BZUN - Earnings call transcript Q3 2024

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Operator

Good morning, ladies and gentlemen, and thank you for standing by for Baozun's Third Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded. I will now turn the meeting over to your host for today's call, Ms. Wendy Sun, Senior Director of Corporate Development and Investor Relations of Baozun. Please proceed, Wendy.

Wendy Sun

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

Newswire earnings available distributed at on well on XXXX call before ir.baozun.com quarter as is and our PR third release earlier was this as Our services. IR website

PowerPoint We have the IR download. where website that your our are for comments same available presentation they also to accompanies a posted

and Officer; Chief Baozun, Yu, Chief Zhu, and Financial Officer management Ms. then Arthur today who that On will by Mr. business Brand Qiu all be separately. company Qiu, Catherine our the answer to discuss and from and Management. call Huang, Ms. Chairman our Yu about will outlook Huang They Ms. Vincent of Mr. Baozun of questions Baozun first E-Commerce; session Mr. will and highlights, President have Q&A followed Financial business to during the Mr. we and share Ken Chief Executive Ms. strategy follows. available by Officer; brand our your and Zhu, more financials share e-commerce

we difficult the known which are which may are U.S. a Before statements Private of of Securities as like meaning Act that upon as other and which control, risks, and on involve the results statements company's are as or regarding other the relate is that or all beyond forward-looking company management's and the Further not actual Commission as current expectations of unknown in Kong market current information and assumptions required you and except and this and Act XXXX company's published risks, the within contains uncertainties applicable of remind company based predict events based and is operating cause the conference Securities Exchange many to information the call Securities forward-looking to and on conditions the All Stock in U.S. factors, of to and of Act amended, this this any Litigation the call that announcement forward-looking of undertake filings to with XXXX as the XXXX. U.S. is those forward-looking reasonable I U.S. hereof Reform the to of mandate Securities the included other begin, would Exchange Limited. website differ law. update or documents statements, provided Exchange of be these from company's Hong date, in date the uncertainties obligation to its any notice materially the factors under statements. does and of believes These

mentioned this in Finally, please note figures during all are RMB. conference call that unless stated, otherwise

place may In to may our go accounting introduce ahead. from adjusted addition, or Vincent Chief overall financials about to grant. It elect Mr. use to now and Qiu. Vincent, GAAP the in operations my related in cause pleasure discussions is we confusion and Executive reduce to that principles of Officer, non-GAAP our Chairman non-general order accepted please

Wenbin Qiu

Wendy. and thank for you, strategic our well everyone, on is with pleased transformation. advancing Hello, to your report Thank Baozun time. I'm that track you all

of strengthened the in reinforcing GAP top from apple-to-apple year-over-year that has further with also increase, on contraction capitalize XX% and sales. triple product BEC resulting approach integration on reflecting following our services our total our initiatives Douyin, Baozun's Our our trends. commerce. and line XX% location commitment Notably, the strategic year-over-year, drivers. both consistent in have innovations BEC the have resumed business a leadership BBM by first of alignment. fact, the achieved BBM strength grew Douyin in our digital China. and key brand Both driven grew presence from operational expansion revenue with directly in by revitalized revenues emerging year-over-year, the since enhanced XX% acquisition, revenue growth These to by increase, and launching and years improvements a growth digit

also channel to quarter District, store opening Week, underscore capabilities and efforts generated during network. confident sustained instrumental across Hunter's our of in Fashion about Zhangyuan. and that was our summary, has visibility momentum. brand local progress remarkable categories and attracting top by I'm and This of Hunter Golden partnerships QX brand drives appeal. In momentum integrating bolster growth line brand refining of sales. in a These insights progress equity sustaining we optimizing highlighted launch has the product we a and management localization attention traffic build and been the solid momentum segments. been The anticipate business Shanghai further recent widespread XXXX. initiatives resources pivotal growth in and our global have made networks, with High as Our continue pop-up this

