Q2 2020 Baozun Inc Earnings Call
Well it is time all participants in the listen only mode. After managements prepared remarks, there will be a question and answer session.
I should remind to today's conference call is being recorded.
I'd now like to turn the meeting over to your host for today's call Ms. Wendy said.
Investor Relations director outside please proceed Bradley.
Thank you operator, thank you everyone and thank you bill joining up today I would say good quarter 22 on the earnings release or distribute it already today and it's available Oh.
And.
Oh I thought Oh go we'll use where somebody sees.
On the call today from both then they have missed a ways in Chile, Chairman and Chief Executive Officer, Mr. <unk>. She schools, though they serve and Mr. Rob Me Little Chief Financial Officer, Ms., Jill will review the business operations on the company highlights followed by Mr., who will discuss financial guidance.
I'll be available.
That's true doing to UQM, they section that photos.
People, we began I like to remind you that didn't call first call contains forward looking statement, leading the meeting the Securities Exchange Act 19, the people and the U.S. probably Securities Litigation Reform Act liking that despite these forward looking statements are based upon managements current expectations and carbon market and all.
Greetings and nation I relate to embed that evolved no Oh, no red uncertainties and other factors they are difficult to predict and the men if they try out beyond the companies can show, which may cause the companys actual results could differ materially from though he knows all looking statements.
Further information regarding these and other risks uncertainties. All factors include it in a company spouting. The U.S. I think you see the company that's not undertake any obligation to update any forward looking statement, except as required under applicable law.
Lee Please know that unless otherwise stated Oh. They go as mentioned during this call I think on the and it's now my pleasure to introduce our chairman and Chief Executive Officer Mr. within two minutes. Please go ahead.
Thank you Wendy Thank you all for joining us today.
Well, let me start proceed China still not agree with you the challenges posed by Golden Monkey.
We saw strong recovery E commerce in the second quarter.
Consumers are increasingly the ball P E commerce as a portal Peter you lives.
And our spending more on categories study, who the quality of life.
She term is creating a human larger opportunities for the greenhill industry to accelerate online penetration father, and the we're seeing growing beach or rent upon <unk> go to market strategies.
People I T data analysis, and the marketing solutions shoppers PK appeared and integrated Omnichannel initiatives and the logistic services.
We believe constraints all results reflects ahlberg unique ability to create additional value for brand partners and the speech literally relinquish alport disease.
I'm very proud off what our team has accomplished so far this two weeks and jaromir twentytwenty.
Well, the second quarter or GMB grew by 31% year over year and more importantly, we sold in the recovery across various categories.
On the group 26%.
Weve service round, the leading the way it with some more than 43% <unk> year over year.
We continue to make meaningful progress you engaging with new brands and optimize the category mix.
We then that these one off 11 new brands.
This new brands, including several luxury brands, that's well, it's a few FMCG brands.
Lastly, in the food and health category.
Yeah. This is something.
That's a part of all the high quality growth strategy, we've focused on optimizing our category Mitch and ramping up newly added the brands alongside all ABR all their service offerings post will be lumpy.
This helped to improve our blended take rate for the known distribution model during the quarter.
While we're pleased to help facilitate or brand partners, even greater success. He must second quarter. We also noted the increasing macro economic uncertainties Mead Koby 90 pandemic.
The proactively took steps to unleash additional flexibility and operating efficiency.
First we have been continuously refining or service offerings for medium sized friends and within our portfolio, we leverage our technology <unk> structure and improve the efficiency and the productivity.
In 20, Monday, we launched Ross or retail operation support system.
And over the past few quarters, we'd have to fine tune several off his modules.
And demonstrate these capabilities to improve operating leverage and increased capacity.
Recently, we said pop a business unit called B or C or business operations Center.
She is powered by Ross and the leverage is shared a functionalities to adopt or delivery system to so maybe just like the brands we've agreed for deficiency.
If you will see losses to seamlessly switch all personal step up from rental Brian on top off our traditional offerings. So highly customizable solutions and the dedicated resources for premium brands.
We believe the you'll see losses to streamline consolidate you grades and to standardize our operations, which will help drive greater efficiency improvements through technology and the shared economy well, we served the medium sized the brands weeping or possibly.
Second.
We saw an accelerating evolution you commerce strategies for the brands we serve.
In the domestic market. That's you may recall, we formed a joint venture with leading domestic FMCG brands you meet pantomime Keith.
He has delivered a remarkable results in just one.
This achievement, how she published a unique pull them value proposition for domestic run partners.
Well the hopper, although you do the brands.
In the first half often why year over year, while at the Mets work the battery brands and the we're seeing even more in the pipeline.
Before we take advantage of this emerging opportunity we set top.
Dedicated operating center for domestic and the newly established the brands, which we refer.
Internally as the goal spreads operating center RGB.
