SHANGHAI, Nov. 21, 2024 /PRNewswire/ -- Baozun Inc. (Nasdaq: BZUN and HKEX: 9991) ("Baozun", the "Company" or the "Group"), a leading brand e-commerce solution provider and digital commerce enabler in China, today announced its unaudited financial results for the third quarter ended September 30, 2024.
Mr. Vincent Qiu, Chairman and Chief Executive Officer of Baozun, commented, "I'm pleased that Baozun is advancing our strategic vision, with robust topline growth driven by transformative initiatives. In the third quarter of 2024, Baozun Group achieved a 12.8% year-over-year revenue increase, powered by solid performances from both Baozun E-Commerce (BEC) and Baozun Brand Management (BBM). For the first time, BBM delivered topline growth in its underlying China business for Gap, underscoring our brand management capability and localization of brand appeal. The third quarter has been a pivotal quarter of growth and progress across our segments, reflecting the resilience and adaptability of our strategies."
Ms. Catherine Zhu, Chief Financial Officer of Baozun Inc., commented, "Baozun delivered double-digit topline growth in the third quarter of 2024, with E-Commerce revenue up 13.9% and Brand Management revenue increasing by 10.3% year-over-year. Notably, BEC product sales resumed growth following twelve quarters of contraction. Furthermore, our proactive positioning in creative content commerce continued to drive triple-digit annual revenue growth on Douyin, highlighting our agility and leadership in digital commerce. BBM remained focused on strengthening our localization efforts and building a sustainable foundation. With confidence in our long-term growth, we continued to execute our share repurchase program with US$9.9 million worth of ADSs repurchased year-to-date."
Third Quarter 2024 Financial Highlights
- Total net revenues were RMB2,057.0 million (US$[1]293.1 million), representing an increase of 12.8% compared with RMB1,823.6 million for the same period of 2023.
- Loss from operations was RMB114.5 million (US$16.3 million), an improvement from RMB135.7 million in the same quarter of last year, primarily due to a reduction in losses from E-Commerce. Operating margin was negative 5.6%, an improvement from negative 7.4% for the same period of 2023.
- Non-GAAP loss from operation[2] was RMB85.2 million (US$12.1 million), an improvement from RMB90.4 million in the same quarter of last year, primarily due to a reduction in losses from E-Commerce. Non-GAAP operating margin was negative 4.1%, improved from negative 5.0% for the same period of 2023.
- Adjusted operating loss of E-Commerce[3] was RMB29.8 million (US$4.2 million), an improvement from RMB40.3 million for the same period of 2023.
- Adjusted operating loss of Brand Management[3] was RMB55.3 million (US$7.9 million), compared with RMB50.1 million for the same period of 2023.
- Net loss attributable to ordinary shareholders of Baozun Inc. was RMB88.1 million (US$12.6 million), an improvement from RMB126.4 million for the same period of 2023.
- Non-GAAP net loss attributable to ordinary shareholders of Baozun Inc.[4] was RMB66.8 million (US$9.5 million), an improvement from RMB76.4 million for the same period of 2023.
- Basic and diluted net loss attributable to ordinary shareholders of Baozun Inc. per American Depositary Share ("ADS[5]") were both RMB1.48 (US$0.21), compared with both RMB2.12 for the same period of 2023.
- Diluted non-GAAP net loss attributable to ordinary shareholders of Baozun Inc. per ADS[6] was RMB1.12 (US$0.16), compared with RMB1.28 for the same period of 2023.
- Cash and cash equivalents, restricted cash, and short-term investments totaled RMB2,655.2 million (US$378.4 million), as of September 30, 2024, compared with RMB3,072.8 million as of December 31, 2023.
Adjusted operating profits/losses by segment are included in the Segments data of Segment Information.
| [1] This announcement contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) at a specified rate solely for the convenience of the reader. Unless otherwise noted, the translation of RMB into US$ has been made at RMB7.0176 to US$1.00, the noon buying rate in effect on September 30, 2024, as set forth in the H.10 Statistical Release of the Federal Reserve Board. |
| [2] Non-GAAP income (loss) from operations is a non-GAAP financial measure, which is defined as income (loss) from operations excluding the impact of share-based compensation expenses, amortization of intangible assets resulting from business acquisition, acquisition-related expenses, impairment of goodwill, loss on variance from expected contingent acquisition payment, and cancellation fees of repurchased ADSs and returned ADSs. |
| [3] Following the acquisition of Gap Shanghai, the Group updated its operating segment structure resulting in two segments, which were (i) E-Commerce; (ii) Brand Management, for more information, please refer to Supplemental Information.
