Q3 2023 Baozun Inc Earnings Call
Speaker 1: Good morning, ladies and gentlemen, and thank you for standing by for Bowson's third quarter 2023 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.
Good morning, ladies and gentlemen, and thank you for standing by for the third quarter of 2023 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.
Speaker 1: As a reminder, today's conference call is being recorded. I will now turn the meeting over to your host for today's call, Ms. Wendy Sun, Senior Director of Corporate Development and Investor Relations at Baldwin. Please proceed.
As a reminder, today's conference call is being recorded I will now turn the meeting over to your host for today's call Ms. Wendy Sun Senior director of corporate development and Investor Relations.
Please proceed Wendy.
Speaker 2: Thank you, operator. Hello everyone, and thank you for joining us today. Our third quarter 2023 earnings release was distributed earlier before this call and is available on our IR website at ir.baozhen.com as well as on Global Newswire services. We have also posted a PowerPoint presentation that accompanies our comments to the same IR website where they are available for download.
Thank you operator, Hello, everyone and thank you for joining US today, our third quarter 2020 is the earnings release was distributed earlier before this call and is available.
I, what's that I or the Belgian dot com as well as on global Newswire services.
We have also posted a powerpoint presentation that accompanies our comments to the same IR website, where they are available for download.
On the call today from Biogen, we have Mr. Lisa Xu Chairman and Chief Executive Officer, Mr. Oscar <unk>, Chief Financial Officer, and President of Biogen E Commerce, and sundries that'd be present 2000 brand management.
Joe will review the business strategy and company highlights followed by Mr. Yu, who will discuss the business development of e-commerce and above tell them financial done by Mr. <unk> to share more about those in brand management. They they'll all be available to answer your questions. During the Q&A session that follows.
To begin I'd like to remind you that this conference call contains forward looking statements within the meaning of the U S. Securities Act of 19 cities suite as a mandate the U S Securities Exchange Act 19, so people as of Monday, and the U S. Private Securities Litigation Reform Act of 1995.
Speaker 2: This forward-looking statement upon management's current expectations and current market and operating conditions and relates to events that involve no or no 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.
These forward looking statements Hum management's current expectations and current market and operating conditions and relate to you guys that involved no oh, no risk uncertainties and other factors all see each other they co to predict and men of page are beyond the company's control, which may cause the company's at.
Actual results to differ materially from those in the forward looking statement.
Speaker 2: Further information regarding these and other risks and certainties of factors is included in the company's filings with the U.S. Security Exchange Commission at its announcement. Notice are other documents published on the website of the Stock Exchange of Hong Kong Limited.
Further information regarding these and other risks uncertainties or factors is included in the company's filings with the U S. Cigarette. It takes change commission and its announcement no tastes. All other document published on the website of the stock exchange of Hong Kong Limited.
Speaker 2: All information provided in this card is as of today here and is based on assumptions that companies believe to be reasonable as of this date.
All information provided in this call is as of today hereof and is based on an assumption that a company is believed to be reasonable as al described this date.
Speaker 2: and the company does not undertake any obligation to update any forward-looking statements except as required under applicable law.
And the company does not undertake any obligation to update any forward looking statements, except as required and Oh.
Speaker 2: Finally, please note that, unless otherwise stated, all figures mentioned during this conference call are in RMB. In addition, we may elect to use adjusted in place of non-general accounting principles or non-GAAP in order to reduce oral confusion that arise from our discussion about financial related to the GAAP grant.
Finally, please note that unless otherwise stated all figures mentioned during this conference call on the in addition, then that you'd like to use the adjusted employers the non general accounted accounting principles or non-GAAP no there to reduce all real confusion.
Rice from our discussion about the national related to the gap brand.
Speaker 2: It is now my pleasure to introduce our Chairman and Chief Executive Officer, Ms. Vincent Chiu. Ms. Vincent, go ahead, please.
It is now my pleasure to introduce our chairman and Chief Executive Officer. Mr. Recent you. Mr. Go ahead. Please.
Speaker 3: Thank you, Wendy. Hello, everyone, and thank you all for your time.
Thank you Hello, everyone and thank you all for apartment.
I'm happy to share with you today several key highlights from the third quarter demonstrated solid progress.
Speaker 3: I'm happy to share with you today several key highlights from the third quarter that demonstrate solid progress.
In our transformation.
Speaker 3: Our total revenue grew by 5% year-over-year to $1.8 billion, driven by incremental BBM contributions.
Our total revenue grew by 5% year over year to one 8 billion.
Driven by incremental <unk> contributions.
These as revenue met our expectations driven by growth in the apparel category was up 26% year over year increase in sportswear.
Speaker 3: In addition, we further improved our operating cash flow even after accounting for cash outflow from BPM.
In addition, we have further improved our operating cash flow, even after accounting for cash outflow from PBF.
Speaker 3: This marks the first third quarter since our IPO, where the company has achieved positive operating cashflow.
This marks the first.
Third quarter since our IPO, where the company has achieved positive operating cash flow.
B B.
Speaker 3: BBM is executing well on its transformation of Gap China and has shown solid progress towards premiumization.
Executing well on its transformation of China and that has shown solid progress towards our premium amortization.
During the quarter <unk> gross margin of 56% continues to outpace our initial forecast.
Speaker 3: During the quarter, BBM's growth margin of 56% continues to outpace our initial forecast.
Speaker 3: We also opened five new stores, garnering impressive consumer feedback and high sales per square meter.
We also opened five new stores are garnering impressive consumer feedback and the highest sales per square meter.
Speaker 3: On my visit to the flagship store in Guangzhou, I was highly impressed with the new galaxy.
Well my visit to the flagship store in Guangzhou I was highly impressed with the new cap.
Speaker 3: Competing with a large array of quality apparel brands in one of China's top 10 shopping malls or stores stood out with notably higher brand energy and overall vibe.
Competing with a larger array of quality apparel brands, one of China's top 10 shopping malls or SAR stood out.
With notably higher brand imaging and the overall wide.
Speaker 3: Furthermore, following the acquisition of Gap China, our Technology Innovation Center quickly simplified
Furthermore.
Following the acquisition of <unk>, China, Our technology Innovation center quickly simplified it.
Speaker 3: complex architecture by consolidating nearly 70 historical systems into one modern integrated omni-channel operating platform.
It's complex architecture by consolidated nearly 17 historical systems into one modern integrated Omnichannel operating platform.
Speaker 3: namely the Retail Operating Platform or ROP.
Namely the retail operating platform all RFP.
So all the pieces.
Speaker 3: The ROVP is new architecture featuring a centralized hub instead of a traditional ERP.
Sure.
A centralized hub instead of traditional ERP.
Speaker 3: achieves more real-time management and utilizes one pool of inventory to increase sales efficiency and inventory turnover.
Achieved more management and utilized one pool of inventory, we increased sales efficiency.
And the inventory turnover.
Speaker 3: This establishes a solid foundation for GAP's continuous digital transformation.
This is published as a solid foundation for gaffes continuous digital transformation.
Speaker 3: In the next phase, our goal is to create an intelligent end-to-end value chain management system.
And the next phase our goal is to create intelligence.
And the value chain management system.
Speaker 3: offering advanced CRM and data capabilities that will significantly enhance inventory of planning and private domain autonomy.
Offering.
Advanced CRM and data capabilities that will significantly enhance inventory of planning and the private domain autonomy.