Now let me Catherine financial for update. pass to

Catherine Yanjie Zhu

Vincent, hello, everyone. Thanks, and

for year-over-year with XXX services rising share plan, for million. launch self-incubated increase results such model, well with by X.X in the Of marketing business business plans. Please Baozun mainly sales XX.X% revenue partners our exclusive time This increased higher year-over-year under merchandising the along for turn and those XX% year-over-year this, to The third sales proportion XXX and Mini the XX% e-commerce our procurement product due quarter. in by e-commerce contributions to Douyin grew the me level was gross distribution was decrease increased increased quarter. and the of categories, product was revenue growth of rebates, product Programs. for X% in #X. turn last group million first #X. in the resumed to compared brand to same sales mainly business with since more margin our e-commerce of the solutions was net driven cash RMB financial a billion. for performance mainly this from RMB in Slide stronger approximately revenue RMB XX% revenue profit as a channels basis, performance IT as Breaking by XXX improved of product revenues to previous RMB period promotional proportion XX% XXXX growth same This to sales a billion, and margin by detail. Please in our compared you of margin margin totaled driven margin down last BEC compared perspective, gross to year. quarter, the were of increased XX% while and like-for-like mostly for last comparison year. e-commerce rebates was digital XX% brands great sales flat beauty the from down million. primarily points key BBM relatively the to to year-over-year period Gross for X.X let management was model. at BBM and transformation from basis Now billion same total the expanded as cosmetics million. Tencent XXX a Group's From our emerging XX.X%, product brand quarter blended to our growth by the RMB from XX% by reflecting quarter. revenue to RMB XX.X% Slide e-commerce On to RMB growth by X.X segmentation by year. lines, growth XXX the period attributable gross Breaking gross revenue gross for for This product rebates profitability grew the

Please turning bottom Slide Now #X. refer items. to line to

totaled XX operating e-commerce from loss loss operations million During in BBM's RMB ago. the of of same million XX last of with improvement adjusted loss RMB RMB RMB totaled compared from an to XX a RMB million operating from segment, of million the the million year. period compared RMB million last of RMB period XX an of XX our XX adjusted year million This X an XX adjusted quarter, improvement in a loss year. million, RMB included same

attributable loss XX in RMB year-over-year period for to net shareholders an improvement same last year. of quarter was of million XX million, adjusted Our from the XX.X% RMB the

XXXX, restricted short-term cash cash billion. $X.X equivalents, As and of our and investments September cash totaled XX,

trading including, beginning the impact our trading of rights. management's limited the year. Lastly, statutory as we and our have open execute well volume, for Hong approximately the as adhere Hong continue at Exchange, U.S. the our and $X.X windows shares million program. and stock that regulations to Kong requirements in program Year-to-date, have confidence million Kong not share company's of X% on repurchase approximately compliance our market, to, future. Year-to-date, outstanding and but note reflecting Stock X.X ADS applicable must repurchased to of Please we repurchase daily total repurchased through we NASDAQ voting

repurchase As share through of million. Board, today, the XXXX remaining $XX is our program amount of our effective as authorized shares by January

you now me update Let pass the over Arthur on to to business. BEC, e-commerce call our

Arthur Yu

you, and Vincent Thank everyone. Catherine, Okay. hello, and

in year-over-year X, quarter BEC We XX% revenue a to achieving report glad its continued are growth that increase.

our strategy resilient improving year-over-year. a services trend recovery growth We upward transform believe further year-over-year healthier, business revenue and reflects BEC sales top achieve made diversified XX% Product momentum accelerated and Our a following contraction. model. the grew of notable its more a progress line the years of to XX% towards to also