As a leading player you're constantly evolving industry, we pride ourselves our track record of innovation and the launch of you'll see GB, although it's another milestone demonstrating or nonstop efforts looking for new ways to support all Brent partners and the stay ahead of the contribution.
Overall over the past for three years, we have centralized and the relentlessly strengthens our technology footprint around the cloud infrastructure and AI technology.
This foundational allows us to deliver integrated digital operating platform to drive automation and the has intelligence far run partners.
We believe digitalization and innovation will continue to be vital for strengthening or come probably people MOAKS, that's guided about vision technology empowers future success.
That's all been partners embrace faster digitalization and increasingly focused on E. Commerce, we believe they will continue to adopt more systematic.
And flexible approaches to get any comments you common strategies that we are well positioned to delever, that's a cutting edge leader in this space.
We're confident that our strong strategic execution, we're continuing to drive sustainable long term gross.
I'll now pass the call were to drive even goal for National 20, <unk>. Thank you.
Oh, that's Vincent I'm pleased to report out Saudi side of result for the second quarter, it's both a decent recovery in topline growth and more importantly meaningful margin expansion.
We believe the resistance all connected result is attributable to our strategic deployment over the past few quarters the was high quality growth.
As a part of these while we have continued to put through of Iraqi I'll call counselling shifting our focus has been to identify with emerging opportunities in new categories are the new channels.
On the we'd have to battle opportunity adaptable business model.
The liking that our continues I births have resulting in a very strong bottom line goes.
Our non-GAAP operating profit growth I keep on per cent you all year.
Our non-GAAP operating profit margin paid 8.7%.
Was a record high for the second quarter since 2015.
We believe these represents a 30 the milestones in terms of TV area, our high quality growth Scott.
Yes, it into a strong well performance.
So happy to report a significant improvement.
Capital, but they communicate our last earnings call. The postponement of collections had a negative impact on working capital in the fourth quarter.
However, it was temporary and a direct result of Colby Nike.
The second quarter, our coffee table to action normalized.
In fact, but the most are et cetera.
Especially with the help of our business process management technology.
This allowed us to a two hour publishing free cash flow for the fourth pop up 2010 gig.
Lastly, before they go into detail, our second quarter financial I wanted to highlight our continue airports to transition to our high quality growth strategy by optimizing our category mix.
Oh one side.
We accelerated our that's a decent off the new brands with the strategic goal to shrunken growth momentum and the pen between service GAAP to you have value proposition fall brand partners.
On the other side they continue to emphasize that's profitable categories other Brian.
For example.
Further optimize our threec category and the proactively do some brand partners that have been impacted by I'm sort of Keith talked Koby 19, you, especially some Brad I'll do it gets built in model.
You can you just you may temporarily impact how it can be on the revenue growth with a year over year basis, but the our Barbie mochi lobbyists all high quality goes bad.
So far this third quarter, where theyll strauss's navigate the despite the current uncertainties in the global macro economy. They they'll continue our effort to do were high quality growth I look forward to optimize our category me.
No doubt healthy and that's sustainable bottom line growth.
Our causing Andy.
And kids pace, that's the so quarter to Sun turnkey and they they'll go by the needs of 15% year over year on a total net revenue they'll be between 175 bidding on the bus <unk> 80 bidding.
Which represents a growth rate of 16% to 20% year over year.
Good luck with our pursuit of high quality growth as we continue to optimize our resource allocation and elaborate synergies across our business.
I'm very confident we will achieve Iraq, 40% Yo Yo girls in non-GAAP operating properties in the third quarter 2020.
With that Matt I will now go over the second quarter till sometime you fit nagra results in detail.
As always they believe Yo your contribution is the best way to do outperformance.
Ultra thin each case and could you gave there will be on that basis.
So again, please note that all thinkers that imation they'll be in RMB.
Total dnbi during the quarter increased by 31.2%.
<unk> eight bidding they think that gets built and yet and they go by 9.1% to one bidding.
I'll now it's wouldn't be this T.N.V. increased by 33, plus 6% Big 11 fund seventh inning.
Well the vision to address 30 or other call. They they didn't need abroad recovery across different categories.
Yes, you can to continue to strong yeah big growth momentum in the sportswear luxury and the FMCG categories.
Appropriately lacking.
The Bateman clothing category also stocking to recover.
[noise], particularly during that takes 18 hadn't pins all you Oh, yes. They have all apparel category, which includes both were luxury as a men's and women's clothing.
By over 45%.
Sure.
Well, we are pursuing high quality girl electronic scan base decline year over year other resolve all pretty birds eye for fuel switching away from last profit bulk Brad.
No careport opt into Atlanta seems category, which is the most leaking out he's built a model was it gradually baker for.