|
| [4] Non-GAAP net income (loss) attributable to ordinary shareholders of Baozun Inc. is a non-GAAP financial measure, which is defined as net income (loss) attributable to ordinary shareholders of Baozun Inc. excluding the impact of share-based compensation expenses, amortization of intangible assets resulting from business acquisition, acquisition-related expenses, impairment of goodwill and investments, loss on variance from expected contingent acquisition payment, cancellation fees of repurchased ADSs and returned ADSs, fair value loss on derivative liabilities, loss on disposal of subsidiaries and investment in equity investee, and unrealized investment loss. |
| [5] Each ADS represents three Class A ordinary shares. |
| [6] Diluted non-GAAP net income (loss) attributable to ordinary shareholders of Baozun Inc. per ADS are non-GAAP financial measures, which are respectively defined as non-GAAP net income (loss) attributable to ordinary shareholders of Baozun Inc. divided by weighted average number of shares used in calculating diluted net income (loss) per ordinary share multiplied by three, respectively. |
Baozun e-Commerce, or "BEC"
BEC encompasses our China e-commerce businesses, including brand store operations, customer services, and value-added services in logistics and supply chain management, IT and digital marketing. During the quarter, total revenue from BEC achieved a 13.9% year-over-year increase, with double-digit growth in both product sales and service offerings within Baozun E-Commerce. The growth in product sales was mainly driven by strong performance in the Beauty and Cosmetics categories, while service growth was mainly attributed to higher demand for digital marketing and IT solutions.
Omni-channel expansion remains a key theme for our brand partners. By the end of the third quarter of 2024, approximately 48.2% of our brand partners engaged with us for store operations of at least two channels.
Baozun Brand Management, or "BBM"
BBM engages in holistic brand management, including strategy and tactic positioning, branding and marketing, retail and e-commerce operations, supply chain and logistics, and technology empowerment. We aim to leverage our portfolio of technologies to forge longer and deeper relationships with brands.
Currently, our Brand Management business line includes the Gap and Hunter brands. During the quarter, product sales revenue for Brand Management totaled RMB329.8 million (US$47.0 million), with a gross profit margin of 52.8%. By the end of the third quarter of 2024, Gap and Hunter brands have 146 offline stores under our management.
Third Quarter 2024 Financial Results
Total net revenues were RMB2,057.0 million (US$293.1 million), an increase of 12.8% from RMB1,823.6 million in the same quarter of last year. The increase in total net revenues was mainly driven by a 14.2% increase in service revenue.
Total product sales revenue was RMB783.1 million (US$111.6 million), compared with RMB707.9 million in the same quarter of last year, of which:
- Product sales revenue of E-Commerce was RMB454.0 million (US$64.7 million), an increase of 10.3% from RMB411.6 million in the same quarter of last year. The increase was primarily attributable to introduction of high-quality new distribution businesses, partially offset by the Company's optimization of its product portfolio in distribution model, especially in the electronics and fast-moving consumer goods sectors.
| For the three months ended September 30, | ||||||||||||||||||||
| 2023 | 2024 | |||||||||||||||||||
| RMB | % of Net Revenues | RMB | US$ | % of Net Revenues | YoY Change | |||||||||||||||
| (In millions, except for percentage) | ||||||||||||||||||||
| Product Sales of E-Commerce | ||||||||||||||||||||
| Appliances | 179.5 | 11 % | 177.1 | 25.2 | 9 % | -1 % | ||||||||||||||
| Beauty and cosmetics | 76.3 | 4 % | 89.7 | 12.8 | 4 % | 18 % | ||||||||||||||
| Others | 155.8 | 8 % | 187.2 | 26.7 | 9 % | 20 % | ||||||||||||||
| Total net revenues from product sales of E-Commerce | 411.6 | 23 % | 454.0 | 64.7 | 22 % | 10 % | ||||||||||||||
- Product sales revenue of Brand Management was RMB329.8 million (US$47.0 million), an increase of 11.3% from RMB296.3 million in the same quarter of last year. The increase was primarily driven by sales increase from the Gap brand, as the Company continued to optimize its merchandising plans and enhance customer experiences.
