BZUN - Earnings call transcript Q2 2021

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Operator

Good morning, ladies and gentlemen. And thank you for standing by for Baozun's Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question-and-answer session.

As a reminder, today's conference call is being recorded. the Sun, to Baozun. Investor turn today's host now Wendy call, Relations will meeting your over for I Director of proceed, Wendy. Please

Wendy Sun

us Thank you everyone. Hello, today. joining you, And operator. for thank

IR was Our quarter today available as Services. Global XXXX as release website second distributed ir.baozun.com at earnings and earlier is on Newswire well on

same also PowerPoint that presentation website. We accompanies our IR posted a comments to the

the operations Officer; from available Chairman follows. guidance. Arthur review They today will call the answer Business Baozun, Ms. highlights, Qui and Financial who be all and Yu, during Executive business the that Mr. to Strategic Qiu, we our followed Yu, On by session Vincent Li, Mr. Mr. will Chief Officer; Chief financials of Vice your company and Tracy have discuss President will questions Mr. Development. and Q&A

would the which you forward-looking Securities not Before except to and and XXXX and obligation statements we to Securities these and which of update the statements law. are announcement company regarding Hong and the XXXX. Exchange. on this from any the current risks, materially differ contains those market included Exchange and filings difficult the to meaning expectations U.S. does conditions within results like of operating risks, cause begin, of the may the statements that and Kong to applicable as Further in factors forward factors SEC actual forward-looking information in are is predict Litigation Reform of management's website The events any U.S. conference of and other of required company's many known with forward-looking company's and undertake call beyond the to which Act uncertainties I company's remind the the statements. or Private relates control, or based Act that uncertainties involve unknown power These are upon other

this Mr. Executive otherwise my conference mentioned unless please introduce Chief It ahead. Vincent, stated, call are Qiu. all to that RMB. during Officer, is now Vincent figures in and pleasure note please go Finally, Chairman our

Vincent Qiu

And Wendy. you, for us. Thank joining you thank all

deliver with achieving in goal quarter. quarter the to big a of are our year-over-year. XX% which have high further the last into We a luxury was In strategic our coming in progress we backed slide. where penetrating expand will growth year, promotional infrastructure base the on further solid able sitting the out the of second in and we satisfied our omni-channel China, inroads operational I quarter Despite and event sector, were service COVID significant by on particular, of first second and comprehensive in innovating executing offerings, GMV the made strategy next

alluded has the we quality of accessories continued The in initially apparel impacted we and into impact the to than and especially category the first the However, or negatively the quarter quarter as results, now both expected. better BCI, longer and international is initiative, larger first for growth brands. second software

quarter. of Total growth. the outbound of the income revenues by our increasing non-GAAP impact net declined by year-over-year the for net logistics services additional XX% impact, of the investments indication an with As by year-over-year the total orders rose increased for and X% the future X%, the quarter our for

Moving on to slide number three.

[XX%] quarter, XX% X% channels of Non-Tmall for the the of same for last year. from GMV, non-traditional flourish accounted During saw channels. increase we and domain in an private demand period total (sic) XX%

our strong be high profile. sales customers of demonstrating brand growth we execute we and continue margin and one able key generate sector growth As omni-channel the premium drivers, The variety incremental a our partners emerging are channels. both from help the luxury to to strategy, of our momentum and

received very regarding several of Following substantial visited brands. the We awareness we opportunities in Jet, broad European e-commerce and Full positive China's our headquarters market. feedback the of premium acquisition of luxury

we sector, post, e-commerce quarter, premium the During also out brand planning and interaction a brands across the have are luxury strong driver observed We Tmall onboarded we source in will the partners X the a channels. believe laid other the to over We this very coming that years. significant and addition pipeline. be

well let's long-term Now believe with make better our our by M&A move our end-to-end to providing proposition. growth We and position to our progress. solutions. as Operationally, improvements these enhance continue improvements we structural will business competitiveness we investments value to to to us deliver make e-commerce clients structural strategic

Now please turn slide to four.

investments. our and verticals strategic Baotong logistics made enlarges coverage. front, the allow we warehouse on us warehouse premium and During our two capacities the quarter, extend to

advantage While integrated achieve to in us Suzhou. meaningful and with [indiscernible] cost regional resources logistics enriches delivery