Personal care appliances had already it's high pace in the same quarter last year second they choose to maintain healthy pricing older too. So sad profitability as they proceed with our high quality growth strategy. During the June 18 marketing campaign.
A copy of the total net revenues increased by 26 times, 3% to Tupac 15 bidding.
You can do style product sales revenue increased by 9.3% to and that kind of 28 minutes and the services revenue increased by 43.2% the one ponting to bidding during the quarter.
Total cost and operating expenses were 119 night bidding compared with 162 bidding in the same quarter last year.
In particular also hurt our increased to 776 meeting from 679 meeting last year based what the line the increase in sales from the distribution model product sales gross margin improved too.
15.8% last quarter from a 15.8% last quarter to 16.4%, mainly due to our efforts to optimize the Cadbury me on the pricing strategy to preserve properties.
A year over year basis product sales gross margin decline, mainly due to incremental contributions from new brands as a deeper industrywide. These calls that's well for sure promo.
Ill children 618 campaign pasta pumping Nike.
Our blocky the gross margin was 64% increase up nearly 4% from last year, mainly due to higher revenue contribution from service revenue.
Fulfillment expenses increased to 575 meeting from 292 meeting in the same quarter last year, mainly due to I mean can be contribution from our distribution at the top them in model you, especially on the more brands engage base.
For the end to end solutions and the ultra oil you cities because all our strong of a stable performance during cold in 19 pandemic into one.
As we expected the China logistics infrastructure almost 40 the tower in the second quarter, all you need.
Fulfillment cost normalize.
Our fulfillment expenses as a percent eat up yet they increased to 4.5% from four plus percent a year ago, which wasn't many due to a higher proportion on the continent model. You know knock is good and yet they are the lower aggregate ticket size.
This was partially offset by all important utilization of warehouse resources.
Sales and marketing expenses increased to 552 meeting well 413 meeting in the same quarter last year.
It wasn't a lot of it the T I think girls.
The expansion if he told mapping.
It was partially offset by the affecting it I think if they can see improvement of our marketing services and our continued cost control initiatives.
As a percentage up yesterday, our sales and the Mckee fancy spatial input to 4.1% from 4.2% a year ago.
Technology on the cost and expenses remained stable at the while having too many compared with the same quarter last year.
Well, it's we have now established our cloud infrastructure on the deploy our <unk> technology, our ERP automation I mean, how to kings.
Let me be.
Stronger position to stabilize our ongoing technology investments.
Although resolved.
His paid that future investment they'll grow at El Baradei mold integrate for the rest of the 2020.
During the second quarter of 2020, our investment in future innovation on the product that season totaled 22.5 meeting compared with 21 meeting last year technology on the continent expenses other potentially off yet they import to zero <unk>, 8% from 1.1%.
Last year.
We experienced greater operating leverage.
Yeah expenses totaled 54 meeting a slight increase from 62 meeting in the same quarter last year, which reflected our display in the upcoming tool, but I was skills our business.
Oh, yes, all income from operations increased by 87.2% 160 by meeting from 86 meeting in the same quarter last year.
Non-GAAP basis income from operations was 187 meeting up have you been talking 4%, but well have a three meeting last year.
Non-GAAP operating margin reached 8.7%, which was a new second quarter record Wow.
Net income attributable to ordinary shareholder, it's all calls and totaled 120 meeting I increase up to 78.6%.
Basic and diluted net income attributable to ordinary shareholder top button for 80 at war to pause there for the 2.0, respectively for the quarter.
Non-GAAP net income attributable to ordinary shareholder thought Bolton totaled 146 meeting I used quits off 73.4%.
Basic and diluted non-GAAP net income attributable to ordinary shareholder top button, probably be at what Tupac 48, or the Tupac 43, respectively for the quarter.
As of June 32020, we had to pump threed bidding cash the cash and equivalents a short term investments compared with 1.7 billion.
34th to sometime.
The increase was mainly due to the recovery of collections that had mentioned earlier on the improvement our working capital efficiency.
This concludes our prepared remarks secular.
Operator, well now ready to begin the two I session. Thank you.
Thank you, ladies and gentlemen, Lou will now begin to question and answer session. If you wish you asked the question now Please press star one on your telephone and light for your name to be announced.
If you wish you can say your request. Please press the pound Oh hash key once again, ladies and gentlemen is star one for questions.
Oh first question comes from the line if Alicia Yap from Citigroup. Please go ahead.
Thank you good evening management, Thanks for taking my questions. All congrats on the Salt Lake means out of my question just on the French strategy I'm. So we said disruption is from the pandemic be sure how would you categorize the attitude from friends are they can't mall.
Selling through the S.K., you and building to sacrifice on pricing and spend on the promotional dollars do you anticipate friends a modified production said selling cycle into future to optimize cost that meeting maybe the margin impact, especially for domestic friends do you theme.
