Zacks Investment Research | May 11, 2016 09:19PM ET
Vipshop Holdings Limited (NYSE:VIPS) is set to report first-quarter 2016 results on May 17. Last quarter, this Chinese online lifestyle product retailer posted a negative surprise of 5.88%. The company posted positive surprise in three of the last four quarters, reaching the four-quarter average surprise to a positive 6.03%.
Let’s see how things are shaping up for this announcement.
Factors at Play
Vipshop Holdings has been posting decent results over the past few quarters on the back of higher revenues and solid expense management.
Vipshop Holdings has made several investments in 2015 to revamp its online business. These should boost the company's top line in the first quarter as more consumers are resorting to online shopping. Moreover, the company enhanced its logistics to improve customers’ shopping experience. The company also expanded the product assortment at its stores during the first half of the year which should aid top-line growth in the to-be-reported quarter.
The company has also started offering discounts since the third quarter of the last fiscal in order to attract new customers. The initiative catalyzed revenue growth during the fourth quarter of 2015, and is also expected to boost the top line in the to-be-reported quarter.
However, the offering of discounts is expected to impact margins. Further, the ongoing macroeconomic slowdown in China and increasing competition in the retail space may offset the positives.
Earnings Whispers
Our proven model does not conclusively show that Vipshop Holdings will beat earnings this quarter. That is because a stock needs to have both a positive Zacks Investment Research
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