Following the in also equity logistics partnership along we our with its strategic the announced potential with our subsidiary. end quarter, Cainiao, of service investments

industry business the in long Our logistics premium group one and highly customized well has as services. leading recognized providers been logistics the in of

comprehensive more will we believe solutions value financial a and our to growing full chain capacity leads drive generate continue business and expanded capabilities, with service and Now returns.

sportswear We During leading potentially customer to this onboard operations. brand believe the domestic particularly pleased for could our for us their e-commerce be entry who an warehouse with brand we for quarter, and as additional work a point were partners logistics services.

to number Moving on slide five.

focused our an quarters. made during acquired fashion from that eFashion, There of branded bolster In us the partnerships our our in penetrate China. provider expanding to to profound bringing the fashion to capabilities, investments position. is solution and quarter, previous This e-commerce top is progress sector, brands investments on we allow further will leadership international the addition, also also logistics on integrating

in the also offer our in developments have this We Tencent progress partner breakthroughs system this will partner categories brand's the earlier its or development programs. joint offer for comprehensive cosmetics special our FMCG to operations And year. With the month. partners iClick, and on operating the well more package program a We its We business of - this exploring brands, track. mini brand begin we products mini for e-commerce year. we Group will later later Fashion is co-launched anticipate become Fosun for solutions to started

up acquired brand and progress quarter. is partners Jet development Full we premium new and Full broader actively of our Regarding during the sector, luxury successfully top I have penetrating as built apparel business On also the in Jet, in and business mentioned leads jointly the participating earlier, category.

partners We a are forms These with various with joined in the extracting value of portfolio the this and partners alliance Baozun business of pleased acquisitions our cooperation. year. substantial have various from progress strategic family our brand on rich new

brands disclose and appropriate is now As going going of our forward. to as only full store no brand our has number business forward partners metric currently in been evaluate operations very longer business enriched, scope longer no captures we our will much potential such

reengineering. page want to six. on I Turning give our business an update to process

continued success, integrating operations future into brand technology empowers service for technology and our our models partners. As we

centers. proof-of-concepts apparel We with BOC, model business we operation have have had some prototypes our and review long year now results after model to business several and such comprehensive the time quarter, decided solid in our such we company trials from wide. yielding. applied first And evaluation, In our fashion replicate in broader this

costs. improve powered to our business, quality the middle reduce As operational service to build technology a started our of transformation part office and further we of

resource efficiency our by We are scale and regional enhancement our competitiveness drive it in our ultimate the And office, to And more integrating of such or long our service comprehensive economies integration, is improvements Hefei the centers promotes Nantong operational. in run. and middle backed RSC are our daily up our our and goal applications believe and operations. make initiatives operations digitalized, We management will technology systematic. e-commerce into infrastructure standardized

efficiency We accuracy about XX% and trial have moved X,XXX improvements. initial over to RSCs, these in and employees the have generated

We effective expansion regional XX and year. driver over will for margin units migrating next service business we more an functions to such months, and believe are become initiatives these the centers next

our such, we organizational believe Lastly, in We the that greatest team, organization. people have in we to our And grown management structure. of omni-channel people the continue strategically truly invest particular, as broadening of to support asset an our services. are and

boost policies, in our with enables working believe quarter retain busy attract work We of quarter ensure has together move people will and This company. us system expansion industry best cutting-edge support is culture. grow continue and for that and HR second Overall, team, employee further our very new compensation a assured, our also headquarters But business. us. the track, upcoming we to nurture been tirelessly have of grow the and the talents and certainly on a enhance environment innovation. will culture to upgrade our we training growing The and the the of enhanced to efficiency rest our

Ever changing suite to shopping with the opportunities. headwinds ongoing from daily year, dynamics this the the both presenting anticipate life. are improve believe we that online we challenges increasingly of pervades for we deploy BCI of shopping experience e-commerce customers. solutions continuously second key half Therefore, While people's comprehensive us is e-commerce in and

strategic and the at will will evaluating the priorities go plan term actively business partner by pass that to Ultimately, and review will focusing partners. of brand and you. change market, and consumers be now financials. continue the choice we to are our partners to our Thank brand our proposition, We middle to all we over far core greater Arthur future convenience, on our our empowering are the with for connect may over existing I we accordingly. call believe

