Q2 2024 Baozun Inc Earnings Call
Speaker Change: Good morning, ladies and gentlemen, and thank you for standing by for Baozun.
Speaker Change: 2nd quarter, 2024, earnings conference call.
Speaker Change: At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded.
Speaker Change: 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 of Ball Zoon. Please proceed, Wendy.
Speaker Change: Thank you all for your heart.
Speaker Change: Hello everyone, and thank you for joining us today. Our second quarter, 2024 earnings deliveries was distributed earlier before this call and is available on our website at IR.bousin.com as well as on Pianus worth services.
Speaker Change: They have also posted a PowerPoint presentation that accompanies our comments to the same IR website where they are available for download.
Speaker Change: On the court today from Bousin, we have Mr. Vincent Chu, Chairman and Chief Executive Officer, Ms. Cassering Zhu, Chief Financial Officer, Mr. Asari, President of Bousin E. Commerce and the Mr. Ken Huang, Chief Financial Officer, Fousin Brand Management.
Speaker Change: Mr. Qiu will first share with our business strategy and the company highlights, followed by Mr. who will discuss our financials and them by Mr. Huang to share more about our e-commerce and brand management segments perspective.
Speaker Change: They will all be available to answer your questions during the Q&A session that follows.
Speaker Change: Before we begin, I would like to remind you that this conference call contains forward-looking statements, relating the meaning of the U.S. Security Act of 1933 as a mandate, the U.S. Security Exchange Act of 1934 as a mandate, and the U.S. private security division in format.
Speaker Change: 1995.
Speaker Change: These follow-up in statement are based upon management current expectations and current market and operating conditions.
Speaker Change: and realize two events that involve no or no risk on certainties and other factors.
Speaker Change: of the age of difficult to predict and manage a young company's control, which may cause the company's actual results to differ materialate from those in the following statement. Further information regarding these and other risks and certain days of factors is included in the company's following with the U.S. Security Change Commission.
Speaker Change: and its announcement notice or other documents published on the website of the stock exchange of Hong Kong limited.
Speaker Change: Our information provided in this call is as of the date here and is this assumption that the company believes to be reasonable as of this date. And the company does not take any application to update any following statements except as required and a playbook law.
Fanilei: Fanilei, please note that, unless otherwise stated, all figures mentioned during this conference car are in Army.
Speaker Change: In addition, we may like to use a just-aid in place of non-general accepted accounting principles, or non-gab, in order to reduce all local confusion that may arise from our discussions about the nation's related to the gap brand.
Speaker Change: It is now my pleasure to introduce our chairman and chief executive officer, Mr. Wenbin Qiu. Mr. Wenbin Qiu, please go ahead.
Wenbin Qiu: I'll thank you, Wendy, hello everyone and thank you all for your time.
Wenbin Qiu: I'm pleased to share that we continue to achieve success in executing your plans.
Speaker Change: In the second quarter of 2024, Walsheng Group achieved a 3% year-over-year revenue growth.
Speaker Change: Reflecting our ongoing efforts to strengthen noble core operations and adapt to the evolving market landscape.
Speaker Change: [inaudible]
Speaker Change: We're encouraged to see a turning point that highlights our effective revitalization efforts in both services and the product sales.
Speaker Change: Noteably, we successfully integrated locations, a pop-to-human partner in the business-like streaming business unit.
Speaker Change: This is the strategic breakthrough as it strengthens our position, we being the toy ecosystem. And the further enhances our omnichannel value proposition.
Operator: June, 2nd quarter, 2024, Earnings Conference Call. At this time, all participants are in listen only mode. After management's prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded.
Speaker Change: BBM is narrowing its losses while accelerating its historic expansion and the fine tuning of the unit economics of new stores.
Speaker Change: We are seeing better performance from our new stores, which gives us confidence in further expansion in these markets.
Operator: I will now turn the meeting over to your host for today's call.
Wendy Sun: Ms. Wendy Sun, Senior Director of Corporate Wendy. Thank you, operator. Hello, everyone, and thank you for joining us today. Our second quarter, 2024, Earnings Relays, was distributed earlier before this call, and is available on our AYR website at ir.baozun.com, as well as Piongius word services. They have also posted a PowerPoint presentation that accompanies our comments to the same AYR website where they are available for download. On the call today, from Baozun, we have Mr. Vincen Qiu, Chairman and Chief Executive Officer, Ms. Catherine Zhu, Chief Financial Officer, Mr. Aceryu, President of Baozun Inc., and Mr. Ken Huang, Chief Financial Officer of Baozun Brand Management.
Speaker Change: This progress was achieved despite the top-line pressure, EBM, is facing from cautious consumer sentiment.
Speaker Change: Additionally, in light of gas, strong global trend, we have deepened our interactions with gap ink.
Speaker Change: and develop plans and develop plans to better leverage this trend and its global resources.
Speaker Change: Or aim is to balance these resources with our localization efforts to drive goals.
Speaker Change: This quarter falls in technology as once again being recognized for excellence.
Speaker Change: who is leaving another prestigious Ghana World War in Dereck, or consumer solutions.
Speaker Change: Hayler for the Chinese market, or DTC solutions offer a comprehensive commerce platform that is secure, scalable and flexible.
Wendy Sun: Ms. Qiu will first start share with our business strategy and the company highlights, followed by Ms. Qiu, who will discuss our financials and them by Ms. Yu and Mr. Huang to share more about our e-commerce and brand management segments respectively. They will all be available to answer your questions during the Q&A session that follows.
Speaker Change: This award, on the scores, are our ability to build innovative solutions for brand's private domains, empowering their photographs.
Speaker Change: On the EFC Front, we continue to advance our commitment to sustainability.
Speaker Change: During the quarter, two of our logistics parks were certified as carbon neutral, and we also partnered with Nike on an innovative, Shoe Recycling Program.
Wendy Sun: Before we begin, I would like to remind you that this conference call can attend forward-looking statements within the meaning of the U.S. Security Act of 1933 as a mandate, the U.S. Security Exchange Act of 1934 as a mandate, and the U.S. Private Security Education and Form Act of 1995. These forward-looking statements are based on power management current expectations and current market and operating conditions and relates to events that involve no or no risk uncertainties and other factors, of which are difficult to predict and manufacture up beyond the company's control, which may cause the company's actual results to differ maturely from those in the forward-looking statement.
Speaker Change: For these efforts, we are not only reducing our carbon footprint.
Speaker Change: but also set the industry standards and the making of positive contribution to environmental protection.
Speaker Change: With the improved momentum in e-commerce and continued focus on strengthening BBM's fundamentals
Speaker Change: We remain fully committed towards strategic transformation.
Speaker Change: Looking ahead, we are confident in our ability to drive full of growth and a deliver long from value for shareholders.
Speaker Change: and let me pass this for a kept ring for financial updates.
Wendy Sun: Further information regarding these and other risks and strategies of factors is included in the company's following with the U.S. Security Exchange Commission and its announcement notice or other documents published on the website of the stock exchange of Hong Kong Limited.
Speaker Change: Thanks, Vincent and hello everyone. Now let me share with you our second quarter 2020 for financial results in more detail.
