SHANGHAI, May 28, 2024 /PRNewswire/ -- Baozun Inc. (NASDAQ:BZUN) ("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 first quarter ended March 31, 2024. Mr. Vincent Qiu, Chairman and Chief Executive Officer of Baozun, commented, "I'm pleased with our solid execution of transformation in the first quarter of 2024. E-Commerce has made progress in growing service revenue and introducing high-quality exclusive distribution models. Brand Management continues to advance in transforming Gap China, launching several China-for-China products and merchandising programs, which have shown positive market acceptance. With these encouraging results, we are confident and committed to our strategic transformation to drive growth." Ms. Catherine Zhu, Chief Financial Officer of Baozun, commented, "I'm delighted to report that Baozun achieved a 5% year-over-year revenue growth, driven by Brand Management's increased contributions and better topline momentum from E-Commerce. We also enriched operating cash flows and free cash flow, achieving a solid year-over-year improvement. Additionally, the operating cash flow for our E-Commerce segment in the first quarter turned positive for the first time since 2019. As we navigate through 2024, our focus remains on driving strategic growth, ensuring financial stability, and creating sustainable value for our shareholders." First Quarter 2024 Financial Highlights Total net revenues were RMB1,979.8 million (US$[1]274.2 million), representing an increase of 4.9% compared with RMB1,887.8 million for the same period of 2023. Loss from operations was RMB54.8 million (US$7.6 million), compared with RMB40.6 million in the same quarter of last year. Operating margin was negative 2.8%, compared with negative 2.2% for the same period of 2023. Non-GAAP loss from operations[2] was RMB17.5 million (US$2.4 million), compared with RMB9.7 million in the same quarter of last year, with the increase loss mainly due to loss from Brand Management. Non-GAAP operating margin was negative 0.9%, compared with negative 0.5% for the same period of 2023.- Adjusted operating profit of E-Commerce[3] was RMB11.8 million (US$1.6 million), compared with RMB25.2 million for the same period of 2023.- Adjusted operating loss of Brand Management[3] was RMB29.3 million (US$4.0 million), compared with RMB34.9 million for the same period of 2023. Net loss attributable to ordinary shareholders of Baozun Inc. was RMB66.6 million (US$9.2 million), narrowed from RMB83.5 million for the same period of 2023. Non-GAAP net loss attributable to ordinary shareholders of Baozun Inc.[4] was RMB15.4 million (US$2.1 million), compared with RMB13.1 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 RMB1.10 (US$0.15), improved from both RMB1.42 for the same period of 2023. Basic and diluted non-GAAP net loss attributable to ordinary shareholders of Baozun Inc. per ADS[6] were both RMB0.25 (US$0.03), respectively, compared with both RMB0.22 for the same period of 2023. Cash and cash equivalents, restricted cash, and short-term investments totaled RMB2,946.7 million (US$408.1 million), as of March 31, 2024, compared with RMB 3,072.8 million as of December 31, 2023.   [1] This announcement contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) at a specified rate solely for the convenience of the reader. Unless otherwise noted, the translation of RMB into US$ has been made at RMB7.2203 to US$1.00, the noon buying rate in effect on March 29, 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] Basic and 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 basic and diluted net income (loss) per ordinary share multiplied by three, respectively.   Reconciliations of GAAP measures to non-GAAP measures presented above are included at the end of this results announcement. Adjusted operating profits/losses by segment are included in the Segments data of Segment Information. Business Highlights Baozun e-Commerce, or "BEC" Baozun e-Commerce includes our 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. During the quarter, total service revenue returned to growth, with double digit growth in sportswear store operation revenues and strong performance in digital marketing and IT services. Omni-channel expansion remains a key theme for our brand partners. By the end of the first quarter, approximately 42.8% 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, we have Gap brand and Hunter brand under our Brand Management business line. During the quarter, product sales revenue for Brand Management totaled RMB312.9 million, a year-over-year increase of 65.6% from RMB189.0 million in the same quarter of last year. The year-over-year comparison also included a timing impact, as the Company started consolidation of Gap Shanghai in February 2023. Gross profit margin of product sales for Brand Management in the first quarter of 2024 was 53.1%. First Quarter 2024 Financial Results Total net revenues were RMB1,979.8 million (US$274.2 million), an increase of 4.9% from RMB1,887.8 million in the same quarter of last year. The increase in total net revenues was mainly driven by a 65.6% increase in product sales revenue of Brand Management. Total product sales revenue was RMB707.5 million (US$98.0 million), compared with RMB666.1 million in the same quarter of last year, of which, Product sales revenue of E-Commerce was RMB394.6 million (US$54.7 million), a decrease of 17.3% from RMB477.1 million in the same quarter of last year. The decrease was primarily attributable to the Company's optimization of its product portfolio in distribution model, especially in the fast-moving consumer goods sector. The following table sets forth a breakdown of product sales revenues of E-Commerce by key categories[7] for the periods indicated:   For the three months ended March 31, 2023 2024 RMB % of Net Revenues RMB US$ % of Net Revenues YoY Change (In millions, except for percentage) Product Sales of E-Commerce Appliances 225.3 11 % 190.7 26.4 10 % -15 % Beauty and cosmetics 66.5 4 % 69.0 9.6 3 % 4 % Fast moving consumer goods 66.6 4 % 32.6 4.5 2 % -51 % Others 118.7 6 % 102.3 14.2 5 % -14 % Total net revenues from product sales of E-Commerce 477.1 25 % 394.6 54.7 20 % -17 %   [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.   