Arthur Yu

everyone. Thank Vincent. Hello, Okay. you,

XX% XX.X GMV, which to billion. saw CNY in nine. number total please turn We Now page growth by healthy increased to

and billion, GMV GMV Our XX% non-distribution billion. XX.X to by CNY increased X.X to rose CNY distribution X%

down it bringing by Now category.

especially and programs. growing mainly good double-digit omni-channel our continued strategies, year-over-year. luxury We momentum high year-over-year. in to and with the The Tencent last growth on progress sector This quarter categories, mini strong over both due continued from FMCG JD its to XXX% see performance growth is in electronics

the other year-over-year, mainly hand, brands initiative, the or which on the some international category accessories of negative is XX% our BCI, impact and due apparel partners. Cotton declined Better to On

new the brands from anticipate impact to likely delighted we this of we second are is While BCI domestic apparel in which sportswear headwind. see some offset and half continue the major business to negative year, the of

X% revenues Product X.X sales net by turning revenues to number billion. increased X%. service by XX. X%, Now revenues increased page to CNY increased by Total and

impact majority BCI has the revenue. these and the the consignment on happening us work end is of end to model, category service affected Given with furloughs in negatively normally of the that that most brands sportswear the full

but last sales flat XX.X%, Our compared from with improved ago, product XX.X% quarter. margin a was gross year largely

ago. XX.X% was bps up a margin growth overall year from XX XX% Our

Our take progress strategy. expected, omni-channel XX.X% as the made take ago. X.X%, in rate was down non-distribution a This model reduction year rates in we for from our was

In revenue to lower addition, reduced the mix as non-distribution the a change revenue contribution of a as whole. BCI take therefore, model, model led the in for rate consignment

as million, consignment take operating let's Fulfillment Now orders page As lower XX.X% rate look quarter decreased to to year-over-year to improvement impact CNY is model at XXX XX. of due turn an the of the on showed BCI. outbound itself, we to actually expenses were the in expenses

As X.X% a percentage ago, of to a GMV, by from the X.X% improved efficiency ratio fulfillment improvements. driven year

marketing were of digital our in blended marketing year and and percentage sales and talent ago. kept as a stronger a our the investment effectiveness result from relatively CNY X.X% XXX million offset digital improved from capabilities. Our gains, build stable of expenses marketing is a by services efficiency at This to GMV,

a Our as of last mainly and in technology stock to the and improvements. content from year, X.X% X.X% offset improved incremental by expenses for due were cost IT GMV to investments, CNY rise million XXX efficiency percentage

year XX million. this increased to variety was growth. our have reflects line the Our of in long-term we investments increase CNY the with to support expenses [ph] predominantly made expectations, G&A This

increased receivables we this an in And fees packages new best professional new the we our for industry. M&A half attract account upgraded additional omni-channel in And increased recruited year. activities our to order secondly, expanding And we also especially Firstly, expenses our first increase conjunction also to to in roles talents compensation headquarter. and the in of critical talent year-over-year finally, related the with our in thirdly, services incurred due the saw retain provision. for

the As X.X% X.X%. above, of from expenses as slightly increased a result G&A GMV to of a percentage

XX% non-GAAP EPS million, to XXX was CNY increase Reflecting an attributable of XX, Now number margin and and diluted CNY for CNY slide from X.X%. to non-GAAP our net ordinary X.XX the shareholders down additional please quarter. by CNY and number income X% On income impact non-GAAP year-over-year. operating X.XX, totaled year-over-year, The was XXX non-GAAP and the respectively, from operations investment BCI, million, XX. was page turn basic

used CNY to turning generated XXX of for a our this We number quarter. positive Now cash CNY flow and million operating activities during page million XX. XXX M&A

activities. level repurchase billion worth And very As authorized lastly, normal healthy had CNY our repurchase term June XXXX, based a of allowing equivalents shares. XX, a is program US$XXX and up of cash we to share a investments, us May which in to our X.X of on on operational of our XXXX, short cash, Directors Board XXth million

XXth, to Operator, our you, and the Q&A begin by inorganically. business, remarks. expanding our are June will of on from everyone. deliver of sustainable Despite our and our investing believe we long-term. organically session. growth. our term ready of we in customers execute our good to execute million second short we capabilities had year, during continue plan and profitable confident business quarter the concludes of our total As XX.X unique in We In impact repurchased have the our strategy [ph]. to this and a progress XXXX, two deliver to remain Baozun BCI, model, to made both Thank value proposition half ADS the now in we This will we prepared

Wendy Sun

Hello, operator?

