Q4 2025 Baozun Inc Earnings Call

March 25, 2026

Speaker #2: After management's prepared remarks, there will be a question-and-answer session. As a reminder, today's conference call is being recorded. I will now turn the meeting over to your host for today's call, Ms. Wendy Sun, Senior Director of Corporate Development and Investor Relations of Baozun.

Speaker #2: Please proceed, Wendy. Thank you, Operator. Hello, everyone, and thank you for joining us today. Our fourth quarter 2025 earnings release was distributed earlier before this call and is available on our IR website at ir.baozun.com, as well as on PR Newswire services.

Wendy Sun: Thank you, operator. Hello, everyone, and thank you for joining us today. Our Q4 2025 earnings release was distributed earlier before this call and is available on our IR website at ir.baozun.com, as well as on PR Newswire services. They have also posted a PowerPoint presentation that accompanies our comments to the same IR website, where they are available for your download. On the call today from Baozun, we have Mr. Vincent Qiu, Chairman and Chief Executive Officer, Ms. Catherine Zhu, Chief Financial Officer, Mr. Junhua Wu, Director and Chief Strategy Officer of Baozun Group, and Ms. Ken Huang, Chief Executive Officer of Baozun Brand Management. Mr. Qiu will first share our business strategy and company highlights. Ms. Zhu then will discuss our financials and outlook. Followed by Mr. Wu and Mr. Huang.

Speaker #2: We have also posted a PowerPoint presentation that accompanies our comments to the same IR website. They are available for your download. On the call today from Baozun, we have Mr. Vincent Chu, Chairman and Chief Executive Officer; Ms. Catherine Zhu, Chief Financial Officer; Mr. Junhua Wu, Director and Chief Strategy Officer of Baozun Group; and Ms. Can Huang, Chief Executive Officer of Baozun Brand Management.

Speaker #2: Ms. Chu will first share our business strategy and company highlights. Ms. Zhu then will discuss our financials and look. Followed by Ms. Wu and Ms. Huang, who Mr. Wu and Mr. Huang, who will share more about our e-commerce and brand management segment, respectively.

Wendy Sun: Huang, who will share more about our e-commerce and brand management segment respectively. They will all be available to answer your questions during the Q&A session that follows. Before we begin, I would like to remind you that this conference call contains forward-looking statements within the meaning of the U.S. Securities Act of 1933, as amended, the U.S. Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management's current expectations of current market and operating conditions and relate to events that involve known or unknown risks, 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 statements.

Speaker #2: They will all be available to answer your questions during the Q&A session that follows. Before we begin, I would like to remind you that this conference call contains forward-looking statements.

Speaker #2: Within the meaning of the US Securities Act of 1933 as a mandate, the US Securities Exchange Act of 1934 as a mandate, and the US Private Securities Litigation Reform Act of 1995.

Speaker #2: These forward-looking statements are based upon management currents, expectations, and current market and operating conditions, and relate to events that involve known or unknown risks and certainties and other factors.

Speaker #2: 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.

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

Speaker #2: Further information regarding these and other risks and certainties or factors is included in the company's filings with the U.S. Exchange Commission and its announcement notice or other documents published on the website of the Stock Exchange of Hong Kong Limited.

Speaker #2: All information provided in this call is as of the date here, and is based upon assumptions that the company believes to be reasonable as of this date.

Speaker #2: And the company does not undertake any obligation to update any forward-looking statement except as required under applicable law. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are at arm's length.

Speaker #2: In addition, we may elect to use adjusted employees or non-GAAP figures in order to reduce overall confusion that may arise from our discussion about financials related to the GAAP brand.

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

Speaker #2: You may now turn to slide two for the executive highlights for the quarter. It is now my pleasure to introduce our Chairman and Chief Executive Officer, Mr. Vincent Chu.

Speaker #2: Vincent, please go ahead.

Vincent Qiu: Thank you, Wendy. Hello, everyone, and thank you for joining us. I'm pleased that Baozun delivered a strong Q4, closing 2025 on a high note and successfully completing our three-year strategic transformation. Over the past three years, we have rebuilt our company with focus and intention, driving consistent sequential momentum throughout 2025. In the Q4, our revenue increased 6% to RMB 3.2 billion, while non-GAAP operating profits grew 91% to RMB 198 million. This was not just about short-term recovery. It was about fundamentally improving the quality and potential of our business. BEC has become a sustainable cash engine. Through sharper execution and a continued cost rigor, BECs are more agile and consistently profitable. We have moved from pursuing scale to focusing on value, prioritizing margin expansion and the reliable cash generation, and most importantly, built alignment with BBM.

Speaker #3: Thank you, Wendy. Hello, everyone, and thank you for joining us. I'm pleased that Baozun delivered a strong fourth quarter, closing 2025 on a high note and successfully completing our three-year strategic transformation.

Speaker #3: Over the past three years, we have rebuilt our company with focus and intention, driving consistent sequential momentum throughout 2025. In the fourth quarter, our revenue increased 6% to $3.2 billion, while non-GAAP operating profits grew 91% to $198 million.

Speaker #3: This was not just about short-term recovery. It was about fundamentally improving the quality and potential of our business. BEC has become a sustainable cash engine.