Product sales revenue of Brand Management was RMB312.9 million (US$43.3 million), an increase of 65.6% from RMB189.0 million in the same quarter of last year. The increase was primarily attributable to a full three-month operational period in this quarter compared to two-month operational period in the same quarter of last year. Services revenue was RMB1,272.2 million (US$176.2 million), an increase of 4.1% from RMB1,221.7 million in the same quarter of last year. The increase was primarily due to the double-digit growth in digital marketing and IT solutions. The following table sets forth a breakdown of services revenues by service type for the periods indicated:   For the three months ended March 31, 2023 2024 RMB % of Net Revenues RMB US$ % of Net Revenues YoY Change (In millions, except for percentage) Services revenue Online store operations 364.1 19 % 366.6 50.7 19 % 1 % Warehousing and fulfillment 487.3 26 % 461.9 64.0 23 % -5 % Digital marketing and IT solutions 377.4 20 % 462.2 64.1 23 % 22 % Inter-segment eliminations[8] (7.1) 0 % (18.5) (2.6) -1 % 161 % Total net revenues from services 1,221.7 65 % 1,272.2 176.2 64 % 4 %   Breakdown of total net revenues of online store operations of services by key categories[9] of services for the periods indicated:   For the three months ended March 31, 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 255.6 14 % 277.2 38.4 14 % 8 % -          Luxury 99.0 5 % 96.4 13.4 5 % -3 % -          Sportswear 88.9 5 % 111.7 15.4 6 % 26 % -          Other apparel 67.7 4 % 69.1 9.6 3 % 2 % Others 108.5 6 % 89.4 12.3 4 % -18 % Inter-segment eliminations[10] (5.4) -1 % (8.1) (1.1) 0 % 50 % Total net revenues from online store operations in services 358.7 19 % 358.5 49.6 18 % 0 %   [8] The inter-segment eliminations mainly consist of revenues from 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.   Total operating cost and expenses were RMB2,034.6 million (US$281.8 million), compared with RMB1,928.4 million in the same quarter of last year. Cost of products was RMB487.1 million (US$67.5 million), compared with RMB505.1 million in the same quarter of last year. The decrease was primarily due to the decline in product sales volume of E commerce, partially offset by the cost of product increase related to Gap Shanghai, a subsidiary the Company acquired in the first quarter of 2023. Fulfillment expenses were RMB546.4 million (US$75.7 million), compared with RMB567.6 million in the same quarter of last year. The decrease was primarily due to a decline in E-commerce warehouse and logistics revenue, together with savings in Gap logistics expenses post-acquisition. Sales and marketing expenses were RMB694.0 million (US$96.1 million), compared with RMB592.7 million in the same quarter of last year. The increase was mainly due to more active performance-driven digital marketing activities during the quarter. Technology and content expenses were RMB133.2 million (US$18.4 million), compared with RMB114.9 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 RMB179.1 million (US$24.8 million), compared with RMB163.2 million in the same quarter of last year. The increase was primarily due to the increase in staff cost, as well as strategic investments in initiatives in high-quality digitalized distribution, Creative Content to Commerce business and brand management. Loss from operations was RMB54.8 million (US$7.6 million), compared with RMB40.6 million in the same quarter of last year. Operating margin was negative 2.8%, compared with negative 2.2% in the same quarter of last year. Non-GAAP loss from operations was RMB17.5 million (US$2.4 million), compared with RMB9.7 million in the same quarter of last year. The loss was mainly due to the loss generated from Brand Management business. Non-GAAP operating margin was negative 0.9%, compared with negative 0.5% in the same quarter of last year. Adjusted operating profit of E-Commerce was RMB11.8 million (US$1.6 million), compared with RMB25.2 million in the same quarter of last year. Adjusted operating loss of Brand Management was RMB29.3 million (US$4.0 million), compared with RMB34.9 million in the same quarter of last year. Unrealized investment loss was RMB17.0 million (US$2.4 million), compared with RMB42.6 million unrealized investment loss in the same quarter of last year. The unrealized investment loss of this quarter was mainly related to the decrease in the trading price of Lanvin Group, a company successfully listed on the New York stock exchange in December 2022 that the Company invested in June 2021. Net loss attributable to ordinary shareholders of Baozun Inc. was RMB66.6 million (US$9.2 million), compared with RMB83.5 million in the same quarter of last year. Basic and diluted net loss attributable to ordinary shareholders of Baozun Inc. per ADS were both RMB1.10 (US$0.15), compared with both RMB1.42 for the same period of 2023. Non-GAAP net loss attributable to ordinary shareholders of Baozun Inc. was RMB15.4 million (US$2.1 million), compared with RMB13.1 million in the same quarter of last year. Basic and diluted non-GAAP net loss attributable to ordinary shareholders of Baozun Inc. per ADS were both RMB0.25 (US$0.03), compared with RMB0.22 for the same period of 2023. Segment Information (a) Description of segments Following the acquisition of Gap Shanghai, 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 March 31, 2023 and 2024, with prior periods' segment information retrospectively recast to conform to current period presentation:   For the three months ended March 31, 2023