Baozun Q4 2025 Earnings Call - BBM Hits First Quarterly Break-even, BEC Margin Expansion Drives Profit Momentum and 2028 RMB 550m Target

Conference Call Operator: Good morning, ladies and gentlemen, and thank you for standing by for Baozun’s fourth quarter 2025 earnings conference call. At this time, all participants are in 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. I will now turn the meeting over to your host for today’s call, Miss Wendy Sun, Senior Director of Corporate Development and Investor Relations of Baozun. Please proceed, Wendy.

Wendy Sun, Senior Director of Corporate Development and Investor Relations, Baozun: Thank you, operator. Hello, everyone, and thank you for joining us today. Our fourth quarter 2025 earnings release was distributed earlier before this call and is available on our IR website at ir.baozun.com, as well as on PR Newswire services. They have also posted a PowerPoint presentation that accompanies our comments to the same IR website, where they are available for your download. On the call today from Baozun, we have Mr. Vincent Qiu, Chairman and Chief Executive Officer, Ms. Catherine Zhu, Chief Financial Officer, Mr. Junhua Wu, Director and Chief Strategy Officer of Baozun Group, and Mr. Ken Huang, Chief Executive Officer of Baozun Brand Management. Mr. Qiu will first share our business strategy and company highlights. Ms. Zhu then will discuss our financials and outlook. Followed by Mr. Wu and Mr. Huang.

Huang, who will share more about our e-commerce and brand management segments respectively. They will all be available to answer your questions during the Q&A session that follows. Before we begin, I would like to remind you that this conference call contains forward-looking statements within the meaning of the U.S. Securities Act of 1933 as amended, the U.S. Securities Exchange Act of 1934 as amended, and the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management’s current expectations on current market and operating conditions, and relate to events that involve known or unknown risk, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company’s control, which may cause the company’s actual results to differ materially from those in the forward-looking statement.

Further information regarding these and other risks, uncertainties or factors is included in the company’s filings with the U.S. Securities and Exchange Commission and its announcement, notice, or other documents published on the website of the Stock Exchange of Hong Kong Limited. All information provided in this call is as of the date hereof and is based upon assumptions that the Company believes to be reasonable as of this date. The Company does not undertake any obligation to update any forward-looking statement except as required under applicable law. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in RMB. In addition, we may like to use adjusted in place of non-Generally Accepted Accounting Principles or non-GAAP, in order to reduce overall confusion that arises from our discussion about financials related to GAAP and non-GAAP.

You may now turn to slide two for the executive highlights for the quarter. It is now my pleasure to introduce our Chairman and Chief Executive Officer, Mr. Vincent Qiu. Vincent, please go ahead.

Vincent Qiu, Chairman and Chief Executive Officer, Baozun: Thank you, Wendy. Hello, everyone, and thank you for joining us. I’m pleased that Baozun delivered a strong fourth quarter, closing 2025 on a high note and successfully completing our three-year strategic transformation. Over the past three years, we have rebuilt our company with focus and intention, driving consistent sequential momentum throughout 2025. In the fourth quarter, our revenue increased 6% to RMB 3.2 billion, while non-GAAP operating profits grew 91% to RMB 198 million. This was not just about short-term recovery. It was about fundamentally improving the quality and potential of our business. BEC has become a sustainable cash engine. Through sharper execution and a continued cost rigor, BEC is now more agile and consistently profitable. We have moved from pursuing scale to focusing on value, prioritizing margin expansion and the reliable cash generation.

Most importantly, built alignment with BBM. BBM, meanwhile, has reached a defining inflection point. After three years of repositioning and localization, our brand management platform achieved its first quarterly breakeven in fourth quarter 2025. This milestone validates the sustainability of our model. Importantly, scale is beginning to translate into tangible operating leverage, marking the transition from a turnaround to profitable growth. Our financial profile has strengthened alongside operational progress. Margins have expanded, profitability has improved meaningfully, and our balance sheet remains solid. In addition, our operating cash flow more than tripled to RMB 420 million in 2025. These results validate that our business is not only growing, it is growing with better structure and healthier economics. In summary, 2025 marks the successful completion of the initial phase of our transformation. As we enter into 2026, our focus shifts decisively from rebuilding to scaling.