The following table sets forth a breakdown of services revenues by service type for the periods indicated:
| For the three months ended September 30, | ||||||||||||||||||||
| 2023 | 2024 | |||||||||||||||||||
| RMB | % of Net Revenues | RMB | US$ | % of Net Revenues | YoY Change | |||||||||||||||
| (In millions, except for percentage) | ||||||||||||||||||||
| Services revenue | ||||||||||||||||||||
| Online store operations | 340.7 | 19 % | 362.6 | 51.6 | 18 % | 6 % | ||||||||||||||
| Warehousing and fulfillment | 431.7 | 23 % | 433.8 | 61.8 | 21 % | 0 % | ||||||||||||||
| Digital marketing and IT solutions | 362.7 | 20 % | 507.7 | 72.4 | 24 % | 40 % | ||||||||||||||
| Inter-segment eliminations[8] | (19.3) | -1 % | (30.2) | (4.3) | -1 % | 56 % | ||||||||||||||
| Total net revenues from services | 1,115.8 | 61 % | 1,273.9 | 181.5 | 62 % | 14 % | ||||||||||||||
| For the three months ended September 30, | |||||||||||||||||||
| 2023 | 2024 | ||||||||||||||||||
| RMB | % of Net Revenues | RMB | US$ | % of Net Revenues | YoY Change | ||||||||||||||
| (In millions, except for percentage) | |||||||||||||||||||
| Online store operations in Services revenue | |||||||||||||||||||
| Apparel and accessories | 248.4 | 14 % | 275.7 | 39.2 | 13 % | 11 % | |||||||||||||
| - Luxury | 86.3 | 5 % | 86.8 | 12.3 | 4 % | 1 % | |||||||||||||
| - Sportswear | 101.3 | 6 % | 100.7 | 14.3 | 5 % | -1 % | |||||||||||||
| - Other apparel | 60.8 | 3 % | 88.2 | 12.6 | 4 % | 45 % | |||||||||||||
| Others | 92.3 | 5 % | 86.9 | 12.4 | 5 % | -6 % | |||||||||||||
| Inter-segment eliminations[10] | (11.2) | -1 % | (20.5) | (2.9) | -1 % | 83 % | |||||||||||||
| Total net revenues from online store operations in services | 329.5 | 18 % | 342.1 | 48.7 | 17 % | 4 % | |||||||||||||
| [7] Key categories refer to the categories that accounted for no less than 10% of product sales of E-Commerce revenues during the periods indicated. |
| [8] The inter-segment eliminations mainly consist of revenues from online store operations, warehousing and fulfillment, and digital marketing and IT services provided by E-Commerce to Gap, a brand under Brand Management. |
| [9] Key categories refer to the categories that accounted for no less than 10% of services revenue of E-Commerce during the periods indicated. |
| [10] The inter-segment eliminations mainly consist of revenues from store operation services provided by E-Commerce to Gap, a brand under Brand Management. |
- Cost of products was RMB563.1 million (US$80.2 million), compared with RMB491.2 million in the same quarter of last year. The increase was primarily due to an increase in product sales volume.
- Fulfillment expenses were RMB519.4 million (US$74.0 million), compared with RMB513.0 million in the same quarter of last year. Fulfillment expenses were remain flat, which is in line with the warehousing and fulfillment service revenue.
- Sales and marketing expenses were RMB800.6 million (US$114.1 million), compared with RMB637.5 million in the same quarter of last year. The increase was mainly due to higher revenue contributions from digital marketing services for BEC, as well as increased marketing activities and offline stores for BBM during the quarter.
- Technology and content expenses were RMB140.7 million (US$20.1 million), compared with RMB120.4 million in the same quarter of last year. The increase was mainly due to more revenues from IT solutions during the quarter, partially offset by the Company's cost control initiatives and efficiency improvements.
- General and administrative expenses were RMB176.6 million (US$25.2 million), compared with RMB214.5 million in the same quarter of last year. The decrease was primarily due to the Company's cost control initiatives and efficiency improvements.
Non-GAAP loss from operations was RMB85.2 million (US$12.1 million), an improvement from RMB90.4 million in the same quarter of last year. The improvement was mainly due to the narrowed loss in the E-Commerce business. Non-GAAP operating margin was negative 4.1%, an improvement from negative 5.0% in the same quarter of last year.
Adjusted operating loss of E-Commerce was RMB29.8 million (US$4.2 million), an improvement from RMB40.3 million in the same quarter of last year. Adjusted operating loss of Brand Management was RMB55.3 million (US$7.9 million), compared with RMB50.1 million in the same quarter of last year.
Unrealized investment gain was RMB3.9 million (US$0.5 million), compared with an unrealized investment loss of RMB7.8 million in the same quarter of last year. The unrealized investment gain of this quarter was mainly related to the increase in the trading price of iClick Interactive Asia Group Limited, or iClick Interactive, a public company listed on the Nasdaq Global Market that the Company invested in January 2021.