Speaker 4: In addition, we have made solid progress in business intelligence capability.
In addition, we have made solid progress in business intelligence capabilities.
Speaker 4: Earlier this year, we identified an increase in demand for instantaneous data insights, which empowers brands in making well-informed decisions.
Earlier this year, we identified an increase in demand for instantaneous data insights, which empowers brand that you're making while you formed the decisions.
Speaker 4: This is vital given the rapidly changing dynamics within the e-commerce industry.
This is a vital given the rapidly changing dynamics within the e-commerce industry.
Speaker 4: During this year's Double Eleven event, we introduced a suite of real-time intelligence and virtualization tools.
During this years double 11 event, we introduced a suite of real time intelligence and visualization tools.
Speaker 4: I'm proud that in such a short span of just a few months, our BI capabilities have evolved to become a leading force in the industry.
I'm proud that in such a short span of just a few months.
RPI capabilities have evolved to become a leading force in the industry.
Lastly, we are very excited to announce our planned 51% equity acquisition of location. All no question, a top tier OEM partner specializing in apparel and accessories.
Speaker 4: Lastly, we are very excited to announce a planned 51% equity acquisition of Location, or Luokexun, a top-tier douyin partner specializing in apparel and accessories.
Speaker 4: We are pleased about combining location's exceptional expertise in daily live streaming with our leadership in creative content, compiling portfolio of brand partners, and the profound e-commerce operating experience.
We are pleased about combining locations exceptional expertise in daily live streaming with our leadership in creative content compelling portfolio of brand partners and the profile of the E Commerce operating experiences.
Speaker 4: The synergy solicited by our leadership in the ecosystem and expands on our success in other major brand e-commerce platforms.
The synergy.
<unk> leadership in the ecosystem.
And expense on our success in other major brand e-commerce platforms.
Speaker 4: This marks a significant milestone in our strategic transformation.
This marks a significant milestone in our strategic transformation.
Speaker 4: Let me now pass the call over to Arthur for review of our financials and update on our e-commerce.
So let me now pass the call over to Arthur for a review of our financials and update on our e-commerce businesses.
Speaker 5: Great. Thank you, Vincent. And hello, everyone. Let me do a quick review of the financials for the third quarter of 2023, after which I will discuss our BEC business in more detail.
Okay. Thank you <unk> and Hello, everyone.
Let me do a quick review of the financials for the third quarter of 2008, when history obsolete I will discuss our EC business in more detail.
Once again, we are reporting in two segments.
Speaker 5: e-commerce, which includes Bolling e-commerce, or BEC, Bolling International, or BZI, and Group Headquarters.
E Commerce.
Inflows Voltaren E Commerce Obe's.
Poultry international obese.
And group headquarter.
And bulk and brand management of BBN wage increase got greater China.
Speaker 5: and Baltimore Brand Management, or BBM, which includes GAP Greater China.
Please turn to slide number three.
Speaker 5: Vulture Group's total revenues for the third quarter of 2023 expanded nearly 5% to $1.8 billion.
Okay groups total revenue for the third quarter of 2023 expanded nearly 5% to one 8 billion.
Speaker 5: driven by incremental BBM revenue of 298 million.
Driven by incremental <unk> revenue of 298 million.
Due to a weaker economic environment, and a stronger seasonality, although e-commerce revenue declined to $1 5 billion.
Speaker 5: Due to a weaker economic environment and a stronger seasonality, our e-commerce revenue declined to 1.5 billion.
Further pursuing a high quality business model, we styled back on low margin product sales and trained low value added service revenues.
Speaker 5: Further pursuing a high-quality business model, we scaled back on low-margin product sales and trained low-value-added service revenue.
Consequently product sales of e-commerce decreased by 17% year over year.
Speaker 5: Consequently, product sales of e-commerce decreased by 17% year-over-year.
Speaker 5: notably in Appliance, Electronics, and Fast Moving Consumer Goods categories.
Notably in applying electronics and fast moving consumer goods category.
Speaker 5: This was partially offset by increased sales from sports, healthcare, and beauty categories.
This was partially offset by increased sales from sports.
Care and beauty categories.
Speaker 5: In addition, our focus on innovation enabled double-digit revenue growth in technology and end-to-end solutions within the Tencent mini-program ecosystem.
In addition, our focus on innovation enabled double digit revenue growth in technology and end to end solutions.
Solutions, what do you think the Townsend mini program ecosystem.
Although total gross profit was largely flat at $1 3 billion.
Speaker 5: Our total gross profit was largely flat at 1.3 billion.
Speaker 5: Product sales growth margin for e-commerce and BBM was 13% and 56% respectively.
Sales gross margin for E Commerce, and BPM was 13% and 56% respectively.
Speaker 5: Gross margin expansion of DBM continues to outperform our initial expectations with a double-digit year-over-year increase.
Gross margin expansion of DPM continues to outperform our initial expectations.
A double digit year over year increase.
Speaker 5: Our adjusted flow from operations was 90.4 million during the quarter.
Our adjusted loss from operations was $19 4 million during the quarter.
Speaker 5: of which e-commerce adjusted operating loss was 40.3 million mainly due to weaker micro conditions and a stronger seasonality.
E Commerce adjusted operating loss was $14 3 million, mainly due to a weaker micro foundation and a stronger seasonality.
Speaker 5: BBM continued to show good momentum in reduction of its operating losses to 50.1 million this quarter.
<unk> continued to show good momentum in reduction all faced operating losses to $58 1 million this quarter.
That's new in China for China product launch.
Speaker 5: New start openings and new marketing strategies were quite successful.
New store openings and new marketing strategy were quite successful.
Speaker 5: These initiatives will provide a foundation for better profitability in the coming quarters.
These initiatives, while providing a foundation for better profitability in the coming quarters.
So I'm wondering will cover the details later.
Speaker 5: Now turn to slide number 4 about our cash and cash flow status.
Now turn to slide number four about our cash and cash flow statement.
Speaker 5: As of September 30th, 2023, of a cash.
As of September 30th 2023.
Our cash cash.
Speaker 5: cash equivalents, restricted cash, and short-term investments totaled $2.9 billion.
Equivalent restricted cash and short term investments totaled $12 9 billion.
Speaker 5: We continue to improve working capital efficiency.
We continue to improve working capital efficiency.
Speaker 5: through back-end process re-engineering on infantry, billing, and cash collection management.
<unk> backend process reengineering, our infantry billing and cash collection management.
Speaker 5: This is the first time since our IPO that Baldwin has achieved positive operating cash flow in the third quarter of the year.
This is the first time since our IPO that Biogen has achieved positive operating cash flow in the third quarter of the year.
Now, let's dive into our e-commerce business.
Speaker 5: Overall, we are making good progress in transforming our BEC business.
Overall, we are making good progress in transforming our P&C business.
Speaker 5: Our transformation strategy focuses on four key areas as follows.
Our transformation strategy focuses on four key areas as follows.
Speaker 5: Number one adopting a customer first approach to meet the needs of our brand partners.
One adopting a customer first approach to meet the needs of our brand partners.
Speaker 5: 2. Enhancing the offering of omni-channel end-to-end services
Number two in handling the offering of Omnichannel and tool and services.
Number three focusing on high quality and high margin businesses and.
Speaker 5: Number three, focusing on high-quality and high-market businesses.