Our priority now is to amplify the progress to accelerate in the next three years. We will do this by expanding BEC’s margin, building scale and operating leverage in BBM, and deepening the strategic synergies between BEC and BBM. Our ambition is clear to drive the group’s non-GAAP operating profit growth to RMB 550 million by 2028. With a stronger organization, a proven strategy, and a highly focused execution culture, we are entering this next phase with confidence and momentum. Now I will hand over the call to our team for a deeper dive into our financials and business performance.

Catherine Zhu, Chief Financial Officer, Baozun: Thanks, Vincent, and hello, everyone. Now let me provide a more detailed overview of financial results for the fourth quarter and full year of 2025. Please turn to slide 3. Baozun Group’s total net revenues for the fourth quarter of 2025 increased by 6% year-over-year to RMB 3.2 billion. Of this total, e-commerce revenue grew by 2.5% to RMB 2.6 billion, while brand management revenue grows by 24% to RMB 664 million. Breaking down e-commerce revenue by business model, services revenue increased 3.1% year-over-year to RMB 2 billion. This increase was driven by revenue growth in digital marketing and IT solutions, as well as strong performance in the luxury category within our online store operation services.

BEC product sales revenue increased modestly by 0.5% year-over-year to RMB 574.5 million, mainly driven by growth in health and nutrition category, which was partially offset by lower sales in appliance category as we continue to optimize category mix to prioritize profitability. BBM product sales totaled RMB 663.7 million, representing a 24% year-over-year growth. This growth was mainly driven by the strong performance of the Gap brand. Please turn to slide 4. From a profitability perspective, our blended gross margin for product sales at a group level was 36.5%, an expansion of 640 basis points year-over-year. Gross profit increased by 35.9% year-over-year to RMB 451.5 million for the quarter.

Breaking this down by our key business lines, gross margin for e-commerce product sales expanded to 18.4%, reflecting a 760 basis point improvement compared to 10.8% a year ago. This margin expansion was primarily driven by product mix optimization. Gross margin for BBM improved to 52.1%, up from 50.4% a year ago, reflecting the effectiveness of its merchandising and marketing initiatives. Now please turn to slide number 5 for a walkthrough of our OpEx. Sales and marketing expenses increased by RMB 181 million to RMB 1.2 billion. This included an increase of RMB 136.9 million for BEC, which was mainly due to higher spending on creative content and marketing initiatives on Douyin and Brandnote, in line with the growth in digital marketing revenue.

BBM sales and marketing expenses increased by RMB 49.6 million, which was mainly driven by the expansion of offline stores and the marketing activities during the quarter. Fulfillment costs for the quarter was reduced by 11.1% to RMB 683.4 million, reflecting our ongoing efforts in cost optimization. Technology and content expenses decreased by 20.2% to RMB 160.9 million as we continue to enhance tech monetization efficiency. G&A expenses decreased slightly by 2% to RMB 187.9 million due to the company’s continued efforts to implement cost control and efficiency improvement initiatives. Turning to bottom line items, please refer to slide 6.

During the quarter, our non-GAAP income from operations was RMB 197.7 million, an increase of 91.4% from RMB 103.3 million in the same period of last year. BEC’s adjusted non-GAAP income from operations was RMB -195.9 million, representing 43% year-over-year increase compared with a year ago. BBM reported a non-GAAP operating income of RMB 1.8 million, a solid milestone as we achieved the very first break-even quarter for the segment. Let us turn to a quick full year summary. The group’s total revenue was RMB 9.9 billion, an increase of 6% year-over-year, of which e-commerce net revenues were RMB 8.3 billion, an increase of 2% year-over-year, while BBM net revenues were RMB 1.8 billion, an increase of 25% year-over-year.