Domestic brands are approaching five up our children.
And engaging us to help them on the integrate the online offline strategy and how would that actually translate these opportunities trying to seek to all the financial in the coming quite a thank you.
Okay. So this is Jim I'll, let me address your first question. So we do see a lot of international brands are you know sitting at the different pricing strategy, especially after the pull they called the 19. So most off those brands are adjusting to our pricing strategy to bid on lower price and.
Compromise another bit in terms of their margins to get clear older all kind of inventory, especially for the first quarter.
During the cold in 19 do you have a lot of because she was offline so more and more off why resources in terms of their marketing spending also they are off like a ski resorts as well be moved to a lot and that we do see there are a very clear tone off the whole year for all those international brands leveraging all of their existing and then try again.
But am I think a little bit margin on getting a higher JV on that part and a we did not see do set a very long term strategy for off from all those Brad and doing a low season like the coming the Q3 more and more international brands and they are focused on doing your daily sales without a big campaign, especially on the big ecosystem. So.
80 cells also become very important, especially in Q3, but we also foreseen that coming quarter four well be another round out big capping base. After the mindset of consumers are always looking forward to see a deeper pricing strategies, especially during the double 11 and the other campaign.
In terms of all those participate all those brands a up there a thought selling circle of all those existing part on their lifecycle, we do see or some of the brands. They are shrink the our full winter assortment planning in the coming quarter three in quarter four most of the Brent.
They also well well migrate to the our spring summer inventory for the second half of this year. So we don't see a this is a long term trends, but only within this year for domestic Brent I'll leave that robbing give you some answers I'm not sure. It's Robin I mean, all sort of concern about the message to Brian I think that the another great.
Continued for 4000 to pick all the good the girls space you know a why you recall as Lee mentioned in the prepared remarks. Please stop a joint venture with a domestic thing worth Damascus, Brent updates choose a very good results leasing a year and a win.
It's a joint venture you know wage we just had learned how we can try to translate to our expire and said the our know how to help to.
Domestically, Brian on the other hand, I think there there is a great opportunity for the domestic brands in two hours to fourth was.
What with the you know maybe isn't more true and lifting a domestic Brad.
Half of them to go online and the you know to get the a you know grow their business as fast as quickly as possible or another and all of two into is the way what we this existing Brian to work with them to begin to pay some new broad based sounds they are very strong supply Chen at Novartis.
Strong technology. So that we can you know a cable or they can catch about you know the filter and the branded growth opportunities.
So that's why we established new over that they didn't call. The TV O automation to you in a in Vincent.
Okay.
You know as a matter of fact, we have all worth 50% all the all a newly introduced Brad you end up whats half of this year domestic brands and a more jobs I'm coming from I've been FMCG category and we do think you know I've M.C.T. jets the likely make.
How about you know during the last year about the Blackberry you know categories in all while the growth area for the people tried to happen he's not I hear you, especially for the domestic brands in the hype M.C.G. So that's why you know we have the new organization focused on the dramatic Brent based on our.
Our Cogs buried inside into how are you know a work you know corporation fees or I can just give you exact but just if I'm doing well up the framework you know a healthy food you know.
Domestic Brad and you know just give me a call you know wants you know what we as a follow through and through you know to incubate summit I knew you Brent based on their supply chains. They will visit us very so you know into vacant. So that's it I think we do see this are there there is a very good trend and the of couldn't keep a hard to work with those of you know a and b.
Sure it's companies so that even though we can catch you kept your future growth. Thank you.
Right. Thank you next question comes from the line to be Wong from HSBC. Please go ahead.
Hi, Hi could even a management. Thank you for taking my question. My first question is actually on double 11, Prentice, yet because we saw any Bob I actually announced that its double your lesson.
Plants in terms of adding a lot more about like 25 television brands and then also 500.
500000 jobs like small media enterprises and also some of the overseas French I'm, calling in does scale. So I just wonder what if any any update in terms of I was trying to teachers here do you see that we can say to you know adult more income and procure.
Having all these users having August merchants, one board and what is the mix of kind of like eight oh, because he plans, especially like local domestic range any idea would be great in 10 separate the ideas a follow up on the I'll question. Many <unk> I guess on the answers management just keep all I find very interesting that that's a step up in FMC cheap.
Do you actually see that the.
I'm just FMCG is a repeat baker or maybe even you know as comparable to apparel Africa because in the past we tend to think apparel as ties that has you know advertising spending budget, so which is very good SB getting <unk> I'm not sure how powerful FMCG.
Thank you so much.
Okay Binney a this is doing part so let me ask to the first question you laid out to the double 11, and yes, sure and let robbing addressed the second question for you. So although timo hasn't release, all the details about their game play in the coming double 11, but we do know there are some very structural timo double 11.