Speaker Change: Please turn to side number three. Although groups total net revenues increased by 3% year over year to 2.4 billion.
Speaker Change: Of this, he comes with revenue contributed to 41 billion while grandmagement generated 294 million.
Wendy Sun: Our information provided in this call is as of the date here and is based on assumptions that the company believes to be reasonable as of this date and the company does not take any application to update any for-looking statements except as required and a playbook law.
Speaker Change: Breaking down the e-commerce revenue by Guinness Model, service revenue increased by 10% to 1.6 billion in the quarter.
Speaker Change: This growth was primarily driven by double-digit year-over-year increase in revenue from stock operations in the carol and accessories category, as well as from digital marketing and IT solutions.
Wendy Sun: Finally, please note that a list otherwise stated all figures mentioned during this conference call are in R&B. In addition, we may elect to use adjusted employees of non-general accepted accounting principle or non-GAP in order to reduce all road confusion that may arise from our discussions about the nation's related to the GAP brand.
Speaker Change: B.C. Prod ourselves revenue continually to show progress, with a year over year construction narrowing by 4% to 559 Min.
Speaker Change: With the business optimization, they'll complete and the ramp up of our newly introduced exclusive distribution business, we're on track to return to growth, you know, a busy product and sales in the second half of 28.04.
Vincen Qiu: It is now my pleasure to introduce our chairman and chief executive officer, Mr. Wenzhen Qiu. Mr. Wenzhen, please go ahead. Thank you, Wendy. Hello, everyone, and thank you all for your time. I'm pleased to share that we continue to achieve success in executing our plans. In the second quarter of 2024, Baozun Group achieved a 3% year-over-year revenue growth, reflecting our ongoing efforts to strengthen our core operations and adapt to the evolving market landscape.
Speaker Change: Vivienne Prada sells total of 292 million for the quarter, a year over a year decline of 10% compared with the same period of last year.
Speaker Change: The construction was made due to weaker consumption sentiment in the fashion peril industry and the can will elaborate more later.
Speaker Change: Please turn to slide the number four.
Speaker Change: From a profitability perspective, our growth margin for e-commerce products sales was 11.7% for the quarter.
Vincen Qiu: BEC has shown solid momentum with top-line returning to growth after 10 consecutive quarters of a year-over-year contraction. We're encouraged to see a turning point that highlights our effective revitalization efforts in both services and product sales. Notably, we successfully integrated locations, a top-to-wing partner into Baozun's life-streaming business unit. This is a strategic breakthrough as it strengthens our position within the DOE ecosystem, and further enhances our omnichannel value proposition. BBM is narrowly its losses while accelerating its stone expansion, the fine tuning, the unit economics of new stores.
Speaker Change: The decrease in growth margin for e-commerce product sales was made into a change in category mix and a higher proportion of cash rebate from brand partners. Compared with more weight and procurement to the base in the same period of last year.
Speaker Change: Rock Magin for BBM Total, 52.3% While our group's blended Rock Magin for proud of sales was 25.3%.
Speaker Change: Now to bottom my items, please turn to slide number five.
Speaker Change: During the quarter, I would just think I'm from operations.
Speaker Change: Total, 10 million compared with one million a year ago, this included an adjusted operating profit of 60 million from e-commerce segments and a reduced operating loss of 50 million from BBM.
Vincen Qiu: We are seeing better performance from our new stores, which gives us confidence in further expansion in these markets. This progress was achieved despite the top-line pressure BBM is facing from cautious consumer sentiment. Additionally, in light of gas, strong global trend, we have deepened our interactions with scape-ink and developed plans to better leverage this trend and its global resources. Our aim is to balance these resources with our localization efforts to drive growth.
Speaker Change: As of June 30, 2024, we maintain a steady balance in cash and cash equivalent, restricted cash and shortening investments, totaling 2.9 billion in line with balance in the previous quarter.
Speaker Change: Lastly, we continue to execute our shear report to the program. Here today, we have reported approximately 2 million ideas for 4.9 million dollars should overmarket, reflecting our confidence in the company's future.
Speaker Change: As of today, the remaining months of fought-off operation in Shaoxi-A-Ri-Quang, which is effective through January 2025, stands at $15 million.
Vincen Qiu: This quarter, Baozun technology has once again been recognized for excellence, receiving another prestigious Ghana War Award in theoretical consumer solutions. Hayler, for the Chinese market, or did he see solutions offer a comprehensive commerce platform that is secure, scalable, and flexible? This award on the scores are our ability to build innovative solutions for brands' private domains, empowering their further growth. On the ESC front, we continue to advance our commitment to sustainability. During the quarter, two of our logistic parks were certified as carbon neutral, and it was also partnered with Nike and Innovative True Recycling Program.
Speaker Change: Let me now pass the call over to Arthur to update you on B.C. our e-commerce business. Thank you, Vincent and Ted Spring, and I'll follow everyone.
Arthur: Now, let's review the BEC Business Performance for the second quarter of 2024. Please turn to slide number six.
Arthur: Despite the challenging, micro-economic environment and slowing down of e-commerce growth in China, BEC delivered good results in the second quarter this year.
Arthur: Total revenue growth, 10 positive for the first time since 2022, increasing by 6% year on year.
Liz Grove: Liz Grove was primarily driven by a strong performance in our service business during the 618 campaign and stabilization of our product sales business.
Vincen Qiu: Through these efforts, we are not only reducing our carbon footprint, but also setting industry standards and making a positive contribution to environmental protection. With the improving momentum in e-commerce and the continued focus, our strengthening BBM's fundamental. We remain fully committed toward strategic transformation. Looking ahead, we are confident in our ability to drive further growth and deliver long-term value to our shareholders. Zun Group's total net revenues increased by 3% year-over-year to 2.4 billion.
Liz Grove: In the second quarter, the E.C. service business grew by 10%.
Liz Grove: driven by strong performances across key categories of sports and fashion of Harold.
Liz Grove: Notably, during the 6-1-8 shopping festival, traditional market places such as Timo, Resume the Growth.
Liz Grove: Waves especially strong momentum in Old Storff and Sportswear.
Liz Grove: [inaudible]
Liz Grove: Significantly outpacing overall market performance.
Liz Grove: in terms of the channel performance.
Speaker Change: So in experience exceptional growth in this quarter, following the successful integration of our newly acquired location business.
Vincen Qiu: Of this, e-commerce revenue contributed to 2.1 billion while brand management generated 294 million. Breaking down the e-commerce revenue by business model, service revenue increased by 10% to 1.6 billion in the quarter. This growth was primarily driven by double-year-over-year increase in revenue from store operations in apparel and accessories category as well as from digital marketing and IT solutions. DC product sales revenue continued to show progress with a year-over-year contraction narrowing by 4% to 579 million.
Speaker Change: Now, country building over 5% of our BC revenue, with triple digits year over year growth.
Speaker Change: Bihol Red Book related revenue also achieved a triple digit growth from a low base, showing good potential to become another growth driver for the E.C.
Speaker Change: We believe that these two lives dreaming and content-based platforms not only provide brands with a new sales channel, but also allowed them to conduct more effective brand marketing to build their brand image.