Our adjusted operating income totaled RMB 126 million, a significant improvement compared with RMB 11 million in fiscal year 2024. As of December 31, 2025, our cash equivalents, restricted cash and short-term investments totaled RMB 2.8 billion. We continue to improve working capital efficiency through back-end process optimization across inventory management, billing and the cash collection. As a result, our annual operating cash flow reached RMB 420 million, representing a 315% year-over-year increase. Let me also briefly address our GAAP items recorded during the quarter. We recognized an investment impairment loss of RMB 230 million, primarily related to previous debt investments in the e-commerce sector, as well as impairment provisions for certain equity investments.

While these investments had strategic rationale at the time, today’s macroeconomic environment, combined with our sharpened focus on developing our brand management business, make it prudent to recognize these impairments. These adjustments reflect our commitment to maintaining a focus and a resilient business portfolio. Importantly, our remaining investments remain healthy and we are confident in their long-term potential. Let me now pass the call over to Junhua Wu to update you on BEC, our e-commerce business.

Junhua Wu, Director and Chief Strategy Officer, Baozun Group: Thank you, Catherine, and hello, everyone. I’m pleased to share we’ve closed 2025 with significant momentum. In the fourth quarter, we delivered 2% revenue growth and a 43% increase in non-GAAP operating profits, capping a year of progression from stabilization to accelerated performance. Throughout the year, we focused on driving sustainable, profitable growth while making strategic investments in high opportunity areas. Now, let me quickly walk through some of our operational highlights in the e-commerce segment for the fourth quarter of 2025. Please turn to slide 7, highlighting the continued quality improvements of our distribution model. During the quarter, BEC product sales gross profit increased 70.9% despite a largely flat top line. Notably, BEC’s gross margin rose to 18.4%, setting a new record since our inception.

This improvement was mainly driven by ongoing optimization of our category mix with strong growth from the health and nutrition and beauty and cosmetics categories. In addition, our efforts to expand into non-standard categories and are beginning to show results. Apparel delivered strong contribution across sales, gross margin, and profitability during the quarter. Turning to slide 8. Our services revenue grew 3% year-over-year in the fourth quarter, led primarily by strong performance of DM and IT solutions, which includes 19%. We gained market share in key categories such as luxury, sports and outdoor. Our omni-channel capability remains one of the Baozun’s core advantages and a focus of developing ongoing forward. During the quarter, we received 41 awards in Tmall ecosystem, including the prestigious 2025 Tmall Ecosystem Excellence in Service Award.

On Douyin, we were once again certified as a Douyin E-commerce Diamond service partner, the platform’s highest tier of accreditation. Together, these recognitions affirm our sustained leadership and execution strength across major platforms. We also continue to focus on strengthening our bottom line. Across the organization, we’re implementing a series of lean initiatives designed to streamline processes, reduce costs, and enhance efficiency. Furthermore, we are expanding the use of artificial intelligence tools across a wide range of employees and business scenarios to enhance productivity. These efforts have significantly improved our profitability, with BEC’s non-GAAP operating income increase 43% year-over-year to RMB 196 million in the fourth quarter of 2025. Overall, we’re pleased with our performance in the final quarter of the strategic transformation, a period that solidified our shift toward the sustainable and profitable operations.

Moving forward, we will continue to deepen client engagement and stickiness, innovate our service models, and enhance operational efficiency. For 2026, our priorities are clear. Deliver the numbers, deliver the strategy, and deliver the talent. Delivering the numbers means maintaining our focus on profitable growth and ensuring that our operational progress continues to translate into strong financial performance. On the strategy, we’re advancing three key initiatives. First, we will expand our apparel distribution business, leveraging the synergy between BEC and BBM to unlock the new growth opportunities and strengthen our brand ecosystem. Second, we will further enhance our digital marketing and traffic acquisition capabilities, helping brand partners capture demand more efficiently across an increasingly complex omni-channel landscape. Third, we will deepen technology empowerment, accelerating the deployment of AI and digital tools to improve operational efficiency and elevate our service capabilities. Finally, delivering the talent remains essential.