Speaker 5: and number four, boosting cost-effectiveness and process efficiency.
And number four boosting cost effectiveness and process efficiency.
Our CEC, we put our brand partners' needs at the center of everything we do.
Speaker 5: At BEC, we put our brand partners' needs at the center of everything we do.
Speaker 5: During the quarter, in collaboration with Nielsen, we further upgraded our Next Promoter Score, or NPS, survey, and spent two months conducting 40 sessions of in-depth conversations with our brand partners.
During the quarter in collaboration with Nielsen, We further upgraded all the nice promoter score or NPS sorry.
And as far as two months contacting 40 stations of in depth conversations with our brand partners.
Speaker 5: We seek to locate service shortfalls and identify opportunities to enhance our services.
We seek to locate surveys shortfalls and identify opportunities to enhance our services.
Speaker 5: For the third consecutive year, we have achieved an excellent MTS rating with 86% of our brand partners gave us a positive rating.
For the third consecutive year, we have achieved.
Alan <unk>, reaching 86% of our brand partner gave us a positive rating.
Omnichannel strategy continues to be our top priority to drive sustainable growth for our brand partners.
Speaker 5: Omni-channel strategy continues to be our top priority to drive sustainable growth for our brand partners.
Speaker 5: This enables brands to improve operational efficiency and drive incremental business opportunity on different platforms.
And this enables brands to improve operational efficiency and drive incremental business opportunity on different platforms.
I stand illustrated on slide number five.
Speaker 5: 45% of our brand engaged with us on at least two channels.
45% of our brands engage with us on at least two channels.
Speaker 5: showing consistent growth compared to the same period last year.
<unk> consistent growth compared to the same period last year.
Speaker 5: In this quarter, 40% of our total GMV was contributed from non-GMOs.
In this quarter, 14% of our total T M D well.
Was contributed from lung chemo channels.
Speaker 5: Among which, WeChat and Stoyan delivered double-digit GMV growth.
One wage wechat and Stowe in delivered double digit GMB girl.
Speaker 5: Since 2019, we continue to invest in Tencent's mini-program ecosystem with good results.
Since 2019, we continue to invest in talent and mini program ecosystem, what it could result.
Speaker 5: Recently, we started to pilot operations on Tencent's video account platform with brands in the SMCG and cosmetics sectors.
Recently, we started to pilot operations on Townsend radio Com platform.
Brandon in CPG and cosmetics, Texas.
In the latest patents and smart retail Shanghai program in October.
Speaker 6: In the latest Tencent Smart Retail Qianyu program in October , we won three major awards.
We won three major awards.
Global operation excellent partner.
Speaker 5: Pioneer Award for Private Domain Training, and Pioneer Award for Video Account Operations.
They're about a full private Tommy in training and Pioneer award for video account operations.
We are also very pleased with our progress in the towing ecosystem. Please.
Speaker 5: We are also very pleased with our progress in the Douyin ecosystem. Please turn to slide number six.
Please turn to slide number thanks.
Things, it's all official launch in late August.
Speaker 5: Our Creative Content to Commerce, or CCC, has partnered with more than 30 brands for Douyin live streaming, and generating a total GMV of over 100 million in the first quarter.
Our creative content to commerce or CCC has partners wave more than third hey, Brian although in live streaming and in generating a total GMB over 100 million in the first quarter.
Speaker 6: We have been strengthening our competitive edge within the ecosystem in luxury sports and outdoor and fashion apparel.
We have been strengthening our competitive edge within the <unk> ecosystem in luxury sports and all store and fashion apparel.
Speaker 5: As announced by Vincent, we are very excited about the planned acquisition of location to create an industry-leading domain service partner, as demonstrated on slide number 7.
It's unknown by Vincent.
We are very excited about the planned acquisition of location to create industry, leading double unitary partner as demonstrated on slide number seven.
Speaker 6: With this partnership, we can now utilize Baozun CCC's market leadership in creative content and ice-level campaigns.
Why is this partnership we can now utilize Bolton CCC its market leadership in creative content and lung.
Ice level campaigns.
Speaker 5: along with location-proofed operational experience in daily live streaming to offer more innovative services in the Douyin ecosystem.
A long way location proved operational experience in daily live streaming to offer more innovative services in Dolby ecosystem.
To both our client partners and our own brand managed by Bds.
Speaker 6: to both our client partners and our own brand managed by BPM.
Going forward, we will have two primary large three new locations in Shanghai, and Hangzhou covering a total area of overlap.
Speaker 6: Going forward, we will have two primary live streaming locations in Shanghai and Hangzhou, covering a total area of over 12,500 square meters.
12500 square meters.
Lastly.
Speaker 6: We value our employees as our most important asset.
By now all of our employees as our most important asset.
Speaker 6: Throughout this year, we initiated several talent development programs via Fulton University.
Throughout this year, we initiated several talent development programs, where powertrain University.
Speaker 6: We also onboarded over 300 new graduates, injecting fresh perspectives and ideas into the organization.
We also on boarded over 300, new graduate.
Injecting fresh perspectives and ideas into the organization.
Speaker 6: We are proud to be consistently recognized as the best employer for seven consecutive years.
We are proud to be consistently recognized as the best employer for seven consecutive years.
Looking ahead to the fourth quarter, our top priority is still to help our client partner to be successful in a tough market environment. This year.
Speaker 6: Looking ahead to the fourth quarter, our top priority is still to help our client partner to be successful in a tough market environment this year.
Speaker 6: During this year's W11, we are glad that once again we helped many brands to become the top performer in their segment, with over half of our brand partners achieved year-over-year growth.
During this years double 11.
And that's once again without my name brand to become the top pro forma in the segment with over half of our brand partners achieved year over year growth.
Now, let me turn the call over to Sandrine to elaborate more on TVN.
Speaker 6: Now let me turn the call over to Sandrine to elaborate more on BPM.
Speaker 7: Thank you, Vincent and Arthur, and thank you all for joining us today. It is my great pleasure to speak with you.
Thank you Vincent enough there and thank you all for joining US today. It is my great pleasure to speak with you.
Speaker 7: BBM is executing well on its transformation of gas China, shifting from a discount-driven approach to one that focuses on building consumer love for our brand and products, that is the premiumization of gas.
<unk> is executing.
Well on its transformation of get China shifting from a discount driven approach to one that focuses on building consumer love our brand and product that is the premium amortization of gap.
In the third quarter.
Speaker 7: In the third quarter, we accomplished a wide array of successes in this direction.
I'm pleased to wider way of successes in this direction.
Speaker 7: This includes successful new product launches, new store openings, and increased brand marketing and visibility.
These include successful new product launches, new store opening and increased brand marketing and visibility.
Speaker 7: Together, they lead us to wide improvement in financial metrics, including higher same-store sales growth, faster inventory turnover, stronger growth margin, and better-than-forecasted operating loss for the third quarter, as demonstrated on slide eight.
Together, they need us to wide improvement and financial metrics.
<unk> hired some staff same store sales growth faster inventory turnover.
Stronger gross margin and better than forecasted operating loss for the third quarter.
Demonstrated on slide eight.
Let me now provide you with additional color on our new product launches.
Speaker 7: Let me now provide you with additional color on our new product launches.
Speaker 7: Building upon the foundation established in the first half of the year.
Building upon the foundation established in the first half of the year.
Speaker 7: This third quarter, we introduced our new locally designed China for China product, aiming to deliver the right product for the right people at the right time.