Vincen Qiu: With the business optimization nearly complete and the ramp up about what newly introduced exclusive distribution business, we are on track to return to growth in our BC product sales in the second half of 2024. CDM product sales totaled 292 million for the quarter a year-over-year decline of 10% compared with the same period of last year. The contraction was mainly due to weaker consumption sentiment in the fashion and payroll industry and the can will elaborate more later.
Speaker Change: In addition to our offerings on doing and lead for Red Book, we further enhanced our services in digital marketing, IT system and logistics.
Speaker Change: Underpinned by over recent events in data and technology.
Speaker Change: During the quarter, we engaged with a large FMCG client to revamp its order management system.
Vincen Qiu: Please turn to slide number 4. From a profitability perspective, our growth margin for e-commerce product sales was 11.7% for the quarter. The decrease in growth margin for e-commerce product sales was mainly due to a change in category mix and a higher proportion of cash rebates from brand partners compared with more weight on procurement rebates in the same period of last year. Work margin for BBM totaled 52.3% while our growth splendid growth margin for product sales was 25.3%.
Speaker Change: In terms of logistics, we onboard it, a world leading out-store of brand, to provide a comprehensive B2B logistics and a warehousing solution in China.
Speaker Change: Our expansion of service capabilities helps us to expand and strengthen our relationship with existing clients. And provides us with a competitive edge with acquiring new clients.
Speaker Change: I saw results of a new business development effort delivered strong performance with over 38 new wins this quarter.
Vincen Qiu: Now to bottom line items, please turn to slide number 5. During the quarter, our adjusted income from operations totaled 10 million compared with 1 million a year ago. This included an adjusted operating profit of 60 million from e-commerce segment and a reduced operating loss of 50 million from BBM. As of June 30, 2024, we maintained a steady balance in cash and cash equivalents, restricted cash and short investments totaling 2.9 billion in line with balance in the previous quarter.
Speaker Change: Over existing current renewable rates reached a historical high at 95% in the first half of this year.
Speaker Change: Ensuring our future revenues, stability and potential growth.
Speaker Change: Now let's turn to products sales business.
Speaker Change: During the quarter, the ECS product sales business has reached the end of our rationalization process.
Speaker Change: with only a single digit decline year on year.
Vincen Qiu: Lastly, we continued to execute our share reforches program. Here today, we have reforches approximately 2 million ADS for $4.9 million should over market, reflecting our confidence in the company's future. As of today, the remaining amount of thought-authorization short share report program, which is effective through January 2025, stands at 15 million US dollars.
Speaker Change: The revenue was impacted by a week performance of the small appliance and electronic categories during the 6-1-8 campaign, which was offset by strong performances in the beauty and high-of-care categories.
Speaker Change: We also continue to add new brands under the exclusive distribution model.
Speaker Change: We're enjoying a higher-girl smart-in with full control of the sales and marketing activities.
Arthur Yu: Let me now pass the call over to Arthur to update you on B.C, our e-commerce business. Thank you, Vincent and Catherine, and hello, everyone. Now let's review the B.C, distance performance for the second quarter of 2024. Please turn to slide number six. Despite the challenging micro-economic environment and slowing down of e-commerce growth in China, B.C, delivered good results in the second quarter this year. Total revenue growth turned positive for the first time since 2022, increasing by 6% year on year.
Speaker Change: This quarter, we signed an agreement with the UK Kitchenware brand Joseph and Joseph, to become the exclusive distributor in China.
Speaker Change: Overall, our exclusive distribution brands have achieved good momentum in the initial phase, and the way anticipates further improvement in revenue and probability following the ramp-up period.
Speaker Change: Lastly, for enhanced bottom line performance, we continue to drive cost optimization and efficiency improvements through lean and six sigma projects.
Arthur Yu: This growth was primarily driven by a strong performance in our service business during the 618 campaign and stabilization of our product sales business. In the second quarter, B.C. 's service business grow by 10%. Driven by strong performances across key categories of sports and facial apparel. Notably, during the 618 shopping festival, traditional market places such as Timo resumed growth, wave is especially strong momentum in our store and sportswear. As a result, B.C, achieved double digit GMV growth for all the brands we operate during the campaign significantly outpacing overall market performance.
Speaker Change: This quarter, we rolled out six sigma training to more front-line staff, combined with upgrading our lean operation system and increasing the adaptation of AIGC2s.
Speaker Change: We also complete a project to integrate our business processes, systems and operations among our group companies, including the integration of the new required location business.
Speaker Change: In 2024, we expect to complete over 100 lean and six sigma efficiency projects.
Speaker Change: which are protected to deliver a financial benefit of more than 20 million.
Speaker Change: In the first half of this year, we continue our strategic plan to turn around the B.C. business and successfully deliver financial performance in line with our expectations.
Arthur Yu: In terms of the channel performance, Thouin experienced exceptional growth in this quarter, following the successful integration of our newly acquired location business. Now contributing over 5% of our B.C, revenue with triple digits year-over-year growth. LiHua Redbook related revenue also achieved a triple digit growth from a low base, showing good potential to become another growth driver for B.C. We believe that these two live streaming and content-based platforms not only provide brands with a new sales channel, but also allow them to conduct more effective brand marketing to build their brand image.
Speaker Change: We are confident that this strategy will help us achieve our full-year target and transform the piece of business back to growth in a sustainable and profitable manner.
Speaker Change: Now I will pass to Ken for an update on BBM
Ken: and Sanko off. It's my great pleasure to speak with you. It's time to assign number seven for additional updates on BBM.
Ken: During the Second Quarter Week Consumption segment led to a devotee-jit decline in retail traffic, particularly in fashion apparel segment. Despite the high winds, we advance our localization strategy by finding the customer experience.
Ken: In proving commercial rates and expanding our offline network.
Ken: We also implemented a cost-up on meditation initiatives to further reduce expenses.
Arthur Yu: In addition to our offerings on Thouin and LiHua Redbook, we further enhanced our services in digital marketing, IT system, and logistics, and the pins by our recent investments in data and technology. During the quarter, we engaged with a large FMCG client to revamp its other management system. In terms of logistics, we onboarded a world-leading old-store brand to provide a comprehensive B2B logistics and warehousing solution in China. Our expansion of service capabilities helps us to extend and strengthen our relationship with existing clients and provides us with a competitive edge when acquiring new clients.
Ken: and Arthur, without of these efforts, we will be able to narrow BBM's total revenue to a 9% year over year decline and achieve the 70% year over year improvement in our adjusted operating loss for the quarter.
Yu: Yu, the 18 months is since taking over, give China operations.
Speaker Change: We have embarked on a strategy to move away from perpetual discounts by enhancing product design, segmentation and the spritre efficiency.
Speaker Change: This quarter of the way you reached our core categories, such as T-shirt by introducing functional features, such as quick dry, cooling and sweat absorption, overall despite the weak consumption environment.
Speaker Change: We maintain the healthy ghost margin of 52.3% for the quarter.
Speaker Change: We also asserted that the pace of our finite work expansion by opening nine new stores, resulting in net increase of two stores and the brain, our total to 126 stores.