Campaign strategy, good to who I had all your warn of a stage and you know a presale stage than before so are we prepare you know starting to prepare all those a T mall Doubleclick campaign with the brands earlier, especially you know all those fashion brands and all those kind of the luxury brands, especially so in August in this.
Yes, we have been working with a lot of Brad to get them care was their resources in terms of the marketing dollars in terms of their assortment planning for the coming double that any especially on dirty overall situation in environment about post called the 19th more and more brands a bet on a lot of stake on becoming double 11, especially in a fashion.
Category so.
If you were talking about the game playing the game Rose four just coming double 11, we can say that so there won't be more interacted with consumer it's happening there will be more outside T mall traffic, calling into that ecosystem and they will pull ahead audio a pre stage you know I like weren't on stage or pre order stage likely.
Like two weeks I head off net loftier, so which means that all those spreads have been early a chance to harvest the or presale orders or atrophy active card while the orders again last year before so a this is also very clear strategy from that ecosystem indicates dock they want to make sure it.
In terms off the observation based on each consumer as pocket money. So are the T. Mall is trying to just get hold of pocket money earlier than last year. So that's what was that strategy. So Belgium, we'll be prepared for that too.
That's my first question Robin Good Charlotte, Let me take the second question you know about to [noise].
Working with a small sized surprise inspectors and local brands I think.
No way as we've mentioned before they have appeals say and a you know TB old.
You know organization based is a well prepared to work with this breadth and as a matter of fact, we start to work with somebody emerging brands already on the waiting for you in a way how a great opportunity looks in the reason for that is will be held various draw proper. They seem to appreciate is I don't know how about how to work with that and how to help the spreads.
Sure.
You know to go away fat. So that's a yeah. That's we are very active to join this kind of game to you know a worked with local brands exactly like the medium or even smaller size Brad on the regarding the I've M. A C. I'd worked had some and I think he is very hard to say you know to compare between the apparel industry FMCG as we move.
He asked and I have I think he's a became battery in their traditional channel before either under you know just like the years ago. They get the kind of work. There. Other work has been the spending well mapping spending from the traditional channel to outline on the knowledge. They are kinda could diverse trying to diversify their spending.
You know a problem chemo only across channels, which we kind of happens is George to work with you in between and the even quite show and the way how a worry type you know a working relationship with the most OEM to pay show and I really happens to do everything for that and there are they on the other how do you in a way.
We want to work with its Brian in a very small size. So that even though we can you know happens them to grow into marketing spend in operations, even the logistics and hiking you know services. So that you know how to them to go to go to the omni channel use. Another you know compacting itself will follow soon you know a based on our system.
Yeah, I think that's a that's altitude all classroom.
HM. Thank you so much that's very helpful.
Thank you on next question comes from the line of 10 have from T.H. capital. Please go ahead.
Yeah. Good evening management [laughter] two questions. The first Mike it's regarding the category mix. So Ah I you know opening remarks. So you guys mentioned about high quality rose and yeah technically mixed so I wonder what.
At the top category today and kept versus a year ago. So that's a number of my question.
Number two regarding the competition. So what's the lives. So they are de pop up in itself setup, a oh, probably should know center to help merchants to love and to do picture operation a pop up and good so HM.
Not in house, right now and I Wonder if that becomes some kind of SAP a pressure to do so that she said the second question. So I am glad commencements keep us some color no competition from thank you.
Hi, I'm sure. It's Robin let me out there are four it's got that seem to how can you know go to the next question are you know before I give you some color about Kathryn.
Onto a expand again above what our high quality girls strategy is.
I mean are in the off course with you know that's really based on our judgment or about the whole industry and now we're thinking though there are classified to two phases that are you know the interface why that's driven by the you know girls stopped a industry and the you know store operations already.
And the focus I think he's a phase two you know we Ah we would think about you know there Rob you know more detailed or more penetrated surveys in the deeper into service I've Ehrs and also the technology is a keen in the into a phase two.
According to the category mix, we need to you know a pick up you know over the profitability about the T N b quality Ah. That's why there is that Oh wait called in the optimization of our brand portfolio something like this.
So but based on these documents you know we you know a quarter. So go away just to have the you know strategy about Hyperlink group girls as there are different part number one we think we need to optimize our brand portfolio under in some sort in categories they need to give up more brands.
So that you know we can get back a certain level of the propping profitability in that in that or the other categories and then number two we need to a adapt our organization our technology and our structure to be very good I'd like to be barring that take to the change.
Of the environment, how the market. So I think this quarter or they gave you. The you know very popular result about Holly what we do or what we have been doing you know constantly to you know a or optimize our.
Cost structure and optimize our categories.
So I think that's kinda like a what we call the high equity girls into and we want to drive I'll walk you know operating margin and all that bottom line fit natural girls.
So without doing the process, but the I think even though.