Third quarter, we introduced our new locally designed China for China product.
They need to deliver the right product for the right people at the right time.
This product line upgrade is a continuous process and critical to the apparel industry.
Speaker 7: This product line upgrade is a continuous process and critical to the apparel industry.
Speaker 7: Our new product line features three new segments, modern preppy,
Our new product lines.
The new segment.
Modern preppy.
Speaker 7: urban workwear, and premium blue, in addition to the traditional GAP logo segment.
Then workwear and premium Bloom in addition to the traditional gap logo segment.
Speaker 7: We launched these products with a comprehensive go-to-market strategy.
We launched these products with a comprehensive go to market strategy.
Speaker 7: Since the last week of September , we have elevated the Gap brand for a combination of celebrity endorsements, new store openings, new products, doing super brand day spotlights, and the I am Gap social buzz.
In the last week of December we have ended the gap brand to a combination of celebrating endorsement.
New store opening new products doing Super brand day spotlights.
And the I am gap social but.
As of October 31st.
Speaker 7: The I am Gap campaign has generated over 309 million impressions, while Craze Gap, Just Gap or Xiang Gap, Qiu Gap in Chinese, it accumulated 222 million impressions across Weibo, Douyin and Xiahongshu.
I am get campaign has generated over 309 million impressions, while crazy gap, just gap or some gap to gap in Chinese.
Accumulated 222 million impressions across Weibo doing <unk>.
We also got nuts.
Speaker 7: We also garnered over 100 million impressions during our Doing Super Grand Day in late September .
100 million impressions.
During our doing Super brand day in late September.
Speaker 7: During the period, we were able to grow GMB by seven times year over year to 56 million, setting a new record for self-broadcasting in a single day. We also topped Boeing's flagship and main fashion hot list during the event.
During the period, we were able to grow <unk> by seven times year over year to $56 million setting a new record for self broadcasting in a single day. We also stopped doing flagship and men's session heartless during the event.
Speaker 7: This marks a significant shift from the past, where our products, marketing and channels were not managed in a fully integrated way.
This marks a significant shift from the past where our products marketing in channels were not managed in a purely fully integrated way.
Consequently, without integrated I am GAAP message projects and channels are new products.
Speaker 7: Consequently, with our integrated IAMGAP message, products and channels, our new products
Speaker 7: are increasingly sold at full price, and more customers are purchasing new products instead of the discounted carryover products.
Our increasingly sold at full price and more customers are purchasing new products.
Third of the discounted carryover product.
Speaker 7: During the third quarter, our inventory turnover days improved to 177 days, down from 220 days.
During the third quarter, our inventory turnover days improved to 177 date.
Down from 220 days a year ago.
In addition to the new product.
Speaker 7: In addition to the new products, we successfully opened five new stores during the quarter, including a flagship destination store in Guangzhou, as well as new stores in Chengdu, Shenzhen, and Beijing, as shown on slide number nine.
We successfully opened five new stores during the quarter.
Including a flagship destination store and Guangzhou as well as new stores, and 10 to Shenzhen and Beijing.
On slide number nine.
These stores emphasize the product layout that is younger and more interactive.
Speaker 7: These stores emphasize a product layout that is younger and more interactive.
Speaker 7: We also showcase trendy co-branded designs as well as an upgraded segmentation for men, women, and kids.
We also showcased.
<unk> co branded designs as well as integrated segmentation for men women and kids.
Speaker 7: As Vincent mentioned, I am proud to share that our Guangzhou Tianxia flagship store
As Vincent mentioned.
I am proud to share that our Guangzhou Chengdu flagship store.
Speaker 7: in one of the top 10 shopping malls in China, distinguished itself with significant higher foot traffic and an elevated brand energy.
He did in one of the top 10 shopping malls in China distinguished itself with significant highest foot traffic and then the elevated brand energy.
Speaker 7: To date, the total sales have exceeded our internal expectations and we are on schedule to open a total of 10 new stores in the second half of 2023.
To date, the total sales that exceeded our internal expectations and we are on schedule to open a total of 10 new stores in the second half of 2023.
Speaker 7: Benefiting from our success, BBM's gross margin for the quarter reached 56 post-royalty fees, marking a significant improvement of more than 10 percentage points from a year ago.
Benefited benefiting from our success <unk> gross margin for the quarter.
It's 56 post Williams <unk>, marking a significant improvement of more than 10 percentage points from a year ago.
Speaker 7: Other key metrics, including traffic, conversion rates, average ticket value, and sales per square meter, all demonstrate positive market feedback.
Other key metrics, including traffic conversion rate.
Rich ticket venue and theft per square meter all demonstrate positive market feedback.
Another indicator of premium migration is the positive shifts of our consumer demographic.
Speaker 7: Another indicator of premiumization is the positive shift of our consumer demographics.
Please turn to slide number 10, as we have prepared a demographic analysis pre and post <unk>.
Speaker 7: Please turn to slide number 10 as we have prepared a demographic analysis pre and post our IM Gap Brand campaign.
Gap brand campaign.
We have observed a significant increase in the contribution of new members.
Speaker 7: We have observed a significant increase in the contribution of new members who tend to be younger, have higher consumption power, and prefer to purchase new products.
Who tend to be younger.
Have higher consumption power and prefer to purchase new products.
Speaker 7: Notably, the important 18 to 29-year-old segment has grown by 700 basis points to 42%.
Notably the important 18 to 29 year old segment has grown by 700 basis points to 42%.
Speaker 7: As of October , we have acquired more than 28 million members, contributing to 77% of our sales, of which roughly 2.5 million are active members.
As of October we have acquired more than 28 million members.
Contributing to 77% about sales.
With roughly $2 5 million active members.
Clearly, we're excited about the upgraded from and of our business.
Speaker 7: Clearly, we are excited about the upgraded front end of our business. Let me now talk about the progress.
Let me now talk about the progress on our backend.
During the quarter, we have made rapid improvements to the local supply chain with localized capacity account.
Speaker 7: During the quarter, we've made rapid improvements to the local supply chain with localized capacity, accounting for almost 100% local sources.
Accounting for almost 100% local sourcing.
Speaker 7: This giant supply chain has enabled us to reduce our design to shelf lead time from the previous three to six months to just
Mr. Jive supply chain has enabled us to reduce our design to shelf fleet time from the previous three to six months.
Just a matter of weeks.
Speaker 7: In addition, we also quickly upgraded the IT systems with the help of Baozun technology.
In.
<unk>, we also quickly upgraded the system with.
With the help of about <unk> technology.
Speaker 7: With the completion of Phase 1 of ROP, our Retail Operation Platform,
With the completion of phase one of our op.
Our retail operation platform.
Speaker 7: We are preparing for phase two, where we aim to deploy Baozong's big data capabilities to develop an intelligent end-to-end value chain management to drive omni-channel inventory and CRM efficiency.
We are preparing for seats, where we aim to deploy Bolton big data capabilities to develop an intelligent end to end value chain management to drive omni channel inventory and CRM efficiency.
Speaker 7: This enhancement will empower us to make more agile decisions on merchandising, marketing, and inventory management.
This enhancement will empower us to make more agile decision on merchandising marketing and inventory management.
Speaker 7: This will be a key emphasis in GAP's journey towards online-merge-offline growth and a major milestone for BBM at large.
This will be a key emphasis.
