By Lynn Cowan
Of DOW JONES NEWSWIRES
U.S. investors didn't welcome a Chinese company's IPO Friday,
with online retailer Vipshop Holdings Ltd. (VIPS) declining in
early trading after pricing below its expected range.
The company, which is the first Chinese firm to launch an
initial public offering in the U.S. since Tudou Holdings Ltd.
(TUDO) went public in August, saw its stock open at $6 a share on
the New York Stock Exchange, down 7.7% from its initial public
offering price of $6.50. It sold 11.2 million American Depositary
Shares at a price below its expected $8.50 to $10.50 range. It was
changing hands recently at $5.76, down 11.4%.
Chinese stocks were spurned by U.S. investors last year after a
string of accounting and corporate governance allegations, and it
became increasingly difficult to bring IPOs from that country.
Vipshop is the first to debut in seven months.
Headquartered in the Guangzhou, China, Vipshop operates its
e-commerce site, vipshop.com, on a flash sale format, which limits
the number of each discounted product available for purchase online
during a specific time period. The method is designed to drive
higher sales from consumers who don't want to miss out on deals.
Recent sales were dominated by Asian brands, but also included
products from L'Oreal S.A. (OR.FR) and The Walt Disney Co.
(DIS).
Vipshop had 12.1 million registered members, more than 1.7
million cumulative customers as of Dec. 31. and claimed 1.5 million
active customers and 7.3 million total orders in 2011, compared to
276,000 active customers and 927,000 total orders in 2010.
The online discount retail market is very competitive, and
Vipshop's rivals include major e-commerce companies in China that
sell a broad range of products and services online, such as Taobao
Mall, 360Buy and Dangdang, and other online discount retail
companies in China.
In 2011, revenue rose nearly sevenfold to $227 million and it
booked a net loss of $107.3 million compared to a loss of $8.4
million in 2010. The company has never been profitable.
Goldman Sachs Group Inc. (GS) and Deutsche Bank AG (DB) managed
Vipshop's offering.
-By Lynn Cowan; 202-257-2740; lynn.cowan@dowjones.com