Now please #X highlights for operational turn Slide to services. on

luxury, foundation setting displayed growth, Our a revenues. core categories, consistent including apparel solid for service and

brand boost are Our marketing awareness on actively online. brand omnichannel to and with partners creative engaging content us

the Our Festival. prestigious Best E-commerce earned recent continued award the digital including at innovations top-notch Year in had of recognitions, up industry of marketing Agency several the ROI

projects. streaming omnichannel expansion, sales-driven delivered terms high-impact growth luxury theme stream brand a for This triple-digit a several live year-over-year. included brand We In an on brand-centric focused for leading brand. a of stream Douyin live automotive international and live park our business and achieved

visibility show enhancing conversion fashion and high-profile brand our significantly for partners. multiple hosted we addition, In live streams, brand sales both

high recorded and on growth like also Program Little emerging we platforms Mini Book. Douyin, Red Beyond Tencent's

substantial strategic this continue and to As and drive Red content-driven we a Little made our point rising clients growth we platform. it have on right operations to a marketing for partner Book, focal services upgrade on will

optimization furnishing the highlighted our lines prioritizing strong in quarters. such Now growth #X. Categories low-margin was product by efforts beauty as cosmetics, achieved of of double-digit and and kids turning growth. projects mainly The to as business sales completion high-quality product and and in and home previous sales Slide baby turnaround in on driven

resilience. and toys, also new diversification with initiatives business our further We metrics category strengthening our and in apparel trendy expanded

the operate, distribution growth sales our coming We expansion Among anticipate Regarding exceeded exclusive Joseph business expectations. the quarter we product on brands Joseph kitchenware in brand brand, we & channel our top and line sales improved high-end far quarters. our this profitability and British marketing. the are continued business, for performance focusing

we through the application of to top healthy efficiency-enhancing growth, measures implemented tools. line AIGC addition In also a building

needs, delivering respond to consumer high-quality During launched our assistant, personalized, service. understand the quarter, intelligent and customer we S-Whiz to service quickly

update me provide on festival. recent XX Double the quick let a shopping Finally,

value double-digit all sales. total partners growth. reached all than XX% more Douyin of double-digit the channels, with Across including than growth. their high year-over-year doubled and growth in achieved we gross we Shop, campaign, half more a participate achieved Our JD, VIP year-over-year and Among Tmall, brand brands order record the

rate the return recent efficiency. dragged the down record While overall also Double was operating high XX encouraging,

recovery. consumer As due to slower-than-expected we cautious macroeconomic we remain headed and into pressures quarter X, persistent a

committed competitive brands the are helping to succeed in We in China. market

I pass Ken update will BBM. an to on for Now

Ken Huang

Thank improvements while with remains insights an you, thank GAP QX turn Inc.'s More September. reflects despite years, achieved preserving that early sequential BBM of the to us I'm growth products and top brand all. Please pleased apple-to-apple development partnership close revenue initiatives with additional This our challenges. Yu, tailor the first integrity. in making local through ongoing global a on strategic to encouragingly, GAP QX. resources year-over-year for into preferences the BBM's you report line to a from collaboration momentum XX% our central macro plan. July global This enables growth, success through steady Close for Slide #X basis. demonstrated turnaround to recent to sales progress

[indiscernible] as We our create regional such also incorporated seamless global a experience appeal campaigns customers. for satisfying for and to

planning execution product of alignment efficiency and and and across to from to chains demand. supply ensuring enhance delivery, optimize design to availability concept continue with better We consistency

channel-specific and baby, in and Brand for products the with strategic more account both a for implemented channel over which the the online On adult our During quarter. for introduced particular, product the we in exclusive quarter, Show the aligned of drove to the Douyin, pricing participated and XX% cycle. reason we life sales Super kids

in gross opened online of Xi'an, including months. conversions stores, strong We XX margins. In sales enabled This Shaoxing such in terms QX, as stable as well of rates, the while expect conversion us as meter. Shanghai. stores exclusive gross our a Urumqi, new productivity stores margins square to coming approach healthy driver and These monthly higher per we major continue and sales high-performing products achieve being delivered to Beijing new impressive maintaining

on we continue our our to store communication, while As mentioned new capitalizing store previous to emerging philosophy in markets. opening maximize in fine-tune productivity opportunities