<unk> journey.
Online merge offline growth and a major milestone will be b M at large.
Speaker 7: As you can see in the first half of 2023, we substantially upgraded GAP supply chain, significantly increased store efficiency and strategically recruited talent for all key positions. In the third quarter, we successfully launched our new locally designed China for China products, open new stores and elevated GAPs marketing.
As you can see in the first half of 2023.
Essentially upgraded GAAP supply chain significantly increased store.
Efficiency and strategically recruiting talent for all key position.
In the third quarter, we successfully launched our new locally designed Tennessee, China products.
Opening new stores and elevated gaps marketing.
Speaker 7: we will continue to expand our product portfolio and open additional stores in Q4.
We will continue to expand our product portfolio and open additional stores in Q4.
Speaker 7: we are confident about where GAP is heading.
We are confident about where gap is heading.
Lastly, our recent acquisition of Hunter is proceeding as planned with the establishment of the joint venture of authentic brands group.
Speaker 7: Given the positive momentum of the brand, we are optimistic about its development plan. We look forward to sharing more with you on our next call together.
Given the positive momentum of the brand.
We're optimistic about its development plan.
Look forward to sharing more with you on our next call together.
That concludes our prepared remarks, thank you.
Speaker 7: That concludes our prepared remarks. Thank you. Operator, we are now ready to begin the Q&A session.
Operator, we are now ready to begin the Q&A session.
Thank you.
To ask a question you May Press Star then one on your Touchtone phone.
Speaker 1: To ask a question, you may press star, then 1 on your touch-tone phone.
If youre using a speakerphone please pick up your handset before pressing the keys.
Speaker 1: If you are using a speaker phone, please pick up your handset before pressing the key. To withdraw your question, please press star 1.
To withdraw your question. Please press Star then two.
Speaker 1: At this time, we will pause momentarily to assemble our rocks.
At this time, we will pause momentarily to assemble our roster.
Okay.
Speaker 1: Our first question comes from Alicia Yap with Citigroup. Please go ahead.
Our first question comes from Alicia Yap with Citigroup. Please go ahead.
Speaker 1: Hello, thank you. Good evening, management. Thanks for taking my question. Congrats on the solid results. I have two questions. First is, would management able to share with us what have been
Hello. Thank you good evening management. Thanks for taking my question Congrats on the solid results I.
I have two questions.
First as well.
With management and a bunch of chassis, but what have been the notable changes that you also are doing this year something that stays a promotion kiewit for example.
Speaker 1: the notable changes that you observed during this year's single-phase promotion period.
Speaker 1: For example, you know, the consumer consumption patterns, you know, how brands promotion their efforts, and even some of these large e-commerce strategy, anything that you know that a big change this year.
The consumer consumption patterns no.
How brands, our promotional efforts and even some of these large e-commerce strategy anything that you know that's a big change you can ship and also.
Speaker 1: And also the marketing campaigns that you help out the brands to execute is effective in driving the intended sales or getting the GMB or the results that the brands want. Any positive or negative surprise that you see that you're able to share with us?
The marketing campaigns that you help out the brands to execute it.
In fact, it even driving the intended sales or getting the <unk> out.
Brands from one.
Any positive or negative surprise that you'd see that you're able to share with US you know for example, any brand step.
Speaker 1: you know, for example, any brands that, you know, particularly have a standout in their G and D, or even, you know, the new use of growth or anything, anything that you can see on positive or negative that you can share. And then very quickly on second question is, any preliminary view that management can share how next year, 2024, the growth rate that Baotong can achieve? Thank you.
Particularly has a stand out in <unk> or even you know they move in so called for anything.
We think that you can see I'm positive on that could be a second can't ship and then very quickly on second question is any preliminary view that management can share. How next year 2024 are the growth rate that outcome can achieve thank you.
Okay. Thank you alethia, it's a long question.
Speaker 6: Thank you, Alicia. It's a long question. Let me try to share some of the observations for this year's W11. So, first, I think the overall traffic in the traditional platforms like T-Mobile and JD is lower than the previous years. But on the other hand, there is more traffic shifting to the social media and content-based platforms such as Douyin.
We try to share some of the observation for this yes.
The double 11.
So first I think the overall traffic in the traditional platform like Tmall and JD is lower than the previous year.
On the other hand, there are multiple I think shifting to the social media and content space the platform such as <unk>.
Speaker 6: So that's number one. Number two is we have seen an increased competition among the different e-commerce platform offering better price transparency with a better overall customer experience like how to return the goods, how quickly the product can be delivered. So that's a key observation.
So that's number one.
Number two is we have seen increased competition among the different e-commerce platform.
Offering bite her price transparency waste a better overall customer experience, but also returned to growth how quickly the product can be delivered.
Uh huh.
A key observation.
Speaker 6: And then from a brand perspective, this leads to a record high cancel and return rate for all platforms.
And then from a brand perspective.
This leads to a record high tensile and return rate for all platforms.
Speaker 6: with causing the issues and causing the financial impact to the brand.
Causing the issues, causing the financial impact for the brand.
Oh, what boating has been helping the brands.
Speaker 6: What Baldwin has been helping the brand are three things. The first one is, before and during the Double 11 campaign, we helped the brand to create an overall strategy for all channels. So that helped the brand to know what they do for the different channels at the different periods of the promotion.
Three things the first one is.
During and before and during the double 11 campaign will help the brands to create an overall strategy for all channels.
We have the brands to know what they do for the different channels at different periods of the promotion.
Speaker 6: And secondly, given our capability to offer an end-to-end service including operation customer service and logistics and warehouse, we can link all the services together using our system capability to provide a better overall customer experience.
And secondly, given our capability to offer <unk> services, including operation customer surveys and loss. It takes on a warehouse with handling all the service together using our system capability to provide a better overall customer experience.
Speaker 6: and also helping the brand to create a better efficiency.
And also helping the brands to create a better efficiency.
Speaker 6: For example during the W11 the cancel rate has been high and return rate has been high. But with our system capability we are able to very quickly release the cancelled item back to the shelf allowing the brand to sell the brand to sell the product without losing the opportunity during the W11.
For example, during the double 11, the cancel rate has been high and return rate has been high but our system capability.
<unk>, which will very quickly released the canceled item bike to the shell, allowing the brand to a sale of the brand.
To start with a product without losing the opportunity during the double 11.
Speaker 6: And finally, it's our support to the brand on the good data inside.
And finally, our support to the brand on the goods data insight.
Speaker 6: We help in the brand to make a real time change and shift on the different phase of the campaign helping them to achieve a better result.
IOP in the brand to make real time.
A change in sheets under different.
After campaign, helping them to achieve a better result, so overall I think we have meet and photon brand exceed.
Speaker 6: So overall I think we have meet and for some brand exceed our own goals internally. But from a financial perspective because of the high return on cancel rate we are waiting to see how much impact that will have on us.
All the AUM.
Goals internally, but from a financial perspective, because of the high retail and cancel rate.
Just to see how much impact that will have on us.
Speaker 6: In regarding to your second question in terms of the next year, given the foundation we laid out on e-commerce for this year, we believe we will have a positive growth both top line and bottom line for the next year. We are in the process of finalizing our annual operating plan for next year, and I will be able to share more in our next call.
In regarding to your second question in terms of the Nicaea Deventer Foundation, we laid out on e-commerce for this year.