Arthur Yu: I thought results of a new business development efforts delivered strong performance with over 30 new wins this quarter. Over existing clients' renewable rates reached a historical high at 95% in the first half of this year, ensuring our future revenue stability and potential growth.
Speaker Change: Ye addition to opening new locations in tier 1, cities such as Shanghai and Guangzhou We also entered several new tier 1 and tier 2 cities, including Changshan, Xi'an, Shenyang and Guayang
Speaker Change: Leveraging science gained a form traffic and the consumer feedback, we have continued to refine our store experience and the side location tactics.
Arthur Yu: Now let's turn to product sales business. During the quarter, BEC's product sales business has reached the end of our rationalization process with only a single degree decline year on year. The revenue was impacted by weak performance of the small appliance and electronic categories during the 618 campaign, which was offset by strong performances in the beauty and high-altitude categories. We also continued to add new brands under the exclusive distribution model, where we joined a higher growth margin with full control over sales and marketing activities.
Speaker Change: We focused on quarterly neighborhood locations and the high traffic areas, with every new store size of 500 to 600 square meters and the higher store inventory capacity to increase sales efficiency.
Speaker Change: Additionally, we introduced the expression strategy in collaboration with local partners. In second year's days, allowing us to leverage local resources and enhance investment efficiency for further expansion.
Speaker Change: The new stopenings have exceeded our expectations.
Speaker Change: is in encouraging that the new stores in Gui Antalfi, Plata, and the Shanyan Joy City are generating unicell and profits higher than average. The early success of these stores also boosts our confidence in market potential of these emerging locations.
Arthur Yu: This quarter, we signed an agreement with the UK kitchenware brand Joseph and Joseph to become the exclusive distributor in China. Overall, our exclusive distribution brands have achieved good momentum in the initial phase and we anticipate further improvement in revenue and probability following the ramp up period.
Speaker Change: We aim to continue strengthening our presence, tapping to new markets and the capital by analyzing on emerging goals opportunities.
Speaker Change: Overall, we are on track with our target to open more than 50 stores for four years, 20-24.
Speaker Change: After accounting for our proactive optimization and the natural retirement of some existing leases, this expansion will increase our offline work by more than 5% in space footage compared to the end of last year.
Arthur Yu: Lastly, to enhance bottom-line performance, we continue to drive cost optimization and efficiency improvements through lean-and-six sigma projects. In this quarter, we rolled out six sigma trainings to more frontline staff, combined with upgrading our lean operation system and increasing the adaptation of AIGC tools. We also completed a project to integrate our business processes, systems and operations among our group companies, including the integration of the newly acquired location business. In 2024, we expect to complete over 100 lean-and-six sigma efficiency projects, which are projected to deliver a financial benefit of more than 20 million.
Speaker Change: Recently, we have also deepened our interaction with Gepink, and the development plans to better leverage the brand's upward trend and global resources across product development, supply chain, merchandising and marketing.
Speaker Change: Both sides see positive long-term opportunities for kittures down in China, and we aim to closely collaborate to balance our localization efforts with Gibbs global themes.
Speaker Change: I was told this place now in 15th Kittigries and the stylish outfits to create ledger scenes highlighting GIF's street key categories, denim, khaki, and sweatshirts.
Speaker Change: I'm happy to report that despite the outcomes of macro challenges, our fine tuning initiatives have led to a positive sales grossing August. With improved customer experience and the growing contribution from new stores with better our pipeline will return to grossing the second half of 2024.
Arthur Yu: In the first half of this year, we continued our strategic plan to turn around the BEC business and successfully delivered financial performance in line with our expectations. We are confident that this strategy will help us achieve our full-year target and transform the BEC business back to growth in a sustainable and profitable manner.
Speaker Change: In summary, as we entered the next phase of our war BBM journey, our focus has extended to include the top-line girls while safeguarding margins.
Speaker Change: Although we have observed the slower recovery and consumer sentiment, we remain committed to executing our streets, teaching plans.
Speaker Change: Our goal is to build a profitable business that appears to mass market families in China by delivering localized programs that align with the FDA of casual and equality. We invite you to follow our progress.
Ken Huang: Now I will pass to Ken for an update on BBM. Thank you, and thank you all. It's my great pleasure to speak with you.
Ken Huang: Please turn to slide number seven for additional updates on BBM. During the second quarter, weak consumption segment led to a double digit decline in radio traffic, particularly in fashion or parosegment. Despite the halvings, we advanced our localization strategy by fine-tuning the customer experience. Improving conversion rates and expanding our offline network. We also implemented a cost of memorization initiatives to further reduce the expenses. As a result of these efforts, we were able to narrow BBM's total revenue to a 9% year-over-year decline and achieve the 70% year-over-year improvement in our adjusted operating loss for the quarter.
Speaker Change: That concludes our work prepared remarks. Thank you. Operator, we are now ready to begin the journey session.
Speaker Change: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad.
Speaker Change: If you are using a speaker phone, please pick up your handset before pressing the keys.
Speaker Change: If at any time your question has been addressed.
Speaker Change: and you would like to withdraw your question.
Speaker Change: Please press star then too.
Speaker Change: Once again, it is star than one.
Ken Huang: In the 18 months, it seems taking over-gift China operations. We have embarked on our strategy to move away from perpetual discounts by enhancing product led design, segmentation and the supply chain efficiency. This quarter, we reached our core categories, such as T-shirt by introducing functional features, such as quick dry cooling and sweat absorption. Overall, despite the weak consumption environment, we maintain the health equals margin of 52.3% for the quarter. We also accelerated the pace of our offline network expansion by opening nine new stores, resulting in net increase of two stores and bringing our total to 100 and 26 stores.
Speaker Change: We'll ask a question.
Speaker Change: After this time...
Speaker Change: We will pause momentarily to assemble our roster.
Speaker Change: [inaudible]
Speaker Change: Episode 2
Speaker Change: What's again?
Speaker Change: Thank you. The first question comes from Thomas Chong with Jeffries. Please go ahead.
Thomas Chong: Thank you for taking my question. My question is about the recent consumer sentiment and expectations for another chemo and a non-timo. So, and how do we see the competition of e-commerce segments in the second half of the year? And any thoughts on the upcoming WWE? Thanks.
Ken Huang: In addition to opening new locations in T-1 cities such as Shanghai and Guangzhou, we also entered several new T-1 and the T-2 cities, including Changshan, Xian, Shenyang, and Guangyang. Leveraging insights gained from traffic and the consumer feedback, we have continued to refine our store experience and the site location tactics. We focused on quarterly neighborhood locations and the high traffic areas, with an average new store size of 500 to 600 square meters and a higher store inventory capacity to increase sales efficiency.
Speaker Change: Okay, I'm...
Speaker Change: Okay, thank you for the question and I think first of all from the first half of the year, we have seen a recovery in terms of the team overall compared with last year.
Speaker Change: Although it is the growth rate is slowing down, but it still has a double digit growth
Speaker Change: and the way things this trend will continue through to the second half of the year.