Speaker #3: Through sharper execution and continued cost rigor, BEC is now more agile and consistently profitable. We have moved from pursuing scale to focusing on value, prioritizing margin expansion and reliable cash generation.

Speaker #3: And most importantly, built alignment with BBM. BBM, meanwhile, has reached a defining inflection point. After three years of repositioning and localization, our brand management platform achieved its first quarterly break-even in Q4 '25.

Vincent Qiu: BBM, meanwhile, has reached a defining inflection point. After three years of repositioning and localization, our brand management platform achieved its first quarterly breakeven in Q4 2025. This milestone validates the sustainability of our model. Importantly, scale is beginning to translate into tangible operating leverage, marking the transition from turnaround to profitable growth. Our financial profile has strengthened alongside operational progress. Margins have expanded, profitability has improved meaningfully, and our balance sheet remains solid. In addition, our operating cash flow more than tripled to RMB 420 million in 2025. These results validate that our business is not only growing, it is growing with better structure and healthier economics. In summary, 2025 marks the successful completion of the initial phase of our transformation. As we enter into 2026, our focus shifts decisively from rebuilding to scaling.

Speaker #3: This milestone validates the sustainability of our model. Importantly, scale is beginning to translate into tangible operating leverage, marking the transition from turnaround to profitable growth.

Speaker #3: Our financial profile has strengthened alongside operational progress. Margins have expanded, profitability has improved meaningfully, and our balance sheet remains solid. In addition, our operating cash flow more than tripled to $420 million in 2025.

Speaker #3: These results validate that our business is not only growing; it is growing with better structure and healthier economics. In summary, 2025 marks a successful completion of the initial phase of our transformation.

Speaker #3: As we enter into 2026, our focus shifts decisively from rebuilding to scaling. Our priority now is to amplify the progress to accelerate in the next three years.

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

Speaker #3: We will do this by expanding BEC's margin, building scale and operating leverage in BBM, and deepening the strategic synergies between BEC and BBM. Our ambition is clear: to drive the group's non-GAAP operating profit growth to $550 million by 2028.

Speaker #3: With a stronger organization, a proven strategy, and a highly focused execution culture, we are entering this next phase with confidence and momentum. Now, I will hand over the call to our team for a deeper dive into our financials and business performance.

Catherine Yanjie Zhu: Thanks, Vincent, and hello everyone. Now let me provide a more detailed overview of financial results for Q4 and full year of 2025. Please turn to slide 3. Baozun Group's total net revenues for Q4 2025 increased by 6% year-over-year to RMB 3.2 billion. Of this total, e-commerce revenue grew by 2.5% to RMB 2.6 billion, while brand management revenue rose by 24% to RMB 664 million. Breaking down e-commerce revenue by business model, services revenue increased 3.1% year-over-year to RMB 2 billion. This increase was driven by revenue growth in digital marketing and IT solutions, as well as strong performance in the luxury category within our online store operation services.

Speaker #2: Thanks, Vincent, and hello, everyone. Now, let me provide a more detailed overview of financial results for the fourth quarter and full year of 2025.

Speaker #2: Please turn to slide number three. Baozun Group's total net revenues for the fourth quarter of 2025 increased by 6% year over year to $3.2 billion.

Speaker #2: Of this total, e-commerce revenue grew by 2.5% to $2.6 billion, while brand management revenue grew by 24% to $664 million. Breaking down e-commerce revenue by business model, services revenue increased 3.1% year over year to $2 billion. This increase was driven by revenue growth in digital marketing and IT solutions, as well as strong performance in the luxury category within our online store operation services.

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

Speaker #2: BEC product sales revenue increased modestly by 0.5% year over year to $574.5 million, mainly driven by growth in the health and nutrition category, which was partially offset by lower sales in the appliance category as we continue to optimize the category mix to prioritize profitability.

Speaker #2: BBM product sales totaled $663.7 million, representing 24% year-over-year growth. This growth was mainly driven by the strong performance of the GAAP brand.

Speaker #2: Please turn to slide number four. From a profitability perspective, our blended gross margin for product sales at the group level was 36.5%, an expansion of 640 basis points year over year.

Speaker #2: Gross profits increased by 35.9% year over year to $451.5 million for the quarter. Breaking this down by our key business lines, gross margin for e-commerce product sales expanded to 18.4%, reflecting a 760 basis point improvement compared to 10.8% a year ago.

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

Speaker #2: This margin expansion was primarily driven by product mix optimization. Gross margin for BBM improved to 52.1%, up from 50.4% a year ago, reflecting the effectiveness of its merchandising and marketing initiatives.

Speaker #2: Now, please turn to slide number five for a walkthrough of our OPACs. Sales and marketing expenses increased by $181 million to $1.2 billion. This included an increase of $136.9 million for BEC, which was mainly due to higher spending on creative content and marketing initiatives underlying underbrand note.

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

Speaker #2: In line with the growth in digital marketing revenue, BBM sales and marketing expenses increased by $49.6 million, which was mainly driven by an expansion of offline stores and marketing activities during the quarter.

Speaker #2: Fulfillment costs for the quarter were reduced by 11.1% to $683.4 million. Reflecting ongoing efforts in cost optimization, technology and content expenses decreased by 20.2% to $116.9 million, as we continue to enhance tech monetization efficiency.