Operator

first the [Operator Instructions] ask your Citigroup. comes Please of of question line question. Your Yap from Alicia

Alicia Yap

management. to sportswear a that mentioned. Good taking my you have question top I this for evening, question. Thanks Hi. brands related

seeing the brand. solid Just channels demand this issue? sports are all like has sentiment top the sports actually recovery that some and recover wondering, the like from of it consumer global alternative seems from this Because BCI

these sure just you also to the and sentiment any feedback this into early not seeing that promotional any these be consumption for we are simple sale for apparels weakness discretionary have similar seen by XQ slowing And down, also preparation you category? curious also there's you brand colors do of apparels on anticipate some know, accessory, any consumer And prepare do Thank these, as to are hear And overall period? to you. accessory trend. this anticipate I'm these continue if So consumptions on the if work will you related [ph] great. their So slowdown to revenues and purchasing on the - of wondering

Tracy Li

quite Actually, Thank large you, Alicia. it's question. a

like So for impact first, – want I the especially to BCI two category. with question sports and the the

celebrity sport the for mostly trends, improving of maxim to the in intention, see than and basically to with Asia's earlier going expect. next part do in live the like BCI, second we work of on continue And reflects - the half maybe has the But cause foresee I quarter it And to in to the endorsement. part the addition, four. category. So its consumer's brand Southeast restriction - continue coronavirus the the impact many disruption the and quarter stream business business the and think quarter our impact purchasing year. the longer or the supply improve, will the And [ph] in apparel lasted chain in of we fashion later

preparing So we in a potential the foresee there's for do stock. XX.XX

conduct and serving are the the BCI the they to We which traffic areas [indiscernible] marketing also, gap back sustainable you channel to traffic [ph] the if by at private larger. to team - in pressure half So with environment, I development months, release our the tactics very want will the mean, supported to the brands stock new on interim incremental recent in for work domain the to year, strategy. in we will see sales to also, And larger clients by right months our spending. the and the the that's [ph] the brands movement believe and Baozun's drive account merchandising or to competitive in part accelerate TMR they see next focusing have omni-channel play have from the still [ph] why the become the between now In also the will I and existing the are caused few aggressive arm place also next we And projects

So our [ph] combined further Baozun's with advantage. team, this, think, we operational advancing

will XX.XX Olympics We relatively in in to Winter held positive a have I February be the thing And highlight year. next want outcome is part. also the one will on

thing discussing with month we So a also about part, and the allocation second overall the currently, we And And and maybe over the overall year, grow like Tmall resource is want starting this consumption they skewed also are actually. there's trends of one clothing of anticipate the consumer, already category. for from to like market see overall the boost to on right, half discuss health-related winter the the is, I highlight if the their the consumption, the you data, XX%. the first attitude the also towards of

the closed from So see price a present. by still [ph] highly is driven this, we still But two we can to due the steady behaviour, after a X/XX. X/XX momentum our downtime during months low expect shopping

time So the of line public diminish moreover, data, home momentum. growth. buy. has again health breakdown X/XX.And that single consumer's the digit from transition has life we beauty desire see total constantly [ph] into coronavirus to online a grow, community and after appliance related And It and luxury slowdown substantial. can and July still [indiscernible] all the so always with even But been which a And increased but a reached August sustainable. you category, great July the show the health sluggish is relatively the has on period, the apparel, see and

our still forming think the the the [ph] and on the part, point view, the in - see the some I area. - confidence of opportunity has we trends from So think shown we have but downtime market

marketplace. potential flow And the with channel here. duration the time derived from new and development increased with is user headings in change this by the is the First traffic driven major of

and life, for and on why And trigger the in of like hope performance that also I quality place is the ourselves differentiate That's you. half firmly selection strive offering. of high healthy, will that's strategy. categories answer luxury, third our year. next the operation in why service to Baozun's rising of platform. we also omni-channel greater brands of the will also community the Thank And and top [indiscernible] more the some which further the traditional your questions. in terms second think So the advantage we our the the will brand is the gain

Alicia Yap

Indeed too. Thank you.