Ken Huang: Additionally, we introduced the expansion strategy in collaboration with local partners in second-year cities, allowing us to leverage local resources and enhance investment efficiency for further expansion. The new store openings have exceeded our expectations, it's encouraging that the new stores in Guangzhou and Xianyang are generating unit sales and profits higher than average. The early success of these stores also boosts our confidence in market potential of these emerging locations. We aim to continue strengthening our presence, tapping into new markets and capitalizing on emerging growth opportunities.
Speaker Change: and another trend with the emerald of the true Omnichannel operation for e-commerce. So for example, some potential channels like the Little Red Book, the OQUI show, they all attack more attention from the brand.
Speaker Change: and a big proportion of our brands is operating on a full channel that bases online, inside of one single channel.
Speaker Change: 4W11, what we anticipate is that W11 will start earlier the last year and the duration will be longer, based on our experience in the 618.
Ken Huang: Overall, we are on track with our target to open more than 50 stores for free of 2024. After accounting for our proactive optimization and the natural retirement of some existing leases, this expansion will increase our off-line network by more than 5% in space footage compared to the end of last year.
Speaker Change: and also the planning is becoming more complex.
Speaker Change: which creates a valuable ideas, alternative for children to help our brand partner, to be successful.
Speaker Change: So internally we have already started the planning process for W11 and we think with our help we can replicate the good performance we have delivered in 6-1 it.
Ken Huang: Recently, we have also deepened our interaction with Gap Inc, and developed a plan to better leverage the brand's upward trend and global resources across product development, supply chain, merchandising and marketing. Both sides see positive long-term opportunities for casual style in China, and we aim to closely collaborate to balance our localization efforts with Gap's global themes. Our store displays now emphasized categories and the stylish outfits to create ledger themes highlighting Gap's three key categories than in khakis and swear shirts.
Speaker Change: Thank you!
Speaker Change: The next question comes from...
Speaker Change: Just one moment, if Jarvis Ying from Civic, please go ahead.
Speaker Change: Good evening, management. Thanks for taking my question. Congrats on the solid quarter and I have two questions. The first is that, recently we have seen some e-commerce platforms shifted from price competition to GM Regros. Does this trend influence the advertising strategy on the brands operated by Bousin?
Ken Huang: I'm happy to report that despite the current macro challenges our fine tuning initiatives have led to positive sales growth in August, with improved customer experience and the growing contribution from new stores, we expect our top line will return to growth in the second half of 2024.
Speaker Change: and my second question is that we have seen a good performance of Gap Global this year. So can management share some details about the future trend of Gap Fashion Design and Will Bowton, consider introducing more global style. Thank you.
Ken Huang: In summary, as we enter the next phase of our WBBM journey, our focus has expanded to include the top line growth while safeguarding margins. Although we have observed the slower recovering consumer sentiment, we remain committed to executing our strategic plans. Our goal is to build a profitable business that appears to mass market families in China by delivering localized products that align with Gap DNA of casual and quality. We invite you to follow our progress.
Speaker Change: OK, so go the first one in terms of the returning to the GMV focus, I think that's a good option and it's a good option because for the large scale brands we operate
Speaker Change: and that's a good news for us as all the platforms especially Timo now they've more attention to the big brands, the big international brands we operate. So we think that's a positive sign for us.
Ken Huang: That concludes our prepared remarks. Thank you.
Operator: Operator, we are now ready to begin the journey session. Thank you.
Malabal: Malabal, the cap. Can I pass on for this? Yes, it's true. We also see the Get Global's performance is quite well.
Operator: We will now begin the question and answer session. To ask a question, you may press star than one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star than two. Once again, it is star than one to ask a question.
Malabal: and we also see GIFIC investing a lot on their new design products and the market.
Speaker Change: So we do plan to increase our global adoption of GAP global products, but we will do it season by season based on the market feedback.
Speaker Change: So to make sure our strategy change will have a positive impact to our financials.
Speaker Change: So I think it includes three parts, one, first days we will adopt Gabs Global product, which is successfully launched in the global market and which is also has a very good cost.
Operator: At this time, we will pause momentarily to assemble our roster. Thank you.
Speaker Change: and this is...
Speaker Change: The second days will work adopt their designs by the use of localite fabrics.
Speaker Change: Feetings and details such as color trend in order to meet Chinese customers' needs.
Speaker Change: and the third one is to continue to expand our self development on some special categories and also in local IP collaborations, in able to maximize our self development and self design the products, sales potential, thank you.
Thomas Chong: The first question comes from Thomas Chong with Jeffries. Please go ahead. Thanks for taking my question.
Vincen Qiu: My question is about the recent consumer sentiment and expectations for the Timo and the Nantimo. How do we see the competition of e-commerce segments in the second half of the year and any thoughts on the upcoming W-level? Thanks. Okay. Thank you for the question. I think for so far, from the first half of the year, we have seen a recovery in terms of the Timo growth compared with last year. Although, And we think this trend will continue through to the second half of the year.
Speaker Change: Thank you.
Speaker Change: The next question comes from Wang Zhao with CICC, please go ahead.
Wang Zhao: Hi, thank you for taking my questions. I have two questions. The first law age, we have observed that you have engaged in shared records in the recent courses. Could you please share your outlook on the future shared records and long-term plans for shareholder return? My second question is, could you please share some new changes in the services provided to our partners?
Speaker Change: and such as the progress of creating two countries to commerce and to you.
Vincen Qiu: And another trend we have seen is the emergence, the true Omini channel operation for e-commerce. So for example, some potential channels like the Little Red Book or Quasual, they all attack more attention from the brand. And a big proportion of our brand is operating on a full channel, this is online, instead of one single channel. For W11, what we anticipate is the W11 will start earlier the last year and the duration will be longer based on our experience in the 618.
Speaker Change: Thank you for your question. This is a theme. I'll take the first one and then also we will answer the second question.
Speaker Change: Yes, we are continuing to join the Sherry Purchase.
Speaker Change: and in the visible future we all maintain this space and trying to secure and give the good you know, a chance for the investors to follow your benefits.
Speaker Change: and the in the future, of course, you know, the shareholder, Spendiffity, it's also very important for us.
Vincen Qiu: And also the planning is becoming more complex, which creates a value added opportunity for both to help our brand partner to be successful. So internally we have already started the planning process for W11 and we think with our help we can replicate the good performance we have delivered in 618.
Speaker Change: So, not only does Sherry purchase, but other things like, you know, we'll strive for better performance of, you know, the performance of each category of our business.
Operator: Thank you.
Speaker Change: and try to...
Speaker Change: who are turn around the hope business to positive this year and also the BBM, you know, holistically next year. So all this we think are very essential parts.
Speaker Change: of Shaeho, their returns.
Speaker Change: and also, we also will develop the synergy between the business units.
Jarvis Ying: The next question comes from just one moment, Jarvis Ying from Citic, please go ahead. Good evening, management, thanks for taking my question, congrats on the solid quarter and I have two questions. The first is that recently we have seen some e-commerce platforms shifted from price competition to GMV growth. That this trend influenced the advertising strategy of the brand operated by Baozun. And my second question is that we have seen a good performance of Gap Global this year. So can management share some details about the filter trend of Gap fashion design and the view of Baozun, consider introducing more global style.
