Baozun Inc. Q3 FY2025 earnings call

• Vincent Qiu noted Baozun is advancing strategic transformation with 5% total revenue growth and improved profitability, with non-GAAP operating loss narrowing to RMB 11 million from RMB 85 million year-over-year. Both BEC and BBM are core engines driving success.
• Junhua Wu shared BEC's solid execution, with services revenue growth, improved gross profit margin for product sales, and progress in building a quality-driven distribution portfolio. Also highlighted content initiatives on platforms like RedNote and Douyin.
• Ken Huang reported BBM's 20% revenue growth, driven by Gap brand's performance. Discussed marketing initiatives like appointing a brand ambassador, merchandising efforts, store expansions, and partnerships with platforms.

Baozun's total revenue grew 5% in the third quarter of 2025. The E-Commerce segment (BEC) saw services revenue grow 6.3% year-over-year to RMB 1.4 billion, while product sales declined 8.9%. BEC's non-GAAP operating profit was RMB 28.1 million, a significant improvement from a loss of RMB 29.8 million a year ago. The Brand Management segment (BBM) had revenue up 20% year-over-year to RMB 396 million, driven by the Gap brand. BBM's gross margin was 56.5%, up from 52.8% a year ago. BEC product sales gross margin expanded to 13.1%, and BBM's gross margin was 56.5%. BEC contributed about 81.8% of total revenue (RMB 1.8 billion out of RMB 2.2 billion), while BBM contributed about 18.0% (RMB 396 million).

• For BEC in 2026, focus on expanding margin and optimizing cost efficiency, with plans to return to top line growth.
• For BBM, prioritize making each brand successful operationally and developing synergy between BBM and BEC. Expect BBM to sustain growth through year-end and beyond, with Gap aiming for breakeven in Q4 2025.
• Emphasized leveraging technology and data warehouse to support strategic priorities and synergy between segments.

Q: Can you provide some observations on the latest consumer sentiment, especially with recent Singles' Day promotions, and comments on 2026 outlook and strategic priorities?

A: Junhua Wu said consumer sentiment is better, with consumers paying for value. Brands are focusing on P&L rather than GMV growth. Vincent Qiu mentioned BEC to focus on margin expansion and cost efficiency in 2026, while BBM to make each brand successful and develop synergy with BEC.

Q: Regarding BEC, has the company's relevant categories benefited from premium consumption stabilizing/recovering, and how does Baozun view strategic shift for brands with emerging platforms?

A: Junhua Wu said premium luxury categories have benefited, with scenario-based sales. Emphasized content and emotion linkage are key as brands shift to merged content and traditional e-commerce.

Q: About BBM, what impact has the Gap brand ambassador collaboration had on brand awareness and user profile, and long-term view on Gap's profit potential?

A: Ken Huang said the collaboration attracted younger customers, increased AIPL, and promoted key products. Expect continued double-digit growth in sales, with new store images to boost productivity and improve profit.