Operator

of question. Your the next Chong from question Thomas ask of line your Jefferies. comes Please

Thomas Chong

about Thanks, strategy share cooperation? going also, you. Cainiao? investments management And some we question. we update or management taking Can about forward? synergy see more to are how potential with M&A my going And for the Thank think should our

Arthur Yu

Arthur This Hello. is here.

So with recently announced partnership I our potential we Cainiao. think

very to So be network, when reach customers. there cost enjoy of synergy into economy get between good the to in account is there is and focused at at. into customer Baozun the on we on better national are logistics is a Cainiao Cainiao we have good what factors good customized reduce specifically to we more luxury, Cainiao's this also potential take able a partnership. service And both is what [ph] two and Baozun for One main standard and very is we scale the if more the out focused sportswear. bespoke will and And is the for - secondly, goods. to

win the we will So two market therefore, think share. of combination help more us

overall, So focus actually look that's M&A our strategy of at to when on second key Cainiao for we year, on areas part. the four half we this In the value. create

first to to or The value Baozun at the additional customer. capability to additional deliver looking help one, building we're acquiring more

at looking the are we So CRM.

also at looking the live are streaming the We services. and data

we also we a very capabilities the these TP and the value still to more diversified to So quickly build proposition. are And JD secondly, looking partner, know, as marketplace. our the are in all we forward enhance are

consolidation. the So looking to is for what we're do

eFashion apparel proved recent really terms in has the deal share So in market of expanding with our category. successful our

we connection to the So opportunity to consolidation. enhance for will for further our opportunity look use continue M&A to And more look with brand. thirdly, will we

create example looking management with where the we some expansion. brand for recent that. created can finally, the deal underground opportunity will together, at overseas by value closely Fosun Group our Fashion more for good And company has are more our working [ph] continue So a we the

Asia, Asia market. great between replicating there the the market of similarity thinking and are has a where to mainly on focused Southeast the Chinese We the overseas and market Southeast Baozun's capability

So that's going our about forward. M&A strategy

Thomas Chong

Thank it. you. Got

Arthur Yu

you. Thank

Operator

Please comes Your your next of question. T.H. ask question Hou Capital. Tian line of from the

Tian Hou

of questions. Yeah, management. I evening, Hi. a good have couple

one first is composition. GMV regarding The the

wonder from one. the brand now contribution internationally, you the as you the partners? different right So for know, what's acquire GMV? third different such the what's the we wonder know, That's regarding The GMV FMCG, I electronics, Number what's number categories, domestically, different their what's more two, categories contribution consumer one like as omni-channel. so brands is from contribution I apparels,

of and days. So we TikTok question. the participated a you Thank e-commerce three promotion of you. That's that I has where just wonder if the saw couple Baozun result what's the guys activity? last

Vincent Qiu

first will take and can Okay. the take maybe two questions, the one, Tracy yeah. I then last

number on our for as GMV, the is at overall women's I And So you But account XX% turn the terms you if five, our actually a to the GMV, impact, in XX%. complete and electronics BCI the is the of it's totally sports the FMCG, finally, the actually The And the XX% performing better, due right digits of - double earlier, for about year-over-year hand it slide on actually from category, this side, within overall about and at mainly you see year-on-year if year-over-year. clothing. account XXX% now perspective. which [ph] of our But XXX% XX%. high over luxury GMV. look accessories for mentioned grow men's apparel appliance it's declining the can and XX% for growing - accounts to

So that's our of composition the GMV.

in China some this some of in in brands we several domestic have electronics from China. of been working brands, contracts far. sportswear But major also we the quarter, mainly In may have large that, terms we global global majority so and some the the our Baozun wins contribution of the know, said the - is progress. made good from kind new with partners, brands We top major brand as company had and revenue having

brands create making really So domestic are in value. progress is major to we China. the I the key good in mean,

the help business looking see major deliver is this time. in we partners grow a for them So to Baozun to to domestic value, this if from moment business more their customer and at which were wants

question my the that's So two… top for

Tracy Li

past promotion, I - rapid situation, And indeed specifically first diverted channel. time to XX the of has actually of the development the e-commerce users all, to in Douyin the think, especially from August Douyin their I

e-commerce challenges, angles. to divide and two want for is this traditional the is platform seeing into So But I true. that in part,