We will continue strengthening our leadership bench and reinforcing a strong execution culture. With the right people and the capabilities in place, we are well-positioned to scale the business and deliver sustainable growth in the years ahead. Now, our partner Ken for an update on BBM.

Ken Huang, Chief Executive Officer of Baozun Brand Management, Baozun: Thank you, team, and hello everyone. Please turn to slide number 9 for BBM’s performance in the fourth quarter of 2025. The fourth quarter marks a defining milestone for BBM as we delivered our first breakeven quarter. This result reflects our structural improvements across merchandising, marketing, store productivity and networking expansion. In Q4, BBM revenue grew by 24% year-over-year to RMB 664 million, supported by a double-digit same-store sales growth and the continued contributions from new store openings. Gross margin improved by 170 basis points from a year ago to 52.1%, leading to a 28% increase in gross profits. Moreover, inventory turnover efficiency improved, reducing our inventory turnover days by 16% to 114 days. Merchandising was the core growth driver for the quarter.

We entered the winter season with a well-balanced assortment architecture, reinforcing Gap’s iconic categories, sweatshirts, denim, and knitwear, while sharpening segmentation across channels and consumer groups. Our partnership with the Forbidden City has maintained a strong sell-through in Q4. More recently, we launched a new IP collaboration with the Peking Opera, showcasing our ability to blend the Chinese cultural storytelling with Gap’s global DNA in a commercially effective manner. Since introducing Cheng Yi as our brand ambassador on September fifteenth, we have collaborated closely to create authentic, engaging content that connects with our audience. We also launched the seasonal products and the limited store styling collections aligned with the key moments in the retail calendar. This ambassador-driven initiatives have boosted the social buzz, leading to higher consumer engagement, increased brand visibility, and a strong brand voice. Offline expansion continues to be a strategic priority for us.

In the fourth quarter, we opened 7 new stores for a total of 29 new Gap stores in 2025, bringing our total store count to 164 by the year-end. Our new stores continue to outperform older locations, driven by better site selection and enhanced visual merchandising. For instance, our new image stores at Dongguan International Trade Center and Shanghai Century Link Mall have delivered strong results. The improved in-store experience and the outfit-based presentation have driven a double-digit gain in sales productivity. These early performance indicators are highly encouraging and reinforce our confidence in our store expansion strategy. As a result, we are accelerating our store opening efforts to build on this momentum and currently plan to open 50 stores in 2026 through a hybrid model that combines direct and partnership stores in line with our SLI approach.

With these initiatives in place, we are confident in sustaining double-digit year-over-year revenue goals and achieving operating breakeven for Gap on an annual basis in 2026. Turning to Hunter, the brand continued to strengthen its premium positioning in Q4. Elevated store presentation and curated lifestyle storytelling are resonating with urban consumers seeking both function and fashion. In the fourth quarter, we launched 5 new Hunter locations and entered our national footprint into a high-potential tier two cities, including Nanjing, Qingdao, Shenyang, and Taiyuan. We concluded 2025 with a portfolio of 177 stores under the BBM umbrella. This expanded physical network sets a solid foundation to enhance supply chain efficiency in the future. In summary, Q4 2025 represents a structural inflection point for BBM. We achieved our first breakeven quarter. This validates our strategy, strengthens partner trust, and sets the stage for long-term double-digit growth.

The direction is clear. BBM is well-positioned to become an increasingly meaningful growth engine for Baozun Group.

Vincent Qiu, Chairman and Chief Executive Officer, Baozun: That concludes our prepared remarks. Thank you. Operator, we are now ready to begin the Q&A session.

Conference Call Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Cao Zhuoming with Huatai Securities. Please go ahead.