We believe we will have a positive growth both topline and bottom line for the next year, we are in the crosshairs of finalizing.
On your operating plan for next year, and I will be able to share more in our next call.
Thank you.
Thank you Alicia.
Our next question comes from Thomas Chong with Jefferies. Please go ahead.
Speaker 1: Our next question comes from Thomas Chong with Jeffreys, please go ahead.
Hi, good evening, Thanks management, but taking my questions.
Speaker 8: Hi, good evening. Thanks, management, for taking my questions. My first question is relating to GAAP. Can management comment about the strategies and investments that we should expect over the next few years, and in particular, how we should think about the revenue scale and the timing to achieve a big event?
My first question is relating to GAAP can management comments about the strategies and investments that we should expect over the next few years and then particular.
How we should think about the back of new scale and the timing to achieve breakeven.
Speaker 8: And my second question is back to the e-commerce business in the domestic about the omni-channel strategies. Can management comment about the future mix for T-Mall and the non-T-Mall channel? Thank you.
And my second question just back to the E Commerce.
These amounts in the boat matched.
About the Omnichannel strategies are Ken let me cumin comments about.
Future mix for T mobile and T Mall channel. Thank you.
Yeah.
Okay.
Speaker 6: Okay, thank you. Maybe maybe Sandra, you can go for the first one and we'll cover the second one.
Yeah.
Maybe maybe country you can go for the first one and I'll cover the second one yes, okay sure okay.
Speaker 7: Okay, sure. Okay. Thank you, Jeffrey, for your question. So, in terms of strategy, we're going to pursue what is at the heart of BBM. So, at the heart of BBM is really China for China and technology empowerment.
Thank you for your question. So in terms of strategy, we're going to pursue what is at the heart of DBM and B. How does the B M is really China for China and technology empowerment. So we are already on a good track on this too, but we are continuing and indicate specific case.
Speaker 7: So we are already on a good track on this too, but we are continuing. And in the specific case of GAP, we will also pursue the premiumization trends that we have engaged in, thanks to our control of supply chain and to our absolute control of discounts.
GAAP, we will also pursue the premium amortization trends that we have engaged in.
Two our control of supply chain and to our.
Absolute control of discount.
Speaker 7: So this will continue with more to come in terms of products, more to come in terms of opening new stores. As you noticed, we started to open five new stores in this third quarter. We have another five planned in the next quarter, and this trend will continue over time and in 24 and beyond.
So this will continue.
To come in terms of products and more to come in terms of opening new stores. As you noticed we started to open five new stores in the third quarter. We have another five planned in the next quarter and this trend will continue.
Overtime and in 'twenty four and beyond.
Speaker 7: And we are confident that we can actually.
We are.
Students that we can actually speak to.
Speaker 7: stick to our initial plan, which was to significantly reduce the loss this year.
Our initial plan, which was to significantly reduce the loss this year.
Speaker 7: further half-fits next year and the break-even in 2025.
The house is.
Next year and be breakeven in 'twenty five.
Okay.
Mhm.
Thank you Sanjay.
The second question regarding domestic and international brands.
So basically <unk>.
Recently.
In the recent years the domestic brand has captured more market share in the middle to low price range segment in each category at the same time international brands still dominate the high price range segment.
Speaker 6: At the same time, international brands still dominate the high-priced range segment with a better overall brand attractiveness, better overall customer experience, and more product innovation and introduction.
A part of the overall brand attractiveness and better overall customer experience and more product innovation and introduction.
Speaker 6: For Baozhun, we see opportunity in both the international and domestic brand partners.
For Biogen, we see opportunity in both.
International and domestic brand partner for the International brand.
Speaker 5: For the international brands, they would like Fortune to play a role as a strategic partner, offering them an end-to-end, one-stop solution, including help them to design a strategy for the overall China e-commerce, and then help them to execute. So this is something Fortune is very uniquely positioned to provide.
I would like to play a role as a strategic partner.
Bringing them.
One stop solution, including help them too.
<unk>.
To design a strategy for the overall, China E Commerce, and then help them to execute so this is something boating is very uniquely positioned to provide.
Speaker 6: For domestic brands, given they are close to China, some of the operations they normally do in-house. But they come to Belgium asking for help on the value-added service, such as the digital marketing, the warehouse management and technology.
For domestic Brian given they are close to China. Some of the operation Denominating in house, but they come to bulge and asking for help on the value added service such as the digital marketing the warehouse management and technology, So way the China.
Speaker 6: So with the China e-commerce ecosystem becoming more and more specialized in each of the services, we believe we have opportunity in both international and domestic brands.
e-commerce ecosystem, becoming a more and more.
Yeah.
To specialized each of the services, we believe we have opportunities in both international and domestic brands.
Okay.
Next one please.
Speaker 1: Yes, our next question comes from Sophie Wong with CNBI. Please go ahead.
Yes. Our next question comes from Santa Cruz, one with C. M. B I. Please go ahead.
Speaker 9: Okay, thank you. Thank you for taking my question. I have two questions here. Number one is regarding the Hangzhou location aggravation. So what is the rationale of location aggravation and how do we look at it? This is synergy in the live stream e-commerce segment and financial impact from this deal.
Okay. Thank you. Thank you for taking my question I have to consume.
Number one regarding that.
We shall condition, so anything you're watching now off location condition.
Okay.
Jeep Laskin ecommerce James.
National impact.
Speaker 9: And the second question is regarding our live stream e-commerce update. We have made progress in the ecosystem for brands. So can you help us to understand the ROI difference between Doinb channel and the Tmall channel and how to improve it?
We congratulate regarding our <unk> com or something.
Uh huh.
Congrats.
Okay.
Four grams. So can you help us to understand.
One difference between the new channels.
And then Tim on channel and how to improve it.
Speaker 9: I remember you mentioned that luxury brands performed well in the ecosystem and what about other categories? Thank you.
I remember you mentioned that luxury brands performed well.
And what about on the categories. Thank.
Thank you.
Okay. Thank you for the question, we believe the overall trend for the e-commerce in China as well.
Speaker 6: Okay, thank you for the question. We believe the overall trend for the e-commerce in China will have more social and content-based e-commerce. So that's the trend we see. And based on that view, we think the capability to produce high-quality live streaming and content is a must to have in the upcoming years.
We will have more social and content based E. Commerce. So that's the trend we see and based on that deal. We think the capability to produce high quality live streaming on Compton is a month that will have in upcoming years, so based on that rationale.
Speaker 6: So based on that rationale, we searched the market. We want to find the best match between folding capability and also the service provider we are looking for. So we found Location, which is an innovative and very solid business with a very deep experience and know-how on how to run the live streaming in both the T-Mall and store-in platform.
We such that the market is we want to find the best match between boardroom capability and also.
The service provider, we're looking for.
That's helpful fault location, which is an innovative and very solid business with a very steep experience had no hall, our HIFU run the live streaming embolden, our chemo and <unk> platforms.
Speaker 6: And also, after our initial working with location, I saw a well run business with a healthy profit margin and a talented core team.
And also after our initial.
Working in waste location.
While resin business waste, a healthy profit margin and at Highland needs co teams.
Speaker 6: So we believe the combination between a Baldwin and location will be able to utilize the good system and infrastructure of Baldwin. The very deep relationship and all meaning China relationship in Baldwin has with France.
So we believe the combination between Biogen and location will be able to utilize.