to have we be Additionally, environment all shopping enriched ages. family-friendly enjoyable and the for

not X are collaborating Going leveraging new the market partners A existing on to in and forward, strategy and will the success, GAP's increased local our new to consistent landlords with Tier neighborhood demand also but we ensure potential potential. focus quality highlighted nationwide emerging and long-term high-traffic with identity local for align expansion partners strong our risks. brand and flexibility and They only confidence areas in their We will X believe goals. locations, the Tier that time, partnerships roadshow brand mitigate cities. market recent products same enhance commitment operations. in openings with localizing At expressed and franchise and our cities appreciation

We are by on the our new to store total footage stores, XX meet target of annual year-over-year XXXX. end track of increasing

recovery, of X summary, disciplined opened stores and direction. QX. In offline under remain a to end XXX number of Shanghai Singapore, management X despite strategic in Hunter X bringing we challenges the gradual in the the our consumer new stores, Additionally, of we by our in total

localized global prepared drive are growth our gross margins. That the us line and to healthy now strength Our maintain ready engagement, GAP's we Thank brand you. well session. to concludes our with top expand begin positions on focus Operator, coupled footprint, remarks. Q&A

Operator

[Operator Instructions] question first today comes with Citigroup. Alicia Yap from The

Alicis a Yap

I questions. have X

that, expectation specifically, observed question Day, your any there's performing which than Singles' expectation? how tool. your category Singles' sales slightly which the better is then the during differentiated than can and then if your compared Also second related that Day? during your management category this shopping worse GAP is overall advertising you And behavior First China wondering year previous to this the is year's to year? And performance elaborate performed

out tool, so AI embrace bigger advertising even opportunity? the to the So future? will rolling or more seek or there Baozun smaller help be AI to seen more could have how So capture platforms the digital you helping them targeting to be eager actually anticipate might in the from with domestic Baozun brands, more especially campaign you technology ad better the brands do need on do

Arthur Yu

some Let answers X questions. me provide the for

think the Day own we this our a for first Singles' performance I year, The actually one regarding from performance the solid of delivered perspective.

luxury, So our like and basically, appliance which are well The which The and are for is expectation. the our park, all small below strength travel, ones which the also XX not are performed is omnichannel hotel character theme slightly this sports which Double meeting and [indiscernible] key the true pretty Double actually expectation categories apparel, the year our XX. are campaign. the during

shown model period the also, which channels higher. is So basically, rate major as I we mentioned rate have growth, business model. double-digit the Double longer been earlier, and which all omnichannel the towards and is cancellation business return means has there and more XX has our us has a of become character also And is seen a

infrastructure capability to actually more like. provides Baozun giving our the really this they but because period challenging, is also and stand-out the provider this during brand, So campaign which like our service service service stable and period a IT the

So like XX. is comment this Double I what on to would further

to aspects. couple the of ago. business technology apply AIGC from we is help Number efficiency. the operation our the AIGC, AI improve from business our years perspective, And to will X started to Regarding one actually a

operations. mentioned reducing each so notes, adopted a lead to helping I for time, quality called successfully the service our time customer simplify new this tool quarter, they the of the work, which the As do improving the same way service S-Whiz, in in prepared we agents average at is

to and to which planning the one. decision-making is we give brand. Business the to market tool better can Baozun this pushed brand inform the with operation So our Baozun, strategy. and thing, them a And a And call out help to are analyze data the informed we from AI collect helping merchandising what our second Intelligence, recently is better

So the those. seen we those tools applied have day-to-day we AIGC are operations, in the good and results the from how

Alicis a Yap

Maybe Ken can related address the GAP question.