Cao Zhuoming, Analyst, Huatai Securities: Hi. Thank you management for taking my question. I have three questions. The first one is about the AI and with the rapid evolution of AI technology would the management share that what is the current status of our workflow transformation using AI agents and have we observed any measurable gains in efficiency? The second question is about the AI to our mid to long term impact. What is our perspective on the mid to long term impact and the opportunities that AI agents present for our e-commerce business and the brand management business? My third question is about our business outlook to the mid to long term.

I have noticed that in our report, we say that in 2028 we will reach RMB 550 million on operating profit. Would the management share what is the key driver behind this business outlook? Thank you.

Junhua Wu, Director and Chief Strategy Officer, Baozun Group: Okay. Thank you. This is Junhua. Let me address your first two questions regarding AI implementation in Baozun. The first one is about the AI agent. We have already leveraged a lot of AI agent technology from the beginning of last year. Most focus on our bottom line. In terms of like the digital assets creating and uploading product digital assets onto different platforms, saving a lot of operating people in terms of doing repeatable kind of the works, we have already leveraged a lot of AI agent. AI agent technology is more focused on driving our efficiency internally, more focused on the bottom line. In terms of the top line, we haven’t having any very clear definition about a scenario in business case about how do we leveraging AI technology, increasing our top line.

About the AI agent, you know, there is an agentic platform and technology is very new in this industry. We realize that in terms of the agentic kind of the technology, right now it’s more focused on the GEO, Generative Engine Optimization. There is an amount, you know, your DAU amount, the shopper apps is close to approximately about 850 million. Among them, the DAU of 300 million is on AI and all those apps in terms of the large-scale model and AI agent apps. This is transforming the consumer behavior and reallocate the traffic structure. We are, you know, closely focused on the trend of different big platforms and adapting to all those changes of the traffic allocation, and we can share with you more in the future quarters. Okay. Thank you.

Conference Call Operator: Thank you.

Junhua Wu, Director and Chief Strategy Officer, Baozun Group: The third one is regarding the business outlook.

Vincent Qiu, Chairman and Chief Executive Officer, Baozun: Yes. We just talked about the 2028 operating profit goal that will goes to RMB 550 million is our planned target. The main driver for this is that we are firstly, it’s our strategy. We’re turning the e-commerce business into a BEC plus BBM plus synergy model. You can see firstly, BBM is improving its profitability, especially Gap is getting more and more profitable in the coming years. In the meantime, you know, because we leverage the experience in this kind of apparel industry from BBM, we then add more brands into BEC with a franchise model. This also expand our margin greatly.

Combined by this both, you know, BBM’s growth and also margin expansion of BEC, you know, is so we can see this result in 2028. But it’s not the end of acceleration. I think in the coming years, even beyond 2028, we can see a more, you know, clear sign of this, you know, improvement of our profitability. Thank you.

Conference Call Operator: Thank you. Our next question comes from Alicia Yap with Citi. Please go ahead.

Alicia Yap, Analyst, Citi: Thanks, management, for taking my question. My first question is about the latest macro sentiment and would management share some color about latest macros Chinese New Year demand and the March eighth promotional performance. What is your expectation for 2026? My second question is about AI. How do you see generative AI and other advanced AI technology changing consumer behavior in the e-commerce landscape? Could you elaborate on Baozun’s strategy for integrating AI into your operations and service offerings? Are you developing your AI tools or partnering with leading AI firms? My last question is about Gap China. What is the growth expectation for Gap China this year? What is your long-term vision for the Gap business in China? What do you see as the key growth drivers for the brand over the next 3-5 years?

Thank you.

Junhua Wu, Director and Chief Strategy Officer, Baozun Group: Okay. Thank you. This is Junhua Wu. Let me address the first two questions. The first one I will elaborate from the BEC perspective, and Ken Huang can just, you know, feedback some new sentiment, kind of the forecast, aligned with the third question from the BBM perspective. Yes, we did have a very strong finish on the Chinese New Year campaign and the Queen’s Day campaign on March 8. This is definitely very strong. We had a late Chinese New Year this year. From the online digital e-commerce growing, that was very promising. We see the momentum of each category growing a lot. The platforms are still compensating a lot of kind of coupons to the end consumers to increase the overall GMV growth. The efficiency of the traffic quality is increasing.