Speaker #2: GMA expenses decreased slightly by 2% to $187.9 million. Due to the company's continued efforts to implement cost control and efficiency improvement initiatives. Turning to bottom line items, please refer to slide number six.

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

Speaker #2: During the quarter, our non-GAAP income from operations was $197.7 million, an increase of 91.4% from $103.3 million in the same period of last year.

Speaker #2: BEC's adjusted non-GAAP income from operations was $195.9 million, representing a 43% year-over-year increase compared with a year ago. BBM reported a non-GAAP operating income of $1.8 million, a solid milestone as we achieved the very first break-even quarter for the segment.

Speaker #2: Let us turn to a quick full-year summary. The group total revenue was $9.9 billion, an increase of 6% year over year. Of which, e-commerce net revenues were $8.3 billion, an increase of 2% year over year.

Speaker #2: While BBM net revenues were $1.8 billion, an increase of 25% year over year, our adjusted operating income totaled $126 million, a significant improvement compared with $11 million in fiscal year 2024.

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

Speaker #2: As of December 31, 2025, our cash and cash equivalents were restrictive. Cash and short-term investments totaled $2.8 billion. We continue to improve working capital efficiency through backend process optimization across inventory management, billing, and cash collection.

Speaker #2: As a result, our annual operating cash flow reached $420 million, representing a 315% year-over-year increase. Let me also briefly address a GAAP item recorded during the quarter.

Speaker #2: We recognized an investment increment loss of $230 million, primarily related to previous debt investments in the e-commerce sector, as well as incremental provisions for certain equity investments.

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

Speaker #2: While these investments had strategic rationale at the time, today's macroeconomic environment, combined with our short-term focus on developing our brand management business, makes it prudent to recognize these impairments.

Speaker #2: These adjustments reflect our commitment to maintaining a focused and resilient business portfolio. Importantly, our remaining investments remain healthy, and we are confident in their long-term potential.

Speaker #2: Let me now pass the call over to Junhua to update you on BEC's e-commerce business.

Junhua Wu: Thank you, Catherine, and hello, everyone. I'm pleased to share we've closed 2025 with significant momentum. In Q4, we delivered 2% revenue growth and a 43% increase in non-GAAP operating profit, capping a year of progression from stabilization to accelerated performance. Throughout the year, we focused on driving sustainable, profitable growth while making strategic investments in high-opportunity areas. Now, let me quickly walk through some of our operational highlights in the e-commerce segment for Q4 2025. Please turn to slide 7, highlighting the continued quality improvement of our distribution model. During the quarter, BEC product sales gross profit increased 70.9% despite a largely flat top line. Notably, BEC's gross margin rose to 18.4%, setting a new record since our inception.

Speaker #1: Thank you, Catherine, and hello, everyone. I'm pleased to share that we closed 2025 with significant momentum. In the fourth quarter, we delivered 2% revenue growth and a 43% increase in non-GAAP operating profits, capping a year of progression from stabilization to accelerated performance.

Speaker #1: Throughout the year, we focused on driving sustainable, profitable growth while making strategic investments in high-opportunity areas. Now, let me quickly walk through some of our operational highlights in the e-commerce segment for the fourth quarter of 2025.

Speaker #1: Please turn to slide number seven, highlighting the continued quality improvements of our distribution model. During the quarter, BEC product sales gross profit increased 70.9% despite a largely flat top line. Notably, BEC's gross margin rose to 18.4%, setting a new record since our inception.

Junhua Wu: This improvement was mainly driven by ongoing optimization of our category mix, with strong growth from the health and nutrition and beauty and cosmetics categories. In addition, our efforts to expand into non-standard categories and are beginning to show results. Apparel delivered strong contribution across sales, gross margin, and profitability during the quarter. Turning to slide 8. Our services revenue grew 3% year-over-year in Q4, led primarily by strong performance of DM and IT solutions, which increased 19%. We gained market share in key categories such as luxury, sports, and outdoor. Our omni-channel capability remains one of Baozun's core advantages and a focus of ongoing development going forward. During the quarter, we received 41 awards in Tmall ecosystem, including the prestigious 2025 Tmall Ecosystem Excellence in Service Award.

Speaker #1: This improvement was mainly driven by ongoing optimization of our category mix, with strong growth from the health and nutrition, and beauty and cosmetics categories. In addition, our efforts to expand into non-standard categories are beginning to show results.

Speaker #1: Apparel delivered strong contribution across sales, gross margin, and profitability during the quarter. Turning to slide number eight, our services revenue grew 3% year over year in the fourth quarter.

Speaker #1: Led preliminarily by strong performance of DM and IT solutions, which includes 19%. We gained market share in key categories such as luxury, sports, and outdoor.

Speaker #1: Our omnichannel capability remains one of Baozun's core advantages and a focus of development going forward. During the quarter, we received 41 awards in the PMO ecosystem, including the prestigious 2025 PMO Ecosystem Accolades in Service Award.

