, they would deliver coupons or vouchers through their customer service staff. We, we are run, run, running on a very different business model. Typically, our return rate is 2-3 percentage points higher than our peers, according to our estimate. Whether it's industry-wise, a phenomenon as to return rate trending up, we, we, we are still doing some research because we don't have the full set data from the all the industry players, we just have some of them. We, we don't have a conclusion on that. We are still evaluating the situation. As to consumer sentiment, we mentioned probably it's, part of the reason is that consumers are becoming more cautious, but that's also our, our estimate. We don't have a solid, concrete, you know, scientific, scientific way to determine whether it's because consumers' wallet, wallet is shrinking. We don't have a conclusion on that, but it's our best estimate that probably they are becoming more rational. As to the competition, we don't think it's a way, it's, it's behind the return rate. Because typically consumers pay for all the items they put in their shopping cart, and then they decide whether to keep one, return or return, whether to keep them all, or to return one or two. They've already made their decision on how to shop on our platform, and they just need to consider whether to keep all the old items or just they need to return some of that. It's not because of the competition. In summary, we, we don't have a final conclusion on why the return rate is trending up. As to SVIP, we, as of June 30, we have a total of 6.7 million super active Super VIP members, who contributed to 44% of our online spending. In terms of GMV, that should be a little bit higher. SVIPs have a little much higher return rate than non-SVIP members because they love Vipshop. Love. One of the reasons they love to shop on Vipshop platform is because we offer worry-free return or exchanges, and they, they think this is a place that is very reassuring for their customers or for their customer experience. That's one of the reasons why the return rate is trending up recently. Thank you. Due to time constraints, that concludes today's question and answer session. At this time, I will turn the conference back to Jessie for any closing remarks. Thank you for taking the time to join us today. If you're having any questions or follow-up, please don't hesitate to contact our IR team. We look forward to speaking with you next quarter. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.