I of KOL few past by in XX, in still the GMV driven think of months, even all, First the August live streaming. the majority is

from bringing KOL actually [indiscernible] choice, I So too. on point and accounts And benefit other I Tmall them, stronger. financial are budget KOL compensation is I on used is for in like will want And to emphasize the live think also the opening of to is have But celebrities is the for Douyin – see shifting But it also this Douyin, brand streaming. relate think a too. can angle view, and other you brands open more they more do their from to now in the portion channels. flat and the of And more certain choice to more from sales

verify successfully also, the more in team We few than XX We're brands few incremental the months. in also Baozun's value - to think months. the I having projects we channels testing of emerging past the past launched self

also XX for than the it's channel. we category, And roughly, right. XX% good they good younger, than Across signs we news their traditional point is traffic the helpful continue with means say, consumer e-commerce selling some two only for less the outcome But client seeing it's I mean, the capability to to from have we're the overlap on for is, sales top top Tmall different is a I the Tmall Douyin, of the in It's want cost view, think XX%. base. our consumer if on lower X there's the value, - also very little and products the our side, the our differentiate is And And also or of to verify also and longer and Douyin this relatively on of the on product will Baozun's product slightly also, and this. And in think the can which overlapping Douyin, also invest XX%, younger cost need it's operation also between monthly years selling brands Some channels. X of - I term. the stable other seeing which strategy, also, strategy sustainable area. in prove - attention to proved reach thanks like different

Tian Hou

Thank answer. for much the you so

Tracy Li

you. Thank

Operator

[Operator of next Charlie China line Chen comes question question. Instructions] Please from ask the Your your of Renaissance.

Charlie Chen

Good question. evening, I Internet to conducted only et one to basically series question cetera. management. have data related know a taking as of Thanks has we for prevention government personal which regulate my industry abuse, issues, activities regulatory Actually, the Chinese that regulatory and includes of

marketing investment in abuse, this So So of preparation for do anything they have yourselves does done action regulatory, business your And decrease will terms this data with Will you. how change online? your specifically the for the of would personal potential in kind changes? that you how this ways activities impact to digital relationship brand partners? they position they in or marketing? increase Thank

Arthur Yu

customer different for consumer regulations aspects. we mentioned, and the the of Yeah, have about received data information about I from talk recently, security. from from almost to question. the ready think in protection. of new to Tmall from keep we for system together are to we a in-place data you us of Okay. as Thank to there's Yeah, ongoing point sensitivity face different already Tmall newly, thing a the the Yeah, way, basically, need lot consumer I regulation reactions the let's acknowledgment connect data. think the protection Tmall view, take Yes, you already with

be what kind process. of will new no general, smooth, business matter into the programs So this in process added

All and that the is – changed. their business place new - consumer the this one. two, your it nothing is not and I for right perception yet. experience, think on for for question the from clear system in So is good so not will the normal in about the shape, number now Number process brand very actions, be because

But change will ready way. smart do know for Tmall now, be on are in big I the So brands marketing a think we things quite their Baozun market going right marketing to are is allowing expense doing how digital there And digital them we that to ready that, change. to this help And different way, a a platform. don't consume the for digital investments. after I think in to

yes, is for think big influence the Yeah, - process, will basically is that general this very thank you. we So a not there I seriously. take business but

Vincent Qiu

more And just point. one

I'm Vincent. So

has into our classification [indiscernible] private So the achieved making us investment we from will now data a government. have competitors. have Level So given data and we the the for securability technology, Baozun that been differentiate These security continuously stronger from the security X

Charlie Chen

you. Thank

Operator

Your next from your Please Ju ask comes from America. Joyce question line of Bank of the question.

Joyce Ju

Good questions. Wendy. for have and my evening, Arthur two questions. Vincent, I taking Thanks

The decline. And is this to grew seen grows growth. first FMCG sports very grew have the sees one strong. And nice. we also like while actually mentioned, like quarter [indiscernible] category related annual and electronics you luxury

And seems seen to Just question get and the growth is, third [indiscernible] the perspective? more this color growth with in second pretty outlook fourth the terms for category GMV like quarter want we the or between wide. growth quarter and revenue our have quarter update of the gap

a should color we Thanks how actually or and Just forward? get terms in this details the want to going what's trend understand more of lot.