Yes, we believe that we had a very good strong start, and the future quarters will be very promising from the BEC perspective. The second one is also related to the AI in terms of the GEO and how does GEO really changing the consumer behaviors. Just like I mentioned that GEO is changing the consumer behavior. It’s changing from the DAU of 850 DAU shoppers from different apps to 300 million from different kind of apps like Doubao, Yuanbao, and Tiangong. Those kind of the generated kind of AI large-scale model.

Consumers started to asking questions, you know, to for their daily life, during their daily life, and those kind of the GEO can smoothly push a lot of information along with some kind of the reference with the brand-oriented right information, such as a shopping link or such as a very emotional linkage from the brand’s perspective with the content, with short video clips or with a very comprehensive information. We can foresee that the change of consumer behavior is, you know, slightly changed from the instant shopping category to different categories. In terms of the instant shopping category, the AI agent is becoming very promising. You can easily order a bubble tea from, for example, the AI GEO systems. But from different categories, it’s still not in the business scenario.

We are closely tracking all those technologies, operations and make sure that we can share more in the future quarters. In terms of the bottom line, we definitely put a lot of effort in the AI agents to increase our efficiency, especially those repeatable kinds of systems. Those proprietary AI tools, we’re not a partner with any other leading AI firms for now. We still use some kind of public services with our in-house engineering team to do a lot of Baozun customizations for our leading brand partners. Thank you.

Ken Huang, Chief Executive Officer of Baozun Brand Management, Baozun: This is Ken. For the first question, about the CNY consumer sentiment, we for Gap also see a high increase in February and January in both months. The increase rate year to year is over 30% for Gap. For Gap actually, we continued our 20%-30% increase rate in the last quarter and this quarter. For the third question, the growth expectation for Gap. First, I think for 2026, we will still continue to keep the growth rates. In 2025, our growth rate is more than 20%, so we will keep this around 20% increase in 2026 by both same-store increase and new openings.

We plan to open more than 50 stores and we will also expand our e-commerce sales scale. For the long-term vision of Gap business, we in 2027 and 2028 plan to accelerate our growth rate from 20% to 30%. We’ll be 25%-30% in the next two years in the top line. We will also try to improve our operating profit from breakeven to 150 basis points increase per year. The main growth driver for Gap in the next three years, I think it will come from three areas.

One is the same-store sales increase driven by our product improvements, our visual merchandising, our store new images, which will in the end to improve our in-store traffic and the commission rates. The second is the scale expansion both offline and online. For example, offline, we also plan to re-enter some markets such as Hong Kong and Macau. The third one is the supply chain efficiency. With the scale increase, we expect to gain our efficiency in our cost management and also in the expenses.

Junhua Wu, Director and Chief Strategy Officer, Baozun Group: That’s all. Thank you.

Vincent Qiu, Chairman and Chief Executive Officer, Baozun: Here’s Vincent Xu. We have some more things to say about the AI. Because AI, you know, application right now is one of the core strategy of the Baozun as corporate. Our goal is quite clear. We want to make the AI utilization and also application as the best practices for both e-commerce and also apparel industry. We’ll be, you know, the best practiced AI for these two areas. Not only for the sales side to utilize AI, but also the supply side for BBM and also of course, for the efficiency improvements. Yeah. It’s quite important for us, and we are confident we’ll be, you know, in a leading position in utilizing AI capabilities. Yeah. Thank you.

Conference Call Operator: Our next question comes from Yin Jiawei with CITIC Securities. Please go ahead.

Cao Zhuoming, Analyst, Huatai Securities0: Good evening, management. Thanks for taking my questions. I have two questions. The first is that we have seen many industry changes, such as the compliance of e-commerce tax, the levy of traffic tax, and the restriction of competition in the courier industry, which are generally beneficial to the sales of branded goods, and are also accompanied by a narrowing growth gap between platforms. How does Baozun view the impact of such evolution on operational preference and strategies? And what’s the brand’s response to this change? My second question is, has there been any change to Baozun’s development strategy for the BBM business in 2026? And how will Baozun balance scale and the profit? What are your expectation for the growth pace and long-term vision of each brand? Thank you.