Junhua Wu: On Douyin, we were once again certified as a Douyin E-commerce Diamond Service Partner, the platform's highest tier of accreditation. Together, these recognitions affirm our sustained leadership and execution strength across major platforms. We also continue to focus on strengthening our bottom line. Across the organization, we're implementing a series of lean initiatives designed to streamline processes, reduce costs, and enhance efficiency. Furthermore, we are expanding the use of artificial intelligence tools across a wide range of employees and business scenarios to enhance productivity. These efforts have significantly improved our profitability, with BEC's non-GAAP operating income increased 43% year over year to RMB 196 million in Q1 2025. Overall, we're pleased with our performance in Q4 of the strategic transformation, a period that solidified our shift toward the sustainable and profitable operations.

Speaker #1: On Douyin, we were once again certified as a Douyin e-commerce Diamond Service Partner, the platform's highest tier of accreditation. Together, these recognitions affirm our sustained leadership and execution strengths across major platforms.

Speaker #1: We also continue to focus on strengthening our bottom line. Across the organization, we're implementing a series of lean initiatives designed to streamline processes, reduce costs, and enhance efficiency.

Speaker #1: Furthermore, we are expanding the use of artificial intelligence tools across a wide range of employees and business scenarios to enhance productivity. These efforts have significantly improved our profitability.

Speaker #1: With BEC's non-GAAP operating income increased 43% year over year to $196 million in the fourth quarter of 2025, overall, we're pleased with our performance in the final quarter of the strategic transformation.

Speaker #1: A period that solidified our shift toward sustainable and profitable operations. Moving forward, we will continue to deepen client engagement and stickiness, innovate our service models, and enhance operational efficiency.

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

Speaker #1: For 2026, our priorities are clear: deliver the numbers, deliver the strategy, and deliver the talent. Delivering the numbers means maintaining our focus on profitable growth and ensuring that our operational progress continues to translate into strong financial performance.

Speaker #1: On strategy, we're advancing three key initiatives: First, we will expand our apparel distribution business, leveraging the synergy between BEC and NBBM to unlock new growth opportunities and strengthen our brand ecosystem.

Speaker #1: Second, we will further enhance our digital marketing and traffic acquisition capabilities, helping brand partners capture demand more efficiently across an increasingly complex omnichannel landscape.

Speaker #1: Third, we will deepen technology empowerment, accelerating the deployment of AI and digital tools to improve operational efficiency and elevate our service capabilities. Finally, delivering the talent remains essential.

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

Speaker #1: We will continue strengthening our leadership bench and reinforcing a strong execution culture, with the right people and capabilities in place. We are well positioned to scale the business and deliver sustainable growth in the years ahead. Now, our pastor can find an update on BBM.

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

Speaker #2: Thank you Tim and hello everyone . Please turn to slide number nine for PBMs performance in the fourth quarter of 2025 . The fourth quarter marks a defining milestone for BBM , as we delivered our first break even quarter .

Speaker #2: This will result reflects our structural improvements across merchandising , marketing , store productivity , and networking expansion in Q4 , BBM revenue grew by 24% year over year to 664 million , supported by a double digit same store sales growth and continued contributions from new store openings .

Speaker #2: Gross margin improved by 170 basis points from a year ago to 52.1%, leading to a 28% increase in gross profits. Moreover, inventory turnover efficiency improved, reducing our inventory turnover days by 16% to 114 days. Merchandising was the core growth driver for the quarter.

Ken Huang: We entered the winter season with a well-balanced assortment architecture, reinforcing Gap's iconic categories, sweatshirts, denim, and knitwear, while sharpening segmentation across channels and the consumer groups. Our partnership with the Forbidden City has maintained a strong sell-through in Q4. More recently, we launched a new IP collaboration with the Peking Opera, showcasing our ability to blend the Chinese culture storytelling with Gap's global DNA in a commercially effective manner. Since introducing Cheng Yi as our brand ambassador on 15 September, we have collaborated closely to create authentic, engaging content that connects with our audience. We also launched the seasonal products and the limited styling collections aligned with the key moments in the retail calendar. This ambassador-driven initiatives have boosted the social buzz, leading to higher consumer engagement, increased brand visibility, and a strong brand voice. Offline expansion continues to be a strategic priority for us.

Speaker #2: We ended the winter season with a well-balanced assortment architecture , reinforcing Gap's iconic categories sweatshirts , denim , and the newer . While sharpening segmentation across channels and consumer groups .

Speaker #2: Our partnership with the Forbidden City has maintained a strong sales in Q4 . More recently , we launched a new IP collaboration with the Peking Opera , showing our ability to blend Chinese culture storytelling with Gap's global DNA .

Speaker #2: In a commercially effective manner. Since introducing Cheng Yi as our brand ambassador on September 15th, we have collaborated closely to create authentic, engaging content that connects with our audience.

Speaker #2: We also launched a seasonal products and limited styling collections aligned with the key moments in the retail calendar . This ambassador driven initiatives have boosted Socialbuzz , leading to higher consumer engagement , increased brand visibility and a strong brand voice Offline expansion continues to be a strategic priority for us .

Ken Huang: In Q4, we opened 7 new stores for a total of 29 new Gap stores in 2025, bringing our total store count to 164 by the year-end. Our new stores continue to outperform older locations driven by better site selection and enhanced visual merchandising. For instance, our new image stores at the Dongguan Minying International Trade City, and Shanghai Century Link Mall have delivered strong results. The improved in-store experience and the outfit-based presentation have driven a double-digit gain in sales productivity. These early performance indicators are highly encouraging and reinforce our confidence in our store expansion strategy.