A good place from an infrastructural poten, the very deep relationship and Omnichannel relationship Bolton pathway brand and also.
Speaker 6: and also the location's high-quality live streaming operations capability and also their Hangzhou facility. We think combining those two will be able to make us one of the best creative content and live streaming service providers in China. And we think this capability will help us to provide the value-added service for our high-end brands.
At the location.
High quality live streaming operations capability and also the humble facility, we think combining those two will be able to make us one of the best creative content and live streaming service provider in China, and we think this capability.
Will help us to provide the value added service for our high end brands.
The second question about the ROI, we think the ROI for both the China and Chemo channel is currently and are currently on the prices. So that's because the.
Speaker 5: For both the Douyin and Tmall, we need to know in terms of how to define a successful strategy to improve ROI.
For the both.
On T mall, we need to know in terms of how to define a successful strategy to improve ROI. So if we think.
Speaker 6: So if we think from the brand perspective.
From a brand perspective, how to differentiate the merchandising strategy how to attract the traffic how to do the digital marketing in those two different platform.
Speaker 5: how to differentiate the merchandising strategy, how to attract the traffic, how to do the digital marketing in those two different platform will determine how good a RIS is about.
Determining how goods iri's about so thats why were seeing offering a good capability and working closely with the brands will be able to improve the ROI for both brand and so in those two platform you will be able to improve the ROI.
Speaker 6: So that's why we think offering a good capability and working closely with the brand will be able to improve our lives for both brands.
Speaker 6: So in those two platforms, you will be able to improve the ROI if you do a very good operation.
A very good operations.
Okay.
Okay. Thank you.
Gene.
Thank you.
Speaker 1: Our next question comes from Collin Chan with City Security. Please go ahead.
Our next question comes from Colin Chan with TD Securities. Please go ahead.
Hi, Good evening management, Thanks for taking my question and congrats on the solid results this quarter.
Speaker 5: Good evening, management. Thanks for taking my question and congrats on the solid results this quarter. I have two questions about BBM. The first question is about GAAP. It has been around three quarters after the acquisition of GAAP China. And looking back on the past quarters, what operation results are beyond your expectation and what are below your expectation?
Two questions about <unk>. The first question is about gas being around three quarters. After the acquisition of China, when looking back on the past quarters.
Accretion results beyond our expectation and whatnot below your expectation and the second question is also about gap.
Speaker 5: And the second question is also about GAPs, how to evaluate the improvement of GAPs results and what are the key metrics to follow other than the gross profit margin?
To evaluate improvement Tom gap to resolve and what are the key metrics to follow.
Dan <unk> Who's currently margin.
Speaker 10: And when we're talking about the
And why are we talking about.
<unk>.
Q2, two company.
Me too Todd.
To maintain the price of gas and a bump in China, especially this year and people are talking about the consumption downgrades.
What's your observation when you are doing these kind of improve.
Improvement in small yes.
Therefore, thank you.
Okay.
Thank you for your question Kelly.
First to you after three quarters not exactly three quarters, because actually we took a very first of February.
We can say that most of the our operational results.
Exceed our margin.
It hit our expectations, particularly when all the.
Data that points to a better attraction of the brand.
Speaker 7: that points to a better attraction of the brand, which means primarily obviously this margin that we discussed earlier, which has increased much more significantly than we even expected, but also the inventory turnover that has been also a very, very strong improvement.
You mean, primarily obviously margin that we discussed earlier.
Which has increased that much more significantly than we then.
As expected.
But also the inventory turnover.
It's been also a very very strong improvement.
Speaker 7: At the same time, by saying this, I'm showing you some metrics that we consider as very important.
At the same time by saying this I'm showing you some metrics that we consider as very important.
Uh huh.
Speaker 7: the inventory turnover, the same store sales growth.
The inventory turnover the same.
Same store sales growth. The conversion rates are these are all metrics that we look very carefully at because at the end of the day indicate if the brand is attractive for our consumer is a consumer comes to a shop and buy a brand only because it's discounted it's actually not a good thing.
Speaker 7: the conversion rates, these are all metrics that we look very carefully at because at the end of the day, this indicates if the brand is attractive for a consumer or not.
Speaker 7: If a consumer comes to a shop and buys a brand only because it's discounted, it's actually not a good idea.
Speaker 7: So from the beginning, we've been extremely attentive to these metrics. Because this is actually how to get back on track to be a positive brand, a brand that attracts consumers. And on all these matters, we are actually quite satisfied. And it's usually beyond expectation. Now, where it's a little bit slower is on the online part of the business.
So from the beginning we've been extremely.
Attentive to these metrics because this is actually how to get back on track to be a positive brand a brand that attracts consumers and on all these matters, we are actually quite satisfied and it usually beyond expectation now where it's a little bit slower is on the online part of the business.
Well, obviously it takes longer time to achieve this.
Speaker 7: where obviously it takes longer time to achieve this with the consumer.
Consumer.
Speaker 7: All the more so as we used to be, Gap used to be very much a Tmall online business.
All the more so as we used to be gap used to be very much a chemo.
Our online business.
Speaker 7: And we saw, as mentioned by Arthur, a lower traffic in general on chemo and JD. And this obviously has also been.
And we so as mentioned by Arthur and lower traffic in general on Tmall and JD and this obviously has also been.
A negative factor for for our online business does that to answer the first part of your question now entering the second part of your question, obviously, we do pay attention to to our top line, but our top line, we prefer to look at it primarily in same stores in same.
Speaker 7: a negative factor for our online business.
Speaker 7: So that's to answer the first part of your question. Now, answering the second part of your question, obviously, we do pay attention to to our top line, but our top line, we prefer to look at it primarily in same source, in same source cells and same channel cells.
Same store sales.
<unk> been channel sales.
Speaker 7: to see the progress, then gross margin is fundamental. Without a proper gross margin, you actually cannot do anything.
See the progress then gross margin its fundamental without proper gross margin you actually cannot do anything we also.
Speaker 7: We also, if I stick to financial metrics, inventory management and inventory days of turnover, very important as well because this is a precondition for the gross margin to remain healthy and control, obviously, of costs. And on all this, we are quite happy with what has happened so far. And these are the metrics we will continue to look at going forward. Now, to answer the third part of your question.
I stick to financial metrics inventory management and inventory days of turnover very important as well because this is a precondition for.
The gross margin to remain healthy and control obviously of course and on all this we are we are quite.
Happy with what has happened so far and these are the metrics. We will continue to look at going forward now to answer the first part of your question.
Speaker 7: Although we have pre-mimized
Although we have premium ice.
Yeah, we haven't turned it into a luxury brand by far.
Speaker 7: gap if we haven't turned it into a luxury brand by far.
Speaker 7: What we've done really is to make sure that a larger percentage of products
What we've done really is to make sure that more a larger percentage of products.
Speaker 7: are sold at full price instead of being fully discounted from the first day. And I think that even in the current circumstances of a slower economy, we can see that this is a winning strategy. And in fact, I would say that the consumers today are not
So at full price instead as.
Being fully discounted from the first day.
And I think that even in the current circumstances of a slower.
Lower economy, we can see that this is a winning strategy and in fact, I would say that the consumers today.
Not so much chasing bargains, but they are really looking for value for money and value for money is not just a question of money. It's also a question of value.