Junhua Wu, Director and Chief Strategy Officer, Baozun Group: Okay. This is Junhua. Let me address the first question. Those policies really don’t affect our detailed operations and day-to-day, because the government has, you know, signaled the direction about setting up a different sliding scale in terms of different kind of the policies. None of them has really changed the allocation of the marketing fee of our existing brand partner. Because after the pandemic, all our brand partners are being very careful and very cautious about spending money, especially into the marketing spending, allocation, and the others. We want to help the brand partner to leverage all those money wisely and to drive a higher ROI as before. In terms of that, we’re really within the range of all those policies.

In terms of the cutthroat competition in the courier industry, Baozun is taking the lead of providing logistics and courier services. We have already leveraged a lot of kind of the pricing efficiency and the cost efficiency for so many years. That doesn’t really just affect our day-to-day operations. In terms of the brand repositioning between different platforms, indeed the brands are, you know, either diversifying via different kind of the strategy for different brand, because for some kind of the leading live stream brand to focus on GMV growth or treat those platform as a content creation platform and let those traffic redirected to all those traditional transaction platforms is different strategies for different kind of categories. Some kinds of the categories of the brands, they choose to drive GMV from both categories, both platforms.

Some of the brands, they treat the live stream platform as a content creation center and let them export it, all those content, building the emotional linkage to the traditional kind of the transactional platforms. We are helping all those different brands in different categories to diversify their strategy across in different platforms. There’s no unified strategy in general in terms of that question. Thank you.

Vincent Qiu, Chairman and Chief Executive Officer, Baozun: Here’s Vincent. I will talk about the BBM strategy. I think the strategy is quite consistent with you know the past years. The only change is about the level of our confidence. Yeah, we think we are much more confident right now than before that you know the transformation is already there. We can see the results. We build a three years model, and we believe in the coming three years, BBM will grow. You know, it will enter into acceleration phase. You know, we’re quite excited about that. Talking about, especially for Gap, the biggest brands, we will see a very good you know trend, and also the improvement for the capability is also promising.

For the premium brand like Hunter and others, you know, I think the most important thing for us is to build the capability on merchandising and also marketing. You know, they will be also growing quite fast, but building capability is more important. Talking about the BD of the new brands, yeah, I think now a lot more brands, you know, come to us. They’re trying to work with us. It’s a good sign. Right now, not only BBM can work with the brands in a very deep relationship and also BEC also have the capability to do more franchise business with brands. In this case, that’s why we think the coming three years will be acceleration phase.

Thank you for that. Thank you.

Conference Call Operator: Our next question comes from Peshan Wang with HSBC. Please go ahead.

Peshan Wang, Analyst, HSBC: Hello. Good evening, management. I have two questions. The first one is on the growth outlook for 2026, and what are the key upside and downside risks you see, based on your expectations? The second question is how should we think about the capital allocation plan given the AI investment and other investment priorities this year? Can management share our thoughts on how you think about shareholder return going forward? Thanks.

Junhua Wu, Director and Chief Strategy Officer, Baozun Group: Sorry, the first one is about the outlook of the business growth in the future 3 years or 2026?

Peshan Wang, Analyst, HSBC: 2026 for the group outlook.

Junhua Wu, Director and Chief Strategy Officer, Baozun Group: The group outlook. Okay.

Vincent Qiu, Chairman and Chief Executive Officer, Baozun: Yeah. Maybe I try to say something and maybe, Catherine, you can say more about that because it’s expectation. Yeah. I think firstly, you know, we are trying to make a positive year in terms of net income to ordinary shareholders. Wendy?

Wendy Sun, Senior Director of Corporate Development and Investor Relations, Baozun: Yes.