Vincent Qiu

is us. So Can Joyce I second you to think sorry, question I repeat? think, clear the very not

Joyce Ju

Sure.

quarter revenue the I gap. a is this pretty think wide GMV the growth there growth seems and

- or actually understand expect And we narrow to to the forward, - to behind. should how how should what's this reason gap that going want we Just sustain?

Vincent Qiu

you, Thank clear.

Arthur Yu

is Arthur This Okay, here. Joyce.

and by [Technical as the mentioned those from channel. of in channels, channel think, in the we I JD mainly increase the contribute And program also the the... prepared strategy strong Difficulty] our the two GMV mini are and remarks, I mainly omni-channel terms in

Arthur Yu

Joyce? Hello, me, hear can you

Joyce Ju

yes. Thanks. Yes, Hello.

Arthur Yu

Yeah, okay. Yeah, I will continue.

half year, mini second FMCG from driven the our and and in continued So which the the the will we of growth program. from in strategy by omni-channel see in the electronics is JD category, mainly

is the is to dropping, I rate Regarding this actually the question, take mentioned think you second anticipated. so

Tmall. are the to time, deploying tried I in the channel in the new lower we margin than last as omni-channel, now As the into mature explain results channel, is the more

a the the in of the the in faster grow investment grow time. we business of the are to program, especially we for as making period still omni-channel, in stage mini therefore, longer So over

a we And of improve our the reason see size the and significant investments as margin have after medium will in traditional return, and the we term. longer why see channel new have cannot So business, no built greater the we profit a will add channel. the

So for. this what looking is are we

Joyce Ju

yeah. great, That’s

Arthur Yu

Okay.

Joyce. Okay,

Joyce Ju

thanks. Yes,

Operator

comes Your the your question. line ask Xu question Please Suisse. from from Credit of Ashley next

Ashley Xu

me. Thanks question. are taking two my There from management for

stores? portfolio? growth. testing the more question have the this brands be international cautious think brands already Thank I the by that Douyin Firstly, tested for apparel most what to channel? names about is the on BCI brand And brands, been launched or my my are second have platform our the would rest growth impression given check you. the have If communication the of in we the - holding of new want been do what issue, official from how our many impacted exclude have them And with is that of the you international new some back

Tracy Li

I with I'll - developed part, it's strategy. the I And Douyin. I of Regarding them think channel the our compliant say clearing driven a implement the on strategy now, operation the traditional, right because is a on you players current It's majority actually not agree most formal by is pipeline brands. actually very actually, is local Douyin mean,

the the want and first is mean, the the environment Regarding on on and store Douyin from the views live on part we why their streaming, to - mature they not KOL - and the also expect now. and by economy, the That's open - chain which itself. next the right I air and see to followed the flagship channel driven itself. right the and by by angles we different the now still try also wave months. now, of KOL driven apparel The cosmetic is product. want they brand even - store, now, they But sports I now. few other It's still in flagship overseas value is also hand, there's the majority brand mean, I consumer category right is think how the say supply of business very is our right opened their category the the means emphasize brands, to But by I some

channel. treat we So our with [indiscernible] on Yes. pressure the but

Arthur Yu

can question because XXX% your clear On Arthur Hi, I'm your again repeat your you second sure question? Ashley. question, I It's here. once wasn't about

Ashley Xu

we that, category the because apparel year-over-year. already disclosed Yes, is declining XX%

Just groups, want impacted is two its much how about [indiscernible] the separate, into get issue? a idea Like being to this the by the growing? that brand portfolio brand not are BCI

Arthur Yu

Yes.

at a portfolio. we of range look you if have so different portfolio, overall think our wide I

growth the strong are a and the volume we is category, high even BCI. in double-digit spotlight sportswear within the where But in though is have apparel the apparel, So this sportswear, by in a year-over-year. very impacted traditionally with luxury actually

and that apparel, look actually one - category we've strategy - grow at Even seen the if wide where healthy. growing. apparel FMCG of even our you the So you electronics, look omni-channel of I is at the actually the the will the mean though wide that's category. Outside very

grow So some over category or double XXX% digits year-over-year. even the high a even of in

So this we of BCI like Baozun range model wide different times get is difficult of a Baozun within helping the us where categories the business through a [ph]. theory have proof and the to

Ashley Xu

you. Thank Okay.