By the end up this year they will finish up you know the the optimization our portfolio and Oh by the way I think well with the you know disappear off the Colby 19 impact on the also with the completion of our organization all our goals you know.
Probably not girls, so there'll be turned to 30%.
All year for the next year.
About the country mix.
Thank you know a way look at all apparel category. That's include no sportswear luxury men's and women's category I think the higher the groceries happened begins.
Luxury categories and a as I mentioned in the last question basing the FMC AG there'll be the next one you'll high while bar a high grocery but of course, you know you know sportswear is a very stable in a worry you know a healthy growth rates I read quarters. You know you know in the path and the unit future as a way.
I use vaccine and also we are growing up some other categories and the next tobacco cosmetics or something like this thank you.
All right. So I'll, let me address your second question related to the Ali Baba in house operation a potential a so called competitor limitation with Belgium, operating so actually I believe that you've got them news lately. So from the Internet that you her Ali Baba had sounded a operations center in the King Bhakti to cover the drug on province.
Operation.
This is part of their Ali Baba Big hole to Springs under project in Chinese they called that twin Lakes Wow. So actually this project has launched in the beginning off this year tend to cover all those more media and you know brands for entities in Taobao and also on T. Mall. So this is not you know overlapping with belt.
Existing addressable market. So there tend to just set up an operation center to provide a fundamental basic technology and operating system to let all those more median rents or entities to run their home business a lot of their entities are like United factory like you know traditional on.
Many factors and they had quite a bit easy to just you know manufacture all those brands starting to a tier three from tier three tier six cities. So this is all the our AAA project or about doing so we do not see due to its kind of the competition with positive operating consider our addressable market is focused on international leading and dome at that meeting Brad.
Yeah.
Thank you [laughter] declared.
Thank you I'll next question comes from your line of Thomas Chong from Jefferies. Please ask your question.
[noise] [laughter] [noise].
[noise] I talked about Europe countries all of our clear.
As a way her body is above the lives babies R crack.
Yes.
Okay, Let me try and electrical blocked by to alter its classic based on what we hear about okay. I I thought that was not very clear to me. So let me give you some color on the livestream part if your question is going into that.
So like streaming is one of the approaches our digital marketing so it's actually.
One way to just you know all just like we're getting the traffic from like Hell or the other kind of celebrities and install a live streaming so if you're talking about live streaming and digital marketing basically will categorize them into a two sections.
One is live streaming ways kaylee almost anybody the second one is live streaming from an install operation lighter brand itself or apply start off their in store associate something like that.
So D opportunities for the outlook of the live streaming is really helping this is a new initiatives, helping get more traffic, especially new consumers to the store. So we have the ROI and we have all the script designed belton is providing a very comprehensive services are helping all brentanos if they want to.
Engage with different kind of way off live streaming. So this is really helping us to get new customers, but if you're talking about the outlook and the future. How do we just kind of rice all those different part we believed that the brand will be engage with their in store live streaming heavier because the cost is relatively lower.
And do what engage with a tail or celebrity Lightstream you know like several times a year consider this is relatively higher cost, but each way consultant and the brands will be you know a and together choose to estimate the return off and that's an off each approaches in the life streaming or I don't know is high.
Just a question on out yeah, that'd be a that'd be as something you know a based on our or what was I care about the Bob's question.
You know a I think that we have barbie very clear position about Alaska babies are number one you know where representing approximately offset Brad the better I've worked with appeal or even the in store or.
Let's do the in companies together and the two you know identified what kinds of he I tell you it's better for the life screening business.
And number two we already engaged in their lives gaming operations into the daily operations basis to the across the stores on the number three or we are setting up some strategic you know agreements with a.
Typical you know kill Al and the typically in store live streaming company, though that you know we can you know a embrace these kinds of a new channels I know to be working with though I'd also note. When you see you know with a a path. So you know a you know a corporation and they do see our strong.
Our value proposition about you know outstanding to a surprise on the you know I'll provide more you know us a supply Chen and there's some I T. A pop up for the also you know, including some logistics UPOP for these two companies. So we how we argue that well I'll go into.
I'd say.
You know a company, but do you know we are what we them very closely with a different the value positioning on the you know I think it that's up article you don't get models to the what can be though.
Hi, Thanks.
Thank you next question comes from the line of choice GE from Bank of America. Please go ahead.
Oh, good evening management's thanks for taking my question Oh My God.
Actually was related to that typically gross.
I know.
You guys actually magazines like FMCG categories like happened not up new additions to our new brand pipeline. So could you actually give us like you know, how how big GMI contribution and what's the rough gross rate take rate and also the operating profit level for this particular case, a great I it seems well.
Our new growth driver for for the next probably like couple years and also I mean, we have it sounds like you know among different categories like apparel FMCG electronics and also probably.