It is quite exciting goal to achieve because that means we have more to contribute to our shareholders and investors. To achieve that, of course, we need to make all the aspects of our operation better than before. Our margin expansion need to be improved as well. In this case, we’re not only to treat our customer or employee better and also give more return to our investors. In terms of numbers, can we share anything or no?

Catherine Zhu, Chief Financial Officer, Baozun: Yeah. Okay. Thank you for your question. I think the management are quite confident and for the coming 2026, we think it’s quite promising because we are doing a lot of initiatives, not only including like the BEC part and also brand management segment. Regarding the revenue, we are expecting a certain number of increase and like BEC segment or we split into two segments. BEC, we’re expecting single digits increase. For BBM part, we are expecting like a very good number to come. Regarding the non-GAAP operating profits, we are also expecting like double the numbers compared with the 2025.

We are doing all kinds of initiatives like as I mentioned in the call. I think the management are quite confident about that.

Vincent Qiu, Chairman and Chief Executive Officer, Baozun: Also we see here again, talking about the AI, you know, right now, although it is still initial phase, you know, for the industry to adopt, the results, the development of the AI, but, you know, we are seeing this change very fast. For us, we need to keep us very active and agile, to keep our pace up to this development. For us, you know, along with the investment into IT and the internal process improvement, every year we put resource and there. This year, starting from this year, we have more initiatives from the corporate level. You know, we have several very interesting and important initiatives, but doesn’t require a lot of investments. You know, I think talents will be more important than investments.

That’s why we’re so confident that we’ll be the best practice for not only e-commerce but also apparel industry in China. You know, we’re quite confident to be the most you know advanced utilization of AI capabilities. Thank you.

Peshan Wang, Analyst, HSBC: Thank you.

Conference Call Operator: The next question is from Shuwen Guo with CMBI. Please go ahead.

Shuwen Guo, Analyst, CMBI: Hi, management. Thank you for taking my question. My question is regarding your development strategy for overseas business. Can management share with us the update regarding your overseas strategies? Can management share with us your development plan regarding about the international business? Thank you.

Vincent Qiu, Chairman and Chief Executive Officer, Baozun: Yeah. Let me first, you know, address some, you know, about the international business. Right now, for the priority of course, you know, BBM and BEC are contributing the major share of our business and also growth. These two are very important. We talk, that’s why we talked more about these two sections. For BZI, I think, you know, recently we have a very solid progress, but still it’s a minor contribution to the whole company and the growth. We are quite solid in, you know, outside the business, outside of China. Hunter is already in Southeast Asia making progress. We have several major e-commerce projects improving, you know, and to be profitable in the region as well.

We have opportunities in, you know, Korea and also South Korea and also several very big projects is going on in Hong Kong and Taiwan. You know, we are seeing this improving, you know, with a promising future, and we are confident that the growth of the international business will be solid, but we are not expecting a big contribution from our international business yet in the coming two years.

BBM new brands.

Yeah. I think you just talked about the new brands of BBM as well. Right now I think we are in a very good situation ’cause, you know, we are having a quite big base of our brands from BEC. So when you know, there’s opportunity emerges in the market, we’ll be the first one you know, to have the opportunity to work with them. Recently we see a lot, yeah. They trust us, and we have such a solid track record for BBM in the past two years, so you know, people just want to work with us.

For us, I think we know what we need to have, so at least we will not have a lot more brands in the future. Definitely, during the coming three years, I think we will have new brands. You know, carefully selected, you know, better profitable brands to add to our portfolio. Thank you.

Conference Call Operator: Thank you. This concludes our question and answer session. I would like to turn the conference back over to Wendy Sun for closing comments. Over to you.

Wendy Sun, Senior Director of Corporate Development and Investor Relations, Baozun: Thank you, operator. On behalf of the Baozun management team, we’d like to thank you again for your participation in today’s call. If you require any further information, feel free to reach out to us. Thank you for joining us again. This concludes the call. Thank you.

Conference Call Operator: Thank you. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.