Arthur Yu

Thank Ashley. you,

Operator

of JPMorgan. Your next of from question. Please ask the Andre line comes question Chang your

Andre Chang

Vincent, in you, investment question Wendy. Arthur Thank the and There changes are the and front. environment. regarding front of consumption overall lot the regulatory in My a is current the

next like next the attention to investment of cash use what's second your think the the one-off year the year. also how pay non-operating should - this Thanks. year and front to the should items we if half wonder any this on the How of about impact we year? into half I and plan second So and the in

Arthur Yu

you the Thank Okay. for question.

like flow take all, more of is ourselves, more more is where current difficult. very restate I account overall, and for is funding a that is - first our into to think, cash situation factor plot able Baozun which operating if important the means I would [indiscernible]] the you create in are we to which positive,

So with either that, secure can build faster. our we use currently we have CNY X.X billion investments in operations or grow cash capability reserves, to can our to which to it make we

the areas for I as So in question different investment. future four earlier, have the we mentioned

period overall, this during So - period this we because will in key. more cash is cautiously cash but the use

whole company. emphasis And put we acquisition make when an we for more we investments, more have a or for be So will target the will the target when we on higher select be we'll of successful. will that liquidity investment certainty the more and we cautious

cash. to So the going to plan that's are how we use

Operator

the your Daiwa. comes Robin of question. Your from of question ask next Please Leung line

Robin Leung

Hi, of taking It's I Thanks Robin behalf Choi. take on the my management. question for question. rate have on asking John follow-up a trend.

the that This XQ, management is mentioned the BCI actually quarter, is new the channel year-on-year decline than because - non-Tmall its quarter, lower even the of But also think decline contribution. mix this more. but and I

to it's pick help the how a If in should outlook domestic revenue Which second it also think impacting second X over at And factor every So But this I should take mid-teens. mention the half. offset. years percentage BCI the the is And did my more? the on new between the to the rate will second decline growing we take in quarters look the think usually, few brand CAGR, sportswear takes quarter? point expect to up. we is we quarter, half? about and trend question the channels X by rate Management also, at

in will a Should should Thank meaningful we XXXX? expect mid-teens? So at we expect XQ XQ also rebound you. grow and

Arthur Yu

Okay.

rate, and question one So is two omni-channel the there largest the rates. factors on are take on the the think Number take strategy. impact I first impacting

I earlier, will are an second is dilute our mentioned rate. take the so the factor investment we But also in BCI. As phase, that

BCI is impacted categories. Baozun's the traditionally know, we high category rate As take

non-BCI as where XX.X% Baozun's excluding it the our this, model consignment a So the improvement BCI whole, model impact impacted, of if year-over-year. out if a have shows BCI you we take an you [ph] actually to look at

the have currently rate normal out So new economy to reason for why mentioned we there period of enjoying channel. over we basically, when we in take strategy, channels, - And take we is actually those the if Tmall get a the as it's take I actually it's time, then out are as cannot and year-over-year. the we no BCI an omni-channel sale the earlier, of improvement back

rate. So that's on the take

will pipeline customer, question the have high in the But GMV. strategy. will second terms we probably to kind and we impact of QX I impact for and BCI in are in maintain rate very of And our of confidence with BCI still strong our confident growth likely in GMV, there omni-channel be that terms the the good the of On quarter fourth the even the we think a a in QX. confident third we given the are omni-channel growth

Robin Leung

Got it. Thank you.

Operator

questions to Sun no in Seeing you. let more back turn me for the Thank the call queue, Ms. closing Wendy the remarks.

Wendy Sun

of for call. behalf In management we'd you Thank you, in participation operator. Baozun closing, on to team, the like your today's thank

joining today. any call. information, the you us. reach out for further If require please This Thank you to concludes free us feel to

Vincent Qiu

you, Thank everyone. Thank you, operator.

Operator

again. all you Thank

You may now disconnect.

Baozun (BZUN) 19 Aug 212021 Q2 Earnings call transcript