Speaker #2: In the fourth quarter, we opened seven new stores for a total of 29 new gift stores in 2025, bringing our total store count to 164 by the year end.

Speaker #2: Our new stores continue to outperform older locations, driven by better site selection and enhanced visual merchandising. For instance, our new image stores at Dongguan Ming International Trade City and Shanghai Central Link Mall have delivered strong results.

Speaker #2: The improved in-store experience and the outfit-based presentation have driven a double-digit gain in sales productivity. These early performance indicators are highly encouraging and reinforce our confidence in our store expansion strategy.

Ken Huang: As a result, we are accelerating our store opening efforts to build on this momentum and currently plan to open 50 stores in 2026 through a hybrid model that combines direct and partnership stores in line with our asset-light approach. With these initiatives in place, we are confident in sustaining double-digit year-over-year revenue goals and achieving operating breakeven for Gap on an annual basis in 2026. Turning to Hunter, the brand continued to strengthen its premium positioning in Q4. Elevated store presentation and curated lifestyle storytelling are resonating with urban consumers seeking both function and fashion. In Q4, we launched 5 new Hunter locations and entered our national footprint into high potential tier two cities, including Nanjing, Qingdao, Shenyang, and Taiyuan. We concluded 2025 with a portfolio of 177 stores under the BBM umbrella.

Speaker #2: As a result, we are accelerating our store opening efforts to build on this momentum and currently plan to open 50 stores in 2026 through a hybrid model that combines direct and partnership stores, in line with our SLA approach.

Speaker #2: With this , initiatives in place , we are confident in sustaining double digit year over year revenue growth and achieving operating breakeven . For on an annual basis in 2026 .

Speaker #2: Turning to Hunter, the brand continued to strengthen its premium positioning in Q4. Elevated store presentation and curated lifestyle storytelling are resonating with urban consumers seeking both function and fashion.

Speaker #2: In the fourth quarter , we launched five new Hunter locations and the entered our national footprint into a high potential tier two cities , including Nanjing , Qingdao , Shenyang and Taiyuan .

Speaker #2: We concluded 2025 with a portfolio of 177 stores under the PBM umbrella. This expanded the physical network and sets a solid foundation to enhance supply chain efficiency in the future.

Ken Huang: This expanded physical network sets a solid foundation to enhance supply chain efficiency in the future. In summary, Q4 2025 represents a structural inflection point for BBM. We achieved our first breakeven quarter. This validates our strategy, strengthens partner trust, and sets the stage for long-term double-digit growth. The direction is clear. BBM is well-positioned to become an increasingly meaningful growth engine for Baozun Group. That concludes our prepared remarks. Thank you. Operator, we are now ready to begin the Q&A session.

Speaker #2: In summary , Q4 2025 represents a structural inflection point for PBM . We achieved our first quarter . This validates our strategy , strengthens partner trust , and sets the stage for long term double digit growth .

Speaker #2: The direction is clear. PBM is well positioned to become an increasingly meaningful growth engine for Baldwin Group. That concludes our prepared remarks.

Speaker #2: Thank you, Operator. We are now ready to begin the Q&A session.

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

Speaker #3: Thank you . We will now begin the question and answer session . To ask a question , you may press star . Then one on your touchtone phone .

Speaker #3: If you are using a speakerphone, 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.

Speaker #3: Then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Chris Cao with Huatai Securities.

Speaker #3: Please go ahead

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

Speaker #4: Hi . Thank you . Management , for taking my question . And I have three questions . The first one is about the AI and with the rapid evolution of AI technology , with the management share that .

Speaker #4: What is the current status of our workflow transformation ? Using AI agents and how we observe any measurable gains in efficiency ? The second question is about the AI to our mid to long term impact .

Speaker #4: This is what is our perspective on the mid- to long-term impact and opportunities that AI presents for our e-commerce business and the brand management business. And my third question is about our business outlook for the mid- to long-term.

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

Speaker #4: And I have noticed that in our report, we state that in 2028, we will reach RMB 550 million in operating profit.

Speaker #4: So with the management share, what is the key driver behind this business outlook? Thank you.

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

Speaker #1: Okay . Thank you . This is Jinhua . So let me address your first two questions regarding AI implementation in Beijing . So the first one is about the AI agent .

Speaker #1: So we have already leveraged a lot of AI agent technology from the beginning of last year . So most focus on our bottom line in terms of like the digital assets creating and uploading products , digital assets onto different platforms , saving a lot of operating people in terms of doing repeatable kind of works .

Speaker #1: We have already leveraged a lot of AI agents . So AI tech , AI agent technology is more focused on driving our efficiency internally , more focused on the bottom line .

Speaker #1: In terms of the top line , we haven't having any very clear definition about the scenario in business case , about how do we leveraging AI , AI technology , increasing our line About the AI agent , you know , there is a genetic platform and technology is very new in this industry .

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

Speaker #1: So we realized that, in terms of that agentic kind of technology right now, it's more focused on the geo generative search engine optimization.