Speaker Change: Like DBM and also DEC, trying to ignore natively, you know, deliver some new services and solutions for existing on the half or 400 clients, to create new value for that main future.
Speaker Change: So that is basically our house in delivering good return for shareholders.
Vincen Qiu: Thank you. Okay, so for the first one, in terms of the returning to the GMV focus, I think that's a good opportunity for Baozun because for the large scale brands we operate that's a good potential for us as all the platforms, especially Timo, now give more attention to the big brands, the big international brands we operate. So we think that's a positive sign for us.
Speaker Change: and Arthur for the second one. For the second one, I see you have seen a way delivered a 10% year-over year girl on the service revenue.
Speaker Change: and that's what I'm doing by improving the service quality and also expanding the service scope we're colliding to our clients.
Speaker Change: and...
Arthur: So, as you mentioned, the time...
Speaker Change: is moving to a mini-channel model at the moment, and both in way forward they have a technology which can provide a full-on mini-channel solution, including all the different channels and how to operate on those channels.
Speaker Change: and that is greatly appreciated by our client, especially as the current moment that increase the computation from all the channels and making the e-commerce landscape very complex and our clients need us to help them through the series to drive the sales online.
Ken Huang: Now about the Gap, can I pass on to you guys? Yes, it's true, we also see Gap Global's performance is quite well and we also see Gap is investing a lot on their new design products and the marketing. So we do plan to increase our global adoption of Gap Global products. But we will do it season by season based on the market feedback. So to make sure our strategy change will have a positive impact to our financials.
Speaker Change: In terms of the creative content, part of the business, for this quarter, we have successfully integrated location business, which we recently acquired.
Speaker Change: and the old comics were good.
Ken Huang: So I think it increased three parts, the first is where we will adopt Gap Global products which is successfully launched in the global market and which is also has a very good cost. And the second is where we will adopt their designs by the use of localized fabrics, fittings and details such as color trend in order to meet Chinese customers' needs. And the third way is we will continue to expand our self-development on some special categories and also in local IP collaborations in able to maximize our self-development, self-design products sales potential.
Speaker Change: because we combined.
Speaker Change: the creativity and the innovation of a small entrepreneurial business like location, with the very efficient foundation of Belgian group has a whole to really unleash the potential of the location business.
Operator: Thank you.
Speaker Change: and that part of the business has curled, triple digit during this quarter and our local case varies from undead part.
Speaker Change: Thank you. Thank you.
Speaker Change: again.
Speaker Change: Again, if you have a question, please press star than one.
Speaker Change: The next question comes from Alicia Yap with City. Please go ahead.
Alicia Yap: Hi, thank you. Good evening, management. Thanks for taking my questions. Two questions. Firstly, some can management to comment and share if there's any of these reasons.
Speaker Change: Intensively competitive landscape around the e-commerce player in China, my has affected or even benefited. I will relatively be more diversified exposure to both the team all and the non-timo channels.
Wang Zhao: The next question comes from Wang Zhao with CICC. Please go ahead. Hi, thank you for taking my questions.
Speaker Change: and then second question is, can management also share your view in terms of some of the latest consumption trend into the second half, especially if you know wondering if you have seen the improvement in the gap offline store traffic.
Vincen Qiu: I have two questions. The first one is we have observed that you have been engaged in shared approaches in the recent courses and could you share your outlook on the future shared approaches and long-term plans for shareholder return. My second question is could you share some new changes in the services provided to our partners, such as the progress of creating content to commerce? Thank you. Thank you for your question. This is Vincent.
Speaker Change: and then for your online business based on your conversation with the brands, just wondering how do you expect your digital marketing solution revenue and the warehousing business might trend in the second half. Thank you.
Vincen Qiu: I'll take the first one and then Arthur will answer the second question. Yes, we are continuing doing the shared purchase and in the visible future we all maintain this pace and trying to to scare and give a good chance for the investors to follow their benefits and in the future of course we shareholder benefit is also very important for us. So not only the shared purchase but the other things like we will strive for better performance of each category of our business and try to turn around the whole business to positive this year and also the BBM you know holistically next year.
Speaker Change: Okay, thank you, Alisa, Arthur. I will take the first half of the question and then I pass on to come into the guest part.
Speaker Change: I think it's a good question in terms of the intensified computation landscape impact. I would say the intensification that's in place will lead to some issues like higher return rate and more discount being offered.
Speaker Change: On the other hand, those change and computation has definitely also an alternative for Baudron, and I think the impact is more positive than negative for a few reasons.
Bolton: Number one, I think the only new channel capabilities for Bolton is always run.
Bolton: and this supported by our ematement into the technology over the last 10 years. And that competitive advantage is very difficult to be replicated by our competitor.
Bolton: So, that's what we believe under this kind of situation, we will stand out as a good company to offer a good service to our clients.
Vincen Qiu: So all this we think are very essential parts of sharedholder returns and also we also will develop the synergy between the business units like BBM and also BEC are trying to innovatively you know deliver some new services and solutions for existing on a half or four hundred clients to create new value for them in the future.
Bolton: And secondly, given the different, um, at the easy platform, start to compete with each other and they introduce a lot of new rules and new ways of operating. The advisory rule, uh, the advisory role of Baldwin is becoming more important to our client.
Arthur Yu: So that is basically our thoughts in delivering good return for sharedholders and then Arthur for the second one. Okay, for the second one as you have seen we delivered a 10% year-old year girl on the service revenue and that's what I'm the team at what I'm the team mainly by improving the service quality and also expanding the service scope we're providing to our clients. I yeah so as you mentioned the client is moving to a omnichannel kind of model at the moment and both in wave-hour data and technology we can provide a true omnichannel solution including all the different channels and how to operate on those channels and that is greatly appreciated by our client especially at the current moment the increase the competition from all the channels and making the e-commerce landscape very complex and our clients need us to help them through the service to drive the sales online in terms of the creative content parts of the business for this quarter we have successfully integrated location business which we recently acquired and the outcome is very good because we combined the creativity and the innovation of a small entrepreneurial business like location where is the very efficient foundation of Belgian group has a whole to really unleash the potential of the location business and that part of the business has grown triple digit during this quarter and our love and our outlook is very strong on that part. Thank you. Again, if you have a question, please press star then one.
Bolton: and we can use this opportunity to work more closely with our clients to define their overall EC strategy. Instead of just to be a operator for one single channel.
Bolton: and Thirdly, this also strands of Odin's position in the middle of the brand Antiteform.
Bolton: and in the first half of the year, we have been approached by quite a few of the EC platforms who wants to collaborate with Rodrin to innovate together for the time.
Speaker Change: They would like to know what the kindest will they need, and given the more than 400 finds we've been dealing with, that's giving us a good position to work closely with a platform to innovate together.
Speaker Change: So, because of this, I think the competition is definitely creating a lot of challenges, but I think there's more opportunity for both of them. Thank you.
Speaker Change: I'm the owner of the house, and I'm half-topped. Okay.
