Baozun, Inc. Q1 FY2025 earnings call

• Vincent Qiu noted Baozun continues strategic transformation with diversified revenue streams, BEC making strides in quality development and value generation, BBM accelerating with 23% sales growth. - Catherine Zhu discussed financials: group total net revenues up 4.3% Y/Y to RMB2.1 billion, blended gross margin for product sales 32.4%, adjusted loss from operations RMB67 million. - Junhua Wu reported BEC made progress in Q1 2025 across key priorities, E-Commerce revenue largely flat, product sales grew 7%, gross profit margin improved. - Ken Huang shared BBM achieved 23% Y/Y sales growth, same-store sales growth improved to 5%, optimized store network, leveraged marketing initiatives like Forbidden City collaboration and Brannan Bear Events, and saw blended gross margin at 52% with adjusted operating loss narrowing 28% Y/Y.

Baozun Group achieved 4% year-over-year revenue growth. BEC (E-Commerce) had revenue of RMB1.7 billion, slightly flat year-over-year. BBM (Brand Management) had revenue of RMB387 million, up 23% year-over-year. E-Commerce product sales grew 7.3% year-over-year to RMB423 million. BBM product sales totaled RMB387 million, a 23% year-over-year growth. Gross margin for E-Commerce product sales expanded to 15%, a 130 basis point improvement from 13.7% the previous year. BBM's gross margin was 51.6%, down from 53.1% year-over-year due to product offering adjustment and commercial plan optimization.

• BBM aims for double-digit top line growth in 2025. - 618 campaign started May 13 to June 20, with first wave results showing strong performance in brand presales and conversion rates. - Plans to open 50 new stores in 2025, expand community engagement initiatives, and continue leveraging synergies between BBM and BEC.

• Forward-looking statements based on current expectations with known and unknown risks, uncertainties, and factors beyond the company's control that may cause actual results to differ. - Macroeconomic challenges impacting business performance. - Risks related to operational execution and financial performance, such as continued seasonality issues in E-Commerce retail and product offering adjustments affecting margins.

Q: Update on 2025 618 campaign expectation, preliminary results, and platform traction; also on IT and logistics service onboarding of brands.

A: Junhua Wu said 618 2025 is a 37-day campaign starting May 13, first wave results show strong presales and conversion rates with lower cancel and return rates. For IT and logistics services, more brands are exploring one-stop solutions, with confidence in catching up revenue growth in Q3/Q4, and focusing on B2B and emerging segment development in logistics.

Q: Update on Gap operation strategy, balancing scale and profitability, and new brand acquisition plans; also on RedNote and Tmall strategy.

A: Ken Huang stated Gap's strategy focuses on product enhancement, local culture relevance marketing, and channel expansion. Balancing scale and profitability involves targeting double-digit growth and opening 50 new stores, aiming for breakeven by year-end. On new brands, BBM uses a portfolio strategy with multiple brands, and BEC also onboard new brands. Junhua Wu explained RedNote and Tmall's Red Cat initiative links content to Tmall transactions, with some brands reallocating marketing budget to it.

Q: Drivers and future trends of Apparel and Sports categories; and synergies between BBM and BEC during 618.

A: Junhua Wu said Apparel and Sports categories are seeing heavy investment with segmentation of consumers, leveraging data for right assortment and marketing. Ken Huang mentioned synergies between BBM and BEC include close collaboration for TP, DP, logistics, and IT services, with BBM providing advanced channel information and responsive supply chain for BEC during campaigns.