Speaker #1: So there is a , you know , there d o amount , the shopper app is close to approximately about 850 million , and among them , the D o of 300 million is on AI .

Speaker #1: And all those apps in terms of the large scale mode and AI agent apps . So this is transforming the consumer behavior and relocate the traffic structure .

Speaker #1: So we are closely focused on the trend of different big platforms and tracking all those changes in the traffic allocation. And we can share more with you in future quarters.

Speaker #1: Okay . Thank you

Operator: Thank you.

Junhua Wu: The third one is regarding the business outlook.

Speaker #3: Thank you

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

Speaker #1: The third one is regarding the business outlook.

Speaker #2: Yes .

Speaker #5: The we just talked about You know , operating profit goal that will go to 550 million . Is our plan target . The main driver for this is that we are firstly is our strategy .

Speaker #5: We're turning the e-commerce business into a , you know , b , c plus BBM plus synergy model . And you can see firstly , BBM is improving its profitability , especially gap is getting more and more profitable in the coming years .

Speaker #5: And in the meantime, you know, because we leverage the experience in this kind of apparel industry from BBM, we then add more brands into B2C with a franchise model.

Speaker #5: So this also expand our margin . You know , greatly . So combined by this , both , you know , bbms growth and also margin expansion of B , you know , we can see this result in 2028 , but it's not the end of our , you know , acceleration .

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

Speaker #5: I think in the coming years , even beyond 2028 , we can see a more clear sign of this . You know , improvement of our profitability Thank you

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

Speaker #3: Thank you. Our next question comes from Alicia Yap with Citi. Please go ahead.

Alicia Yap: Thanks management for taking my question. My first question is about the latest macro sentiment. Would management share some color about latest macros Chinese New Year demand and the March 8 promotional performance? What is your expectation for 2026? My second question is about AI. How do you see generative AI and other advanced AI technology changing consumer behavior in the e-commerce landscape? Could you elaborate on Baozun's strategy for integrating AI into your operations and service offerings? Are you developing your AI tools or partnering with leading AI firms? My last question is about Gap China. What is the growth expectation for Gap China this year? What is your long-term vision for the Gap business in China?

Speaker #6: Thank you, management, for taking my question. My first question is about the latest macro sentiment. Would management share some color about the latest macros?

Speaker #6: Chinese New Year demand and the much as promotional performance? And what is your expectation for 2026? And my second question is about AI.

Speaker #6: And how do you see generative AI and other advanced AI changing consumer behavior and the e-commerce landscape? Could you elaborate on Baozun's strategy for integrating AI into your operations and service offerings?

Speaker #6: Are you developing a Pi? Are you developing your AI tools or partnering with leading AI firms? My last question is about GAAP.

Speaker #6: China . What is the growth expectation for GAAP China this year ? What is your long term vision for the business in China , and what do you see as the key growth drivers for the brand over the next 3 to 5 years ?

Alicia Yap: What do you see as the key growth drivers for the brand over the next 3 to 5 years? Thank you.

Junhua Wu: Okay. Thank you. This is Junhua. Let me address the first two questions. The first one I will elaborate from the BEC perspective, and Ken can just, you know, feedback some, and your sentiment kind of the forecast align with the third question from the BBM perspective. Yes, we did have a very strong finish on the Chinese New Year campaign and the Queen's Day campaign on 3 March. This is definitely very strong, and we had a late Chinese New Year this year. From the online digital e-commerce growing, that was very promising. And we see the momentum of each category growing a lot. The platforms are still compensating a lot of kind of coupons to the end consumers to increase the overall GMV growth.

Speaker #6: Thank you .

Speaker #1: Okay . Thank you . This is Jinhua . Let me address the first two questions . And the first one I will elaborate from the b c perspective .

Speaker #1: And the can can just , you know , feedback . Some sentiment kind of the forecast align with the third question from the VPN perspective .

Speaker #1: So yes, we did have a very strong finish on the Chinese New Year campaign and the Queen State campaign on March 3rd.

Speaker #1: So this is definitely very strong. And we had a late Chinese New Year this year. So from the online digital e-commerce growing, that was very promising.

Speaker #1: And we see the momentum of each category grossing a lot. And the platforms are still compensating a lot of kind of coupons to the end consumers to increase the overall GMV growth.

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

Speaker #1: And the efficiency of the traffic quality is increasing . So , yes , we believe that we had a very good , strong start and the future quarters will be very promising from the B perspective .

Speaker #1: And the second one is also related to the AI in terms of the geo. And how does geo really change the consumer behaviors?

Speaker #1: Just like I mentioned , that Geo is changing the consumer behavior . It's changing from the d o of 800 , 850 d o shoppers from different apps to 300 million from different kinds .

Speaker #1: Apps like Bao , Yuan , Bao and Tian . Those kind of the generated kind of AI , large scale mode . So consumers started to asking questions , you know , to , for their daily life , during their daily life .

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

Speaker #1: And those kind of g.l can smoothly push a lot of information along with some kind of the reference with the brand oriented writing formation , such as a shopping link or such as a very emotional linkage from the brand's perspective with the content with short video clips or with a very comprehensive information .

Speaker #1: So, we can foresee that the change of consumer behavior is, you know, slightly changed from the instant shopping category to different categories.