Ken Huang

The and Yes. platforms. double performance GMV not on of And sales and only final last apparel performance on on X both is compared performed men's the explain. on in digits. GAP's net And other XX, platform. on Tmall by actually Tmall this Double sales JD stronger we year, The year. even for increased sales ranking increased This I can positions to

we with performance total, in Double sales satisfied So of on XX. GAP are our

Operator

with comes Frank CMBIS. question Tao next The from

Ye Tao

I strategy. GMV platforms this see the operating your trend? trend We've question this to have operating management live I does to be your business ask slowdown year. growth regarding e-commerce And in a streaming would coming how like in rate there a quarters? business And will of adjustment some noticed the strategy

Arthur Yu

Vincent is then and maybe it will required. more if I comment add can

point my as view, mentioned, I omnichannel operations. from we basically, So are of already

do service helping operations the our planning So make or and tool of different e-commerce to business. based terms fundamentally emphasize to to to forward will EC put the a the brand in lot put a have to they solution decide what of of offering And in the where now on to which because not the developed trend and resource and more that, a analysis change better are we should lot on we to how platform going our channels them to. resource them is help decision

the So drive Tmall in helping performance. strong a us stronghold which That our of and also given one. is seen this forward. the first and on sign, is And we our terms good this to overall a year's XXX, business is during Tmall Double recovery have one, second is XX

Wenbin Qiu

Yes.

platforms across is means capability that So right or all components. now, a in each we no e-commerce -- streaming it our established to service capability deliver services the the all the channels have the to matter is already and That of not.

little a about trends. Arthur just business of right our tell the dynamics the So close look channels. intelligence now the as a have all can us all mentioned, we support and And channel future

allocate of the to platforms the resources future a each for on of So the judgment better get result. we depends can potential

Operator

from Jefferies. Thomas with comes next The Chong question

Thomas Chong

so about is categories -- is performance XX? And outlook consumer apparel, question first X for the luxury, appliance? second sales the about questions. is in electronics like months recent have post Double should think My I how monthly how like my we and FMCG question

Arthur Yu

I Post from and will weather Double XX, we by for there's apparel a the think promotion year's given the given the December. the hope we seen lot big this into categories. discounts colder, be terms especially getting a of with a Double platform. of heavy category, all But all there going in the sales recovery have XX, sales softening

the So overall. this is

apparel luxury next And partners overall, being the think In Baozun we year growth terms that, the outlook able to into is our flat for brand a I the provide I the think what relatively service FMCG categories, have rate Having of is and seen doing be year-over-year. we has operate. cautious. been high-quality said to

decision help Given there to under the terms succeed. the terms of cautious, business with they market infrastructure of which to even across we think good the capability are to that, how relatively in operate very lot all are and a to though the a make market brand helps but them become to all partner of this the the them means who omnichannel, forward. huge think like is capability market, condition, outlook like which starting for drive building, a And in overall to I emphasis partners Baozun current partners a to put their and has Baozun, opportunity

Operator

next [indiscernible]. from The question comes Instructions] [Operator

Unknown Analyst

I have questions. X

growth The is has that XX campaign, impressive. very first lot for the the also also this Double clothing rate and is category a year's invested in JD.com

many we how is Baozun's seen my have reported the brand return second high. in Ralph is media Lauren that the this very that So layout question rate of is channel? And

in Baozun? category by consumer the And comments has the significant a clothing what operated increase for return Baozun's been on are in and So especially rates, there this? brands

Arthur Yu

JD to in and partner apparel strategic platform. think a Yes, have we have And good most them. have a the [Foreign very working a closely And has the as sports which also Baozun performance strategic they a we with to as the we XXXX means result XXXX, category. Language] partner, been voted partner good and high-level drive are of seen been JD partner, growth achieved we from

in top a one our And X of XX the operated GAP also brands from operating performing luxury Baozun. JD. JD, top brand a brands So are brand in them perspective, basically, from by performance-wise, of is

very for size this apparel JD which help to So Baozun terms having how of But small, and in JD we represents a said push this that, means to huge forward. further still is sports Tmall, small compared on the succeed category platform. in with overall opportunity that

