Baozun Q2 Earnings Call Highlights

Baozun (NASDAQ:BZUN) reported second-quarter 2026 revenue growth of 7% to RMB2.7 billion, as gains in its e-commerce services and brand management businesses offset a planned reduction in lower-margin product sales categories. Non-GAAP income from operations reached RMB74 million, compared with RMB6 million in the prior-year period. Chairman and Chief Executive Officer Vincent Qiu said the results reflected improving earnings quality and resilience in a competitive e-commerce environment. The company also raised its 2028 non-GAAP operating profit target to RMB700 million from RMB550 million, citing confidence in its brand management momentum, artificial intelligence and automation initiatives, and potential synergies between its business segments.

Baozun’s e-commerce segment, or BEC, generated RMB2.3 billion in revenue, up 5% from a year earlier. Service revenue increased 10% to RMB1.8 billion, supported by market-share gains in luxury, sports and outdoor categories, as well as greater investment in content creation, digital marketing and Douyin-related initiatives. BEC product sales revenue declined 10% to RMB541 million. Chief Strategy Officer Junhua Wu said Baozun intentionally reduced its exposure to certain standardized product categories, including home furnishings, beauty and cosmetics, and appliances, where price competition was intense and margins were less attractive. For the first half, total product sales were RMB1 billion, up 3% year over year. Wu said the company is investing in supply-chain management, data analytics and product development to build out an apparel product-sales business, which Baozun expects to begin contributing to both revenue and profit from 2027 onward. BEC non-GAAP operating income rose to RMB107 million, which management described as its highest second-quarter level since 2022. Baozun attributed the improvement to cost discipline, structural efficiency measures and a greater focus on higher-value revenue streams. The company has begun piloting AI and automation tools in Gap’s e-commerce operations to streamline selected processes. Qiu said the early trials showed “substantial productivity gains,” while Wu said the near-term emphasis is on improving operational efficiency rather than directly driving sales growth. Baozun expects to accelerate these initiatives over the next 18 months.

Brand management, or BBM, revenue increased 22% year over year to RMB486 million. The segment’s non-GAAP operating loss narrowed to RMB33 million from RMB35 million a year earlier, despite additional investment in emerging brands. Gap remained the primary driver of BBM performance. Ken Huang, chief financial officer of Baozun Brand Management, said Gap’s non-GAAP operating loss improved by more than 40% year over year, while same-store sales rose in the 20% range for a second consecutive quarter. Management cited gains in traffic, store productivity and gross margin, as well as product assortment optimization, data-driven merchandising, tactical pricing and supply-chain management. Gap posted double-digit growth across women’s, men’s and kids’ categories, Huang said. BBM gross margin expanded 383 basis points from a year earlier to 56.1%. Gap inventory turnover stood at 128 days, which Huang said reflected disciplined inventory management and healthy sell-through. Baozun opened eight Gap stores during the quarter, bringing the network to 167 stores. The company remains on track to open more than 50 new stores in 2026, with a focus on tier-one and tier-two cities. Huang said management had seen further month-over-month improvement in July and August and now expects full-year B...