On the fine because it sounds like which one has the highest grows with why has the highest like take rate, which will have better operating leverage just like order just just getting them on their off like different like you know categories and also I have a small follow up on the how Uh huh.
Getting questions just for what our actually F. G four hour.
Existing brands for this quarter.
Thanks, So nothing thought but just growth was different brands like for like thank you.
Oh sure about the same store sales girls sees the 49% in Q2.
I also just putting forth. Other then bother Doug or the category. It's you know I think I need to give you more extra Nathan about you know all looking to see a you know as we mentioned during the remarks, a way are switching away or some of the rise in the series C.
Okay, because you see in the very low take rate I agree heres the way don't want to do that anymore and the you know that has some impact on the T.N.V. alu temporarily possibly you know we how are very strong pipeline in FMCG and a luxury you know abroad, which Ken.
Replace them I, you know a step at that all of cross unit luxury or we should offset because some of the luxury supply chain outside China and the they need some time to gotten pop and.
You know, there's still has some delay about that locker, Brad opening stores in chemo and the other platforms and but I think that will be ramping up on the finish up by before the end of this year I know about that I've had to say geez IND or most of that either domestic or a you know.
There's I think the you know a if you say the year over year prices that you know both category will be or how do we more than 100% year over year growth.
And the just now I may show about a you know our largest catheter is doing the apparel, which include the sportswear luxury men's and women's category. The both where is very healthy growth rate.
No change before very stable and the work healthy and for the luxuries over 100% year over year girls and the Mensa mens and womens in those cuts do category Coward since a 618 as a base hopefully they can you know get back by the type of 11.
We do see lots of positive sense about double 11 everything.
You know this third quarter is a very strong seasonality because I'll be couldn't even because he is 18 and the timing diving, especially on the environment. How the Colby 19, So that's kinda like a virus back to a burst traffic as high as.
The Q3 and the way you know make you adopt this time to do a lots of adjustments. So that the week had you know how a path or groceries, but I'll kill fraud that that next year. Thank you.
Got it Oh man Muslim up its I actually just for the three Q outlook I mean, we get it sounds like that's slowing down or the G.N.V.. We understand it's a course like less promotions from the brand and also it all has already the other pets I'm sure in a second quarter.
I guess to it which particular typically well see the biggest like impact.
Like in the third quarter I'd like you know that deceleration the growth rate salaried materially from second second quarter to quarter on your notes.
Uh huh.
Yes, I mean, how it's like I said.
You know.
Yeah, I think it I mean are for the into category you know three see category all you'd actually this category a week. So call you back electronics category is still you know Bari a week you know a eyewear because our optimization they category.
And Ah Ah you know I think you'll maybe Paul you know, we you know last quarter.
A year ago, the quarter a year ago. They have a worry high base about this category had the you know a way also about so you're going to too we had a decline in that category I think it as a similar in Q3 I think that's a big impact on our about about Alex yet they have.
However, it's a very healthy for us to pursue a high quality girls. Because you know we are trying to adjust that he had way so that would cause more more profitable if you have become coming through to our portfolio.
Got it thanks a lot.
Thank you on next question comes from your line of Charlie Chan from China Everything sounds. Please go ahead.
Hi management. Thanks for taking my question I have a follow up question on the quality of growth strategy, which you mentioned a few times truthfully.
It seems that's the margins wrote out should read a nicely this quarter. So I would like to you got a bit more color on how this strategy work. For example are you simply give me more services or selling more products to clients that are willing to pay you more give you better terms for better take rate or.
You are actually selling more products or services to clients that generates better margins or returns to Q2. The firm. So I think the follow up question would be is there any particular.
Services or products that have better marginal return across all I can give us a few examples on that thank you.
Sure. It's Robin let me answer this question just I eat rather watch the a high quality high quality growth strategy, a eat away on a away our stat immune regarding Q2, I think that's a really good to be black shed a watch way due out in the hall.
What quarter hard in the past quarter odd that you know he they were this cut it off the result, I think that's a multiple factors are number one regarding that are the topline revenue.
You know a way do you Wanna add up the services you know for example, a you know we how barring a we had a very stable as a very good performance our luggage surveys in Q1 during the Kuwait 19, and after Q why you know more and more breadth coming to a hot to you know to lead the there.
<unk> about you know consignment model, but you can see or our consignment model revenue you know really drive our service revenue and of course, you know the pure service drive you'll also have already he said the girls or the number two about distribution way I worry pretty cautiously to adult.
You all combined our distribution portfolio, because you know, possibly things there. The for example, there is a baby formula Brian on the you know how worried Matt topping there marquee the price on the you know goes to the into hurt a gross margin. They know pretty cautiously. We just see you know gets continue these surveys.
On the you know a switch the inventory back to the Brad and is there is that an 8-K that these filter on the you know we just try to protect our gross margin. There is some challenging the market, but we can always you know very cautiously choose solved or to solve that problem.