Speaker Change: for the traffic question, actually it's the improving, it's especially august.
Speaker Change: We are going to have a sales-soil wine increase in August, and we also spent for the second half we will have a wine increase in the Gipsels. I think talking about this traffic question, I think it's...
Speaker Change: It's quite different, different cities, different walls and all the, and the destination neighborhoods stores.
Speaker Change: So I see the opportunity to get because compared to other competitors, get still have a big room and flexibility to optimize our channels. So we will continue to take advantage of this.
Speaker Change: Opportunity, second half to optimize our store locations. Make sure we're opening our news store in good locations with a good traffic and also have our sales growth in the next year. Thank you.
Alicia Yap: The next question comes from Alicia Yap with City. Please go ahead. Hi, thank you. Good evening management. Thanks for taking my question. So two questions.
Speaker Change: i
Speaker Change: The next question comes from Jack Ho with all tight securities.
Vincen Qiu: Firstly, can management comment and share if there's any of these reasons intensified competitive landscape among the e-commerce player in China might have affected or even benefited about June or given our relatively more diversified exposure to both the team or the non-team or channels. And then second question is can management also share your view in terms of some of the latest consumption trend into the second half, especially if you're wondering if you have seen the improvement in the gap offline store traffic.
Speaker Change: Please go ahead.
Jack Ho: Okay, thanks management for taking my attention. I have a question also regarding the computation.
Speaker Change: So, with intensified computation in commerce sector, we have seen a commerce platforms are continuously paying efforts on merchant sport and efficiently improvement. For example, the launch of marketing towards off trend entry on almost all e-commerce platforms.
Speaker Change: So, what's management to your on-balks and for core combat ceremonies and a barrier in the next stage of development. Thank you.
Speaker Change: OK, thank you for the touch screen, it's Arthur here. I think there are a couple areas where we would like to build our competitive advantage.
Vincen Qiu: And then for your online business based on your conversation with the brands, just wondering, you know, how do you expect your digital marketing solution revenue and the warehousing business might trend in the second half? Thank you. Okay, thank you, Alicia. I will take the first half of the question and then I pass on to Ken to comment on the gap path. I think it's a good question in terms of the intensified competition landscape impact.
Arthur: First one is all the focus on all the customers, all the clients.
Speaker Change: So basically, we think 2022, we launched the MPS Program, the 9th Pomod School Program, with the aim to offer a good service, a stable service to our clients.
Vincen Qiu: I would say the intensification definitely will lead to some issues like higher return rate and more discount being offered. On the other hand, those change and competition has definitely offered a opportunity for Belgium and I think the impact is more positive than negative for a few reasons. Number one, I think the only channel capability for Belgium is over strength and is supported by our investment into the technology over the last 10 years.
Speaker Change: and Arthur resorts always have done a good job in terms of...
Speaker Change: Improving the renewal rate of our time, at the same time, we enhanced our service offering to our customers and attend our investments in technology and data.
Speaker Change: So that, for me, is our full compatitiveness and the current kind of democracy situation. So that's number one.
Speaker Change: Number two is looking internally, or starts to launch a lot of leading programs aiming as improving our operation efficiency.
Speaker Change: That will give us a lot of competitive advantage from a cost perspective.
Vincen Qiu: And that competitive advantage is very difficult to be replicated by our competitor. So that's what we believe under this kind of the situation where we will stand out as a good company to offer a good service to our clients. And secondly, given the different easy platforms start to compete with each other and they introduce a lot of new rules and new ways of operating. The advisory rule, the advisory role of Belgium is becoming more important to our clients and we can use this opportunity to work more closely with our clients to define their overall easy strategy instead of just to be a operator for one single channel.
Speaker Change: On one hand, we're all a good service. On the other hand, that service is being offered in a affordable and good value from financial perspectives to our clients.
Speaker Change: and that gave us a ability to acquire more Makishya under the current environment.
Speaker Change: And finally, the third one is our recent push into the good quality, the high quality product sales business and the introduction of the exclusive distribution of business models.
Speaker Change: and we believe that exclusive distribution model can give us more scope to operate and to leverage our strength in terms of e-commerce and marketing and digital. And we would like to operate as a digital enhanced.
Vincen Qiu: And thirdly, this also strength Holdren's position in the middle of the brand and platform and in the first half of the year we have been approached by quite a few of the easy platforms who wants to collaborate with Holdren to innovate together for the client. They would like to know what the client is really needs and given the more than 400 clients we've been doing with and that's giving us a good position to work closely with the platform to innovate together.
Speaker Change: had distributed a full global brand in China and given the current situation in the market, we believe this will be another driver for all of this news.
Speaker Change: Thank you.
Speaker Change: The next question comes from Johanna, Mar with DMBI.
Speaker Change: Please go ahead.
Ken Huang: So because of this, I think the competition is definitely creating a lot of challenges, but I think there's more opportunity for Belgium. Thank you.
Johanna Mar: Thank you. Hi, Madeline. Thank you for taking my caution.
Johanna Mar: Q2 question clear, the first one is about congratulations and updates on the observation of community consumption trend.
Ken Huang: On the gap one, I will have to 10. Okay, for the traffic question, actually it's improving, especially in August, we are going to have a sales while we increase in August, and we also expect for the second half, we will have a while we increase in the gap sales. I think talking about this traffic question, I think it's quite different than in different cities, different malls and all-ay and the destination neighborhood stores.
Speaker Change: and your hour load for the second house will build the end objectives on our business strategy related to this.
Speaker Change: and another question is for our BBM business, how should we think about the loose reduction trajectory of made a current macro backdrop?
Speaker Change: and regarding the long-term growth strategy, we can actually share with our viewer in rotten plan or key priorities on the environment to drive for a long-term growth.
Ken: Okay, I will answer the first one and I will pass them to Ken to comment on the second one, yeah
Ken Huang: So I see the opportunity to gap because compared to other competitors, gap still have a big room and flexibility to optimize our channels. So we will continue to take advantage of this opportunity in the second half to optimize our store locations. Make sure we are opening our new stores in good locations with a good traffic and also have our sales growth in the next year.
Speaker Change: I think the first one in turn shows the trend for the quarter-consumption.
Speaker Change #100: I mean the overroach in his steel wigs.
Jack Hou: Thank you.
Speaker Change #100: Yu Zhu, the cautious kind of suspending by the overall consumers, and also that being impacted by the white micro economic environment.
Ken: I have been said that I think what we're looking at the six one-eight performance.
Speaker Change #101: The Brandt will be supported
Vincen Qiu: The next question comes from Jack Hou with all type securities. Please go ahead. Okay, thanks management for taking my question. I have a question also regarding the computation. So with intensified computation in commerce sector, we have seen e-commerce platforms are continuously paying efforts on merchant sport. And efficiency improvement, for example, the launch of marketing tools of transaction tree on almost all e-commerce platforms. So what management view on both the core competitors and the barrier in the next stage development? Thank you. Okay, thank you for the question is over here.
Speaker Change #101: to carefully planning the campaign.
Speaker Change #102: and can also steal a good girl for a month and so take example the brand we operate is still in the 6-1-8 has delivered a double digit growth year over year. So even though the market is a little bit soft, but if we do well we can still find an opportunity to grow.