Now Lauren. to Ralph turning

the So noticed about we Ralph also return high news and Lauren. the for cancellation

in brand is see are sorry technology impact during to is Lauren our help the our you sometimes a Ralph comment. within can is We which to Lauren I brand only the of within terms period, very is because to a the back put help operate impact with very means terms the can e-commerce that, though minimal. to we Double not XX how the cancellation, there This the to smooth the period, a on we once there business Lauren. But a of in high are product a but minutes, Ralph we to the system what the Ralph shelf in business. is even And share of negative cancellation position rate, cancellation very but for short couple

the what impacting is target. I the business can the for GMV that Ralph result, but which not cancellation have on net exceeded Baozun, are to you hugely. Lauren a target impact the is as business levels we And share minimized is very the to rate high, with So

yes, also the our brands So are and happy with service.

I that is the issue, an even question. hope an still apparel, to tried high still high we problem, cancellation your overall still of see single-digit answers return perspective this terms performance, year's that a In from though solve we increase return and terms from rate cancellation on but the of in overall. overall operation

Unknown Analyst

ask That's more to question. want I And very X clear.

our encouraging observations BBM quite seen the that output for apparel compared have of industry. in brands We department is to

about So can as line trends the more well? share top management

Ken Huang

to also performing strategy, performance the Super to online as very into especially product faster the And in is on as about our commercial is because and this responsive improving. the such hope is are And new facing you traffic first meters also think strategy Baozun this help sales sales square brand our offline, our Douyin very And higher to new flexibility for per it than brand not our like online flexible us more growth more the a the increase be portion but with the expansion And Tier in I although explained as also brand show have for fully JD, is X and I performance. store platform. but overall our asked answers QX GAP, BBM also increase help recovered, product requires and well us encouraging, QX. and cities BBM, expectations. to is For before, to our big still Hunter Tier strategies, on platform quarter-to-quarter strategy when the X commercial the especially well the question your our a what this questions. GAP, sales different performance,

Operator

comes question Securities. Jack with next The Hou Instructions] [Operator Huatai from

Jie Hou

you. for questions X have I

we The first categories. warming saw We maybe many with one know operates slightly brands many all Baozun this a about consumption quarter. is XX and Double year promotion, third versus sentiment

outlook the trend Baozun some for I does consumption on for margin? our well year? And approaching and line this next a how share year, top expect year So year, maybe management as follow-up on as could the outlook next have on opportunities color of end the and our in we're next

Arthur Yu

I will question. take the first

terms on add in For one, Catherine maybe outlook the Baozun. of second for and can Vince

think for the will one, we next first stabilize. the of overall consumption further consumption, in year, the So for terms outlook

into internal period, will put So terms to we At after from the maintain China and brands the we will which From sports. And focus money them choose terms want so. emphasis the to a service during do expand to our categories, more helping quality cautious apparel, their our drive will innovation to perspective, stronghold be have COVID of up our brands to new the the same a seen lot market. more to categories has own as of the downs those spend use key we luxury which in core Baozun in on on on time, capability and in of perspective, growth. other the building more capability, we and

on Baozun is perspective. Vincent outlook? do this comment from to So want the and you Catherine,

Wenbin Qiu

Yes, Sure. the one, second yes.

Looking more from think things. is that forward, government. Number the policies the think seeing are and X initiatives will better we and this more general. that we economy one We in

year. focus to reason And a most our more to also, will importantly, I than have little optimizing more next make be we operations the business others. This in own important a think be is our for our So even optimistic better.

So and make be the us, into XXXX. I look think we seriously next that more potential in year all operations, the aspects realized business will the to of in for

Operator

This concludes I company the our for the to conference back remarks. turn over question-and-answer session. would to closing like any

Wendy Sun

thank Thank Baozun all like management to you, operator. would team, participation call. for On behalf of we you your in today's

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

Operator

today's attending for you presentation. Thank concluded. now has conference The

now You disconnect. may

Baozun (BZUN) 21 Nov 242024 Q3 Earnings call transcript