Fair value change on financial instruments was a loss of RMB17.0 million (US$2.4million), compared with nil in the same quarter of last year. The fair value change on financial instruments is primarily due to the losses recognized related to the financial instruments the Company invested in the second quarter of 2024.
Exchange gain was RMB11.9 million (US$1.7 million), due to exchange rate fluctuation between Hong Kong dollars and Japanese Yen in the quarter ended September 30, 2024, compared to net exchange loss of RMB1.3 million in the same quarter last year.
Net loss attributable to ordinary shareholders of Baozun Inc. was RMB88.1 million (US$12.6 million), compared with RMB126.4 million in the same quarter of last year.
Basic and diluted net loss attributable to ordinary shareholders of Baozun Inc. per ADS were both RMB1.48 (US$0.21), compared with both RMB2.12 for the same period of 2023.
Non-GAAP net loss attributable to ordinary shareholders of Baozun Inc. was RMB66.8 million (US$9.5 million), compared with RMB76.4 million in the same quarter of last year.
Diluted non-GAAP net loss attributable to ordinary shareholders of Baozun Inc. per ADS were RMB1.12 (US$0.16), compared with RMB1.28 for the same period of 2023.
Segment Information
(a) Description of segments
Following the acquisition of Gap Shanghai in February 2023, the Group updated its operating segments structure resulting in two segments, which were (i) E-Commerce and (ii) Brand Management;
The following summary describes the operations in each of the Group's operating segment:
(i) E-Commerce focuses on Baozun traditional e-commerce service business and comprises two business lines, BEC (Baozun E-Commerce) and BZI (Baozun International).
a> BEC includes our mainland China e-commerce businesses, such as brands' store operations, customer services and value-added services in logistics and supply chain management, IT and digital marketing.
b> BZI includes our e-commerce businesses outside of mainland China, including locations such as Hong Kong, Macau, Taiwan, South East Asia and Europe.
(ii) Brand Management engages in holistic brand management, encompassing strategy and tactic positioning, branding and marketing, retail and e-commerce operations, supply chain and logistics and technology empowerment to leverage our portfolio of technologies to forge into longer and deeper relationships with brands. Currently, the Company runs brand management operations for the Gap and Hunter brands in Greater China.
(b) Segments data
The table below provides a summary of the Group's reportable segment results for the three months ended September 30, 2023 and 2024, with prior periods' segment information retrospectively recast to conform to current period presentation:
| For the three months ended September 30, | ||||
| 2023 | 2024 | |||
| RMB | RMB | |||
| Net revenues: | ||||
| E-Commerce | 1,543,276 | 1,757,320 | ||
| Brand Management | 299,645 | 330,605 | ||
| Inter-segment eliminations * | (19,279) | (30,905) | ||
| Total consolidated net revenues | 1,823,642 | 2,057,020 | ||
| Adjusted Operating Losses **: | ||||
| E-Commerce | (40,300) | (29,781) | ||
| Brand Management | (50,091) | (55,331) | ||
| Inter-segment eliminations * | - | (51) | ||
| Total Adjusted Operating Losses | (90,391) | (85,163) | ||
| Unallocated expenses: | ||||
| Share-based compensation expenses | (29,415) | (19,628) | ||
| Amortization of intangible assets resulting from business acquisition | (7,911) | (9,529) | ||
| Cancellation fees of repurchased ADSs | - | (162) | ||
| Acquisition-related expenses | (7,995) | - | ||
| Total other income | 4,198 | 4,596 | ||
| Loss before income tax and share of income (loss) in equity method investment | (131,514) | (109,886) | ||
| *The inter-segment eliminations mainly consist of revenues from services provided by E-Commerce to Brand Management. | ||||
| **Adjusted Operating Profits (Losses) represent segment profits (losses), which is income (loss) from operations from each segment without allocating share-based compensation expenses, acquisition-related expenses and amortization of intangible assets resulting from business acquisition, and cancellation fees of repurchased ADSs. | ||||
On January 24, 2024, the Company's board of directors (the "Board") authorized the management to set up and implement a new share repurchase program under which the Company may repurchase up to US$20 million worth of its outstanding (i) American depositary shares ("ADSs"), each representing three Class A ordinary shares, and/or (ii) Class A ordinary shares over the next 12 months starting from January 24, 2024. As of November 21, 2024, the Company repurchased approximately 3.6 million of ADSs for approximately