Speaker #1: So in terms of the shopping category , so the AI agent is becoming very promising . You can easily order a bubble tea from , for example , from the AI systems and but from different categories .

Junhua Wu: We are closely tracking all those technology, you know, operation and make sure that we can share more in the future quarters. In terms of the bottom line, we definitely input a lot of efforts in the AI agent to increase our efficiency, especially those repeatable kind of systems. Those proprietary AI tools, we're not a partner with any other leading AI firms for now. We still use some kind of the public services with our in-house engineering team to do a lot of Baozun customizations for our leading brand partners. Thank you.

Speaker #1: It's still not in the business scenario. So we are closely tracking all those technologies, you know, operations, and making sure that we can share more with you in the future quarters.

Speaker #1: And in terms of the bottom line, so we definitely input a lot of efforts in the AI agent to increase our efficiency, especially those repeatable kind of systems.

Speaker #1: So those proprietary AI tools . So we're not a partnered with any other leading AI firms for now . We still use some kind of the public services with our in-house engineering team to do a lot of Belgian customizations for our leading brand partners .

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

Speaker #1: Thank you .

Speaker #2: So this is Ken. For the first question about the CNY consumer segment, we forgot we also see a high increase in February and January, in both months.

Speaker #2: The increase rate year to year is over 30% for GAAP. So we can remember, actually, we continued our 20% to 30% increase rate in the last quarter.

Speaker #2: And this quarter . For the third question , the growth expectation for GAAP . First , I think for 2026 , we will still continue to keep the growth rates in 2025 .

Speaker #2: Our growth rate is more than 20%, so we will keep this around a 20% increase in 2026 by both same store increase and new openings.

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

Speaker #2: We plan to open more than 50 stores, and we will also expand our e-commerce sales scale for the long-term vision of the GAAP business.

Speaker #2: In 2027 and 2028, we plan to accelerate our growth rate from 20% to 30%. So we'll be at 25% to 30% in the next two years.

Speaker #2: In the top line. And we will also try to improve our operating profit from breakeven to a 150 basis points increase per year.

Speaker #2: And the main growth driver for in the next three years . I think we're coming from three areas . One is the same store sales increase driven by our product improvements .

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

Speaker #2: Our visual merchandising , our store , new images which will in the end to improve the our in-store traffic and conversion rates . And the second is the scale expansion , both offline and online .

Speaker #2: For example , offline , we are also planning to open re-enter some markets such as Hong Kong , Macau . And the third one is the supply chain efficiency with the scale increase , we expect to gain our efficiency in our cost management and also in the expenses .

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

Speaker #2: That's all. Thank you.

Speaker #5: Here's Vincent , we have some some more things to say about the AI . Because AI , you know , application right now is one of the core strategy of , of the as corporate .

Speaker #5: So our goal is quite clear . We want to make the AI utilization and also application as best practices for both e-commerce and also apparel industry .

Speaker #5: So we will be , you know , the best practice AI for this two areas . So , so not only for the sales side to , but also the supply side for BBM and also of course , for the efficiency improvements .

Speaker #5: Yeah . So it's quite important for us . And we are confident we'll be , you know , in the leading position in utilising utilizing AI capabilities .

Speaker #5: Yeah . Thank you

Operator: Our next question comes from Xiawei Yin with CITIC Securities. Please go ahead.

Speaker #3: Our next question comes from Gui Yin with CITIC Securities. Please go ahead.

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

Speaker #7: Good evening management . Thanks for taking my questions . I have two questions . The first is that we have seen many industry changes such as the compliance of e-commerce tax , the levy of traffic tax , and the restriction of competition in the courier industry , which are generally beneficial to the sales of branded goods and also accompanied by a narrowing growth gap between platforms .

Speaker #7: How does Bao Zheng view the impact of such evolution on operational preference and strategies , and what's the brand's response to this change ?

Speaker #7: And my second question is, has there been any change to the development strategy for the PBM business in 2026? And how will Bao Xuan balance scale and profit?

Speaker #7: What are your expectations for the growth, pace, and the long-term vision of each brand? Thank you.

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

Speaker #1: Okay, so this is Jin Hua. Let me address the first question. So those policies really don't really affect our digital operations.

Speaker #1: And day to day, because the government has, you know, signed up the direction about setting up a different sliding scale in terms of different kind of policies.

Speaker #1: And none of them has really changed the allocation of the marketing fee of our existing brand partner , because after the pandemic , so all our brand partners are being very careful and very cautious about spending money , especially into the marketing spending allocation and the others .

Speaker #1: So we want to help the brand partner to leverage all those money wisely and to drive the higher ROI . As before . So in terms of that , so we are really within the range of all those policies .

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

Speaker #1: And in terms of the cut-throat competition in the industry, Beijing is taking the lead in providing logistics and courier services.

Speaker #1: So we have already leveraged a lot of kind of the pricing efficiency and cost efficiency for so many years . So that doesn't really just affect our day to day operations .

Speaker #1: So in terms of the brand repositioning between different platforms , so indeed , the brands are , you know , either diversifying view , different kind of strategy for different brands because for some kind of the leading livestream brand to focus on GMV growth or treat those platforms as a content creation platform and let those traffic exceeded to all those traditional transaction platforms is different strategies from different kind of categories .