Speaker Change #103: OK, first I call question regarding the...
Speaker Change #104: Perring the macro backstop. I think from all point of view we see to actually an opportunity for gaps.
Speaker Change #105: Business, because we have a marketing company.
Speaker Change #106: and currently we see the mass market trend is still okay and as mentioned before, it's also an opportunity for us to optimize our channels, our stores.
Vincen Qiu: I think there are a couple of areas we would like to build our competitive advantage. First one is our focus on our customer, our client. So basically, we think 2022, we launched the NPS program, the night-promote school program, with aim to offer a stable service to our client. And as a result, we have done a good job in terms of improving the renewal rate of our client. At the same time, we enhance our service offering to our customers underpinned by our investments in technology and data.
Speaker Change #106: So, on one hand, we will continue to keep our coffee.
Speaker Change #107: Cost, Kip the Hour, Cost of the Enlightenment, myzation, Actions.
Speaker Change #107: and the other hand, we will still continue to improve our products including adopting more products from Gave Global Successful Experiences.
Speaker Change #107: and invest our brands in New Tier 1 and the second year cities to boost our sales in our target market and the target audience. So we are of the misty own our progress.
Speaker Change #107: of Gibbs financial targets, 3 years, 3 years business plan.
Vincen Qiu: So that, for me, is over all competitiveness under the current kind of the market situation. So that's number one. Number two is looking internally. We start to launch a lot of leading programs, aiming at improving our operation efficiency. That will give us a lot of competitive advantage from a cost perspective. On one hand, we offer a good service. On the other hand, that service is being offered in affordable and good value from a financial perspective to our client. And that gave us an ability to acquire more market share under the current environment.
Speaker Change #108: for the long-term strategy and also the investment solve. This is instant for share some of our thoughts.
Speaker Change #108: and despite the challenge for the macroeconomy, I think based on solid efforts, our long-term growths will be driven by a straight thanks for a see-see-up.
Speaker Change #109: I mean these schools, and then BBM schools, and then, you know, synergy in between.
Speaker Change #109: So we are happy to see that although the environment is very challenging, but it seems the first time already turned back to a goal.
Speaker Change #109: It's a very happy thing to see, and then we see that BBM here is also very confident to be back on track on girls for the second half of the year.
Vincen Qiu: And finally, the third one is our recent push into the good quality, the high quality product sales business and the introduction of the exclusive distribution business model. And we believe the exclusive distribution model can give us more scope to operate and to leverage our strengths in terms of e-commerce and marketing and digital. And we would like to operate as a digital enhanced distributor for the global brand in China. And given the current situation in the market, we believe this will be another driver for our business. Thank you.
Speaker Change #109: So it's a very good thing to see and the 40 key priorities for investment, I think there's several key words. First line will be cautious.
Speaker Change #109: Kuzum.
Gavin Hunter: We need to make Gavin Hunter as to a quiet friends to be very successful.
Speaker Change #111: and then the macroeconomies are not very optimistic in visible, you know, second half of this year. So we need to take cautious. Second, cautious doesn't mean do nothing.
Speaker Change #111: We are still looking for good opportunities. We will do it with caution. That is the second one. The third thoughts will be we need to maintain the very healthy financial positions of a person as a group.
Speaker Change #111: and very important in this today's environment.
Johanna Ma: The next question comes from Johanna Ma with DMBI. Please go ahead. Thank you.
Speaker Change #111: and the number four is that we need to have a very strong capability.
Speaker Change #112: You know, um, custom.
Vincen Qiu: Highlight. Thank you for taking my question. Two questions here. The first one is about, can I share some updates on the observation of PDD consumption trend and your outlook for the second half will build the end of judgment on our business strategy related to this. And another question is for our BBM business, how should we think about the loose reduction trajectory of made a current model backdrop. And regarding the long-term growth strategy, can I share with us your investment plan or key priorities on investment to drive for long-term growth.
Speaker Change #112: When we want to invest, we need the financial resources, but we also need a very strong team to integrate.
Speaker Change #113: You know the target this is in two weeks off.
Speaker Change #113: or court business just like we did successfully for location integration. So that is the key ideas when we think about the long-term growth and also human investment strategies. Thank you.
Speaker Change #113: Thank you.
Speaker Change #113: This concludes our question and answer session. I would like to turn the conference back over to Wendy Sun when he closing remarks.
Vincen Qiu: Thank you. Okay. I will answer the first one and I will pass on to Ken to comment on the second one. Yes. I think the first one in terms of the trend for the cost of consumption. I mean the overall trend is still weak due to the causes kind of disbanding by the overall consumer and also that being impacted by the wider economic environment. Having said that, I think when we are looking at the 618 performance, the brand we supported to carefully planning the company and can also steal a good growth momentum.
Wendy Sun: Thank you, Operator. On behalf of the Management Team, who would 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 Change #115: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Vincen Qiu: So for example, the brand we operated during the 618 has delivered a double-digit growth year over year. So even though the market is a little bit solved, but if we do well, we can still find opportunity to grow. Okay. The second question regarding the current macro backdrop. I think from our point of view, we see actually an opportunity for gaps business because the gap is targeting a mass market. And currently we see the mass market trend is still okay.
Vincen Qiu: And as mentioned before, it's also an opportunity for us to optimize our channels, our stores. So on one hand, we will continue to keep our cost, keep our cost of optimization actions. And on the other hand, we will still continue to improve our products, including adopting more products from gap global successful experiences and invest our brands in new T-1 and the second market and the target audience. So we are optimistic on our progress of gap financial targets, three years business plan.
Vincen Qiu: Yeah, for the long-term strategy and also the investment solves, this is an instant to share some of our solves. And despite the challenge for the macro economy, I think based on solid efforts, you know, our long-term growth will be driven by three things. First is the B.E.C, growth and then B.B.M, growth and then you know synergy in between. So we are happy to see that although the environment is very challenging but the B.E.C, is the first time already turned back to growth.
Vincen Qiu: It's a very happy thing to see and then we see that B.B.M, here is also very confident to be back on track, on growth for the second half of the year. So it's a very good thing to see. And for the key priorities for investment, I think there are several keywords. First line will be cautious because we need to make a gap on Hunter. There's two acquired brands to be very successful.
Vincen Qiu: And then the macro economy is not very optimistic in a visible, you know, second half of this year. So we need to be cautious. Second cautious doesn't mean too nothing. We are still looking for good opportunities. Yeah, but we will do it with caution. That is the second one. And the third, you know, source will be we need to maintain the very healthy financial positions of the of buzzing as a group.
Vincen Qiu: Because this is very important in this today's environment. And the number of points that we need to have a very strong capability, you know, because when we want to invest, we need the financial resources but we also need a very strong team to integrate. You know, the target business into our core business just like we did successfully for location integration. So that is the key ideas when we think about the long term growth and also investment strategies.
Vincen Qiu: Thank you. This concludes our question and answer session. I would like to turn the conference back over to Wendy soon for any closing remarks. Thank you, operator. On behalf of the management team, we would 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. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.