Speaker 7: so much casing bargains, but they are really looking for value for money. And value for money is not just a question of money, it's also a question of value. And what we can see is that if we give consumers at a reasonable price, a price that reflects the value in the product, the product he or she wants with the quality he or she expects, the design he or she expects, then this is what they consider to be value for money and this works.
And what we can see that if we give consumers and.
Reasonable price.
A price that reflects the value in the product the product he or she wants with the quality he or she expects the design here should we expect.
And then this is what we consider to be value for money and this work.
Speaker 7: That's about the way I would answer your three parts of questions.
That's that's it that's the.
The way I would answer your part of question.
The key thank you very much.
Again, if you'd like to ask a question. Please press Star then one our next question comes from Jack Hu with Okay.
Speaker 1: Again, if you'd like to ask a question, please press star then 1. Our next question comes from Jaclyn with Altar Security. Please go ahead.
<unk> Securities. Please go ahead.
Speaker 11: Good evening, management. Thanks for taking my question. I have a small question regarding M&A strategy. We have seen some progress on GAAP business after our acquisition. So could management share some thinking on the M&A strategy going forward? Thank you.
Hi, Good evening management. Thanks for taking my question I have a small question regarding M&A strategy, we have seen some progress on caffeine is after our acquisition so could management share some thinking on the M&A strategy going forward. Thank you.
Speaker 4: Okay. Thank you, Jack. This is Vincent. I will answer this question and then, Sanjun, maybe you want to add some comments after that. For the M&A strategy, I think we have two parts and one important consideration.
Okay. Thank.
Thank you Jack this is Vincent.
Ill answer this question and then.
So Andrew maybe you want to add some comments after that.
Yes.
I'm in the strategy.
Strategy I think we have two parts and the one important consideration.
Speaker 4: One part is about the BBM, I think for the BBM M&A for potential brands, number one is that we think
One parties about the Pbms I think for the <unk> M&A.
Four potential brands.
Why is that.
We think.
Speaker 4: Right now, GAAP 100 is very important for us. So the first thing we need to do is to make GAAP turnaround a successful one.
Rental cap Hunter is very important for us. So the first thing we need to do is have to make.
GAAP and Theyre wrong, a successful one.
Speaker 4: And you know to have a gap in the home. You know we all the potential we have to turn this to a very positive opportunity for us. That is number one.
To have a cap on the hunter.
With all the potentials, we have alternatives to a very positive opportunity for us that is number one.
Speaker 4: Number two is that we will still be very active in exploring potential brands, but we will be very selective.
Number two is that we will still be very active in exploring potential brands, but we'll be very selective.
Very selective for brands.
Speaker 4: You know, the brand and the opportunity has to be good, and then has synergy, meet our criteria. So it will be a very selective, you know, way for us to acquire new brands.
No.
The brands and the opportunity has to be good and then.
Synergy meet our our criterias so it will be very selective.
Waiting for us to acquire new brands.
Speaker 4: For BEC, you know, we are acquiring necessary capabilities from, you know, other companies or vendors, just like location, we just, we just have done.
For BC.
We are acquiring a necessary capabilities from all.
Other.
Companies from vendors.
But just like location, we just we we just have Tom.
Speaker 4: So in this direction, I think we'll be also very selective.
So in this sum.
In this direction I think we will be also very selective.
Speaker 4: And I think right now, most of the capabilities of Baozun are very strong, we're strong enough in different aspects. So I think maybe for only for those very selective opportunities, we consider
And.
I think right now most of the capabilities of Boston are very.
Strong and we're strong enough in different aspects. So I think maybe for only for those very selective opportunities.
We would consider to acquire in the future. So overall I think the one.
Speaker 4: So overall, I think the one principle for us, which is very important, is synergy. No matter it is a brand or it is a company with a special capability we are going to acquire, it has to have a very strong synergy to the existing business.
The principal for US, which is very important as a synergy.
No matter it is a brand or this.
Company with sales special capability, we're going to acquire it has to have a very strong synergy to the existing business no matter the discipline in the business or this.
Speaker 4: no matter if it's a brand business or it's an e-commerce.
E Commerce business, so that is the.
Speaker 4: So that is the overall strategy for M&A, yeah.
Overall strategy for <unk>.
Yeah.
So Andrew you want to add something.
No.
Speaker 7: No, I think I may just say that yes of course we want to number one prove the turnaround of the brand specifically GAP, number two we really want to be very selective and also to be true to our key criteria which is China for China and technology empowerment. So we want to really select brands where these two drivers will make a huge difference. Okay.
Oh.
They just say that yes of course, we want to number one the proof the turnaround of the brand specifically gap number two we really want to be very selective and also to be true to our key criteria, which is China.
China for China, and technology empowerment, So we want to really select brands, where these two drivers will make a huge difference.
Okay.
This concludes our question and answer session.
Speaker 1: I would like to turn the conference back over.
I'd like to turn the conference back.
Speaker 2: Okay, actually, I just see Thomas back on the queue, maybe the last one, please.
Oh, good actor Justin Thomas iconic here, maybe the last one please.
Speaker 1: Sure, it looks like we have a rejoiner here. We will now take a question from Thomas Johnwick Jeffreys. Please go ahead.
And it looks like we have.
Joining me here, we will now take a question from Thomas Chong with Jefferies. Please go ahead.
Speaker 8: Hi, good evening. So, may I ask a quick follow-up question? I think it's more relating to the trend for our takeaway. Can management comment about how we should think about it in the near term and the long term? Thank you.
Hi, good evening.
I ask a quick follow up question I think is a more with 18 pool.
The trend for our take rate can management comment about how we should think about it in the Vietnam in the long term. Thank you.
Speaker 6: Okay, thank you, Thomas. I will take this one. In terms of the take rate for the e-commerce services, what we observe is some of the basic services like the store operations, the customer service, the take rate is under pressure and has a trend to reduce.
Okay. Thank you Thomas.
This one in terms of the take rate for the E Commerce.
<unk>, what we observed.
Some of the basic services like thus far operations for customer service.
The take rate is.
Under pressure and has how trends to reduce.
Our reaction to that is we want to improve our internal efficiency through the economy of scale to make sure we keep.
Competitive in terms of at the price we offer.
To counter impact of drops that headwind.
Speaker 6: At the same time, we see the take rate for the value-added service has been really...
At the same time, we see the take rate for the value added service has been really.
For some really.
High quality, sorry, we see at the take rate.
The only firm so thats why we shifted a lot of our efforts into creating a good quality higher value added services.
Our PUC kind.
Kind of.
Our service offerings.
Speaker 5: And at the last, we think from this year, we start to do high-margin, high-quality product sales business. And we believe with more control for the product sales business, we will be able to positively contribute to the growth market and also to the net profit, despite a very high pressure on the take rate.
And I have a lot we think from this year, we started to do high margin high quality product sales business and we believe weighed more control for the product sales business, we will be able to positively contribute to the.
Our gross margin and also to the net profit.
Despite.
Very high pressure on the take rate.
Got it thank you.
Thank you.
This now concludes our question and answer session I would like to turn the conference back over to London for any closing remarks.
Speaker 1: This now concludes our question and answer session. I would like to turn the conference back over to Wendy Sun for any closing remarks.
Thank you operator on behalf of the management team wed like to thank you 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 today. This concludes the call.
Speaker 2: Thank you, operator. On behalf of the Bowerton management team, we'd like to thank you 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 today. This concludes the call.
Speaker 1: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.