ER.
That's a number number wise I think a number two you know weight how worried goods you know a you know a development in the technology and the you know both the the breast meat. Our technology you know to integrate all you, though offline online to offline which contribute more.
You our service.
Revenues.
Also you know internally, we utilized Rotce system, you know as Quintin mentioned about you know like you know we get the you know automated and the empowering beacon safe all cross that really gave us about the phase two you know to do the cost reduction used to either to adapt to our business model to the fast.
Hedging environment, you know I think after the past quarters, you know a past few quarters that you know endeavor, but you do see you know our leverage or did you see improvement in the different the policy a initiative and the number three I think we've finished up you know a.
No Barbara.
Otherwise you know technology platform been called the deal P is about to get all president platform on the you know way just the you know we don't need to spend that you know a borrower high growth all the technology to keep our worry a competitive position having a technology you know really you know what the for this.
I'd like to stable in baton to technology and that gave us more space about it you know a margin improvement so they've kind of like a multiple factors to contribute to our high quality girls and TV word resulting too.
Thank you Rob it's very clear I just have one other very a quick follow up question. The pipeline of new brand partner acquisition for the rest of year can you give us some color on that thank you.
Yeah, we have some oh I.
I think well very strong broad pipeline.
You know jeopardize that you're not based on our says that hop hi table about the adjustment on the optimization Alpro brand portfolio and the morning, partly based on our bar is strong pipeline. We are expecting you know a 30% governmental we already own.
Growth, but the next year. So that's really based on the the strong pipeline are the means well I think we can keep the opn an operating profit margin values and momentum a you know just this year for the for the next year. Thank you.
Thank you.
[noise] trial next question comes from the line as John Choi from Taiwan. Please go ahead.
Thanks management for taking my question is Rob and asking on behalf of John Toy isn't the right way to expect three Q2 half a slower growth because of the seasonality and as we eliminate some of the friends, but but we will see better margins asked those brands will be taken out and expect a G.N.V.
And revenue to see a strong read reacceleration in for Q and also could management comment on thick improvement in the take rates this quarter and is it mainly because of the G.N.V. ramp up from the brands that we acquired in the second half of 29 teen and I would there Jim be ramp up would be able to offset somewhat though.
Seasonality in Threeq you. Thank you.
Yeah, I think a that's for my question, yet I mean, a drop the youre the to answer your question is the yes.
For the for the three Q.
I think they survived that they can year you know internally we are doing some optimization.
Actually there as you know in between the two big promotions 618 that double 11, it's kinda like a TV caused largely by the they see the stronger Cincinnati key a impact in this year or add up all the take rate I think it you know a we are you know a getting back from.
A you know based on the calculation of our Bakken back to had Pam, 4%, Although a service take rate and I think that's a many because you know way how a mall a survey spreads come in for the last year and also they are ready get hop the survey, especially for example for the IP.
You know revenue under you know logistics revenue coming up for the us for the this new brands and the contribute.
Two hour.
Food take rate.
Alright. Thank you all final question for today comes from Sally Chan from C.L. Ashley. Please go ahead.
Yes, Hello, and good evening management. Thank you for taking my question I have two questions one is.
We saw honestly. This is take rate has quite a notable increase so I like the 1.6 percentage point on the young your basis. So just wondering is management could Sharon will come out on the try this behind like how much of it was driven by category mix and then how much of it. So you know what's driven by the new brands revenue contribution and.
Then my second question, so and there have to don't get the take rate for the rest something here, maybe and then if the question is actually on a mini program challenging we chat. So just wondering if theres any update there and then you know what's on strategy like going from what some thoughts on that will be very helpful. Thank you.
Yes about take rate I think you you have done other hop are driving by the category mix on the half driven by the.
New product introduction and about a I mean, you program you know I think we are very proud off to a recent progress in the media program. You know a you know starting by the you know a I T support I had the store operation in no way start to a pro why do you know you don't tracking services in the media program.
And most importantly, you know a after buying to hop here you know for the pieces you need to help them even programs have been brick brooking, even a in the breakeven preleasing in Q2, I think he is a milestone for them to a walk worry you know a progressive me a into future and the also.
So I'll wait Howard very strong relationship with the brands on the you know you end up running commerce side in the media a mini program sector.
So that's a way are basically that's very helpful to grow this business is very quickly. Thank you.
Great. Thank you. Thank you Robin.
Thank you I'll now turn the call back can management team for closing remarks.
Thank you operator in closing on behalf of what about in management team I'd like to thank you for your participation in today's call. If it were quite anybody inflammation feel free to reach I still have.
Joining us today, they conclude the call.
Thank you, ladies and gentlemen that does conclude our conference for today. Thank you for participating you may disconnect.
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