Speaker #1: So most , some of the categories of the brands they choose to drive GMV from both categories , but both , both platforms and some of the brands they treat the live streaming platform as a content creation center and let them exceeded all those content building the emotion linkage to the traditional kind of via transactional platforms .

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

Speaker #1: So we are helping all those different brands in different categories to diversify their strategy across different platforms. So there is no unified strategy in general, in terms of that question.

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

Speaker #1: Thank you .

Speaker #5: Here's Vincent . I will talk about the the BPM strategy . I think the strategy is quite consistent with , you know , the past years , the only change is about the level of our confidence .

Speaker #5: We think we are much more confident right now than before . That , you know , the transformation is already there . We can see the results .

Speaker #5: So we built the three-year model, and we believe in the coming three years, BBM will grow. You know, it will enter into the acceleration phase.

Speaker #5: You know , so we were quite excited about that . And talking about the so for especially for gap , the biggest brands , we will see a very good , you know , trend and also the improvement for the capabilities also promising for the premium brand like Hunter and others , you know , I think we the most important , you know , thing for us is to build the , the capability on merchandising and also marketing .

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

Speaker #5: So , you know , there , there will be also growing quite fast , but building capability is more important . And talking about the BD of the new brands .

Speaker #5: Yeah , I think we are now a lot more brands , you know , come to us trying to work with us . It's a good sign .

Speaker #5: And right now, not only BBM can work with the brands in a very deep relationship, but also BC also has the capability to do more franchise business with brands.

Speaker #5: So in this case, you know, that's why we think the coming three years will be an acceleration phase. Thank you for that.

Vincent Qiu: Thank you for that.

Peishan Wang: Thank you.

Xiawei Yin: Thank you.

Operator: Our next question comes from Peishan Wang with HSBC. Please go ahead.

Speaker #7: Thank you

Speaker #3: Our next question comes from Pei-shan Wang with HSBC. Please go ahead.

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

Speaker #8: Hello . Good evening management . I have two questions . The first one is on the growth outlook for 2026 . And what are the key upside and downside risks .

Speaker #8: You see, based on your expectations. And the second question is, how should we think about the capital allocation plan given the AI investment and other investment priorities this year?

Speaker #8: And can management share our thoughts on how you think about shareholder return going forward? Thanks.

Peishan Wang: Sorry. The first one is about the outlook of the business growth in the future three years or 2026?

Junhua Wu: Sorry. The first one is about the outlook of the business growth in the future three years or 2026?

Speaker #1: Sorry. The first one is about the outlook — the business growth in the future, three years or 2026.

Peishan Wang: 2026 outlook for the Group.

Operator: The group outlook. Okay.

Junhua Wu: The group outlook. Okay.

Speaker #8: 2026 for the group outlook.

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

Speaker #1: The group outlook. Okay.

Speaker #5: Yeah , maybe I try to say something and maybe Catherine , you can say more about that because it's expectation . Yeah , I think firstly , you know , we are we are trying to make a positive year in terms of net income to ordinary shareholders .

Catherine Yanjie Zhu: Yes. Thanks.

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

Speaker #5: Wendy . So yeah , it is quite , you know , exciting goal to achieve because that means , you know , we have more to contribute to our shareholders and investors .

Speaker #5: Yeah . To achieve that , of course we need to make all the aspects of our operation better than before . Our margin expansion need to be , you know , improved as well .

Speaker #5: So in this case, we're not only to treat our customer or employee better and also give more, you know, return to our investment investors.

Speaker #5: Yeah. In terms of numbers, can we share anything, or...

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

Speaker #9: Yeah , okay . Thank you for your question . I think the management are quite confident . And for the coming 2026 , we think it's quite promising because we are doing a lot of initiatives not only including like part and also brand management segment .

Speaker #9: So regarding the revenue, we are expecting a certain number of increase, and like A, B, C segment, or if we split it into two segments, B and C, we are expecting a single-digit increase.

Speaker #9: And for the VPN part, we are expecting a very good number to come in, and regarding the non-GAAP operating profit, we are also expecting about double the number compared with 2025.

Catherine Yanjie Zhu: We are expecting this. We are doing all kinds of initiatives like as I mentioned in the call. I think the management are quite confident about that.

Speaker #9: And so, we are expecting this. We are doing all kinds of initiatives like those mentioned in the call. So, I think the management are quite confident about that.

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

Speaker #5: And also we see her again talking about the AI . You know , right now , although it is still an initial phase , you know , for the industry to adopt the results , the development of the AI .

Speaker #5: But , you know , we are seeing this change very fast . So for us , we need to keep us very active and agile to keep our pace up to this development .

Speaker #5: So for us , you know , along with the investment into it and the internal process improvement , every year we put resources and there and this year , starting from this year , we have more initiatives from the corporate level .

Speaker #5: You know , we have , you know , several very interesting and important initiatives , but doesn't require a lot of investments . So , you know , I think talents will be more important than investments .

Vincent Qiu: You know, I think talents will be more important than investments. That's why we're so confident that we will be the best practice for not only e-commerce but also apparel industry in China. You know, we're quite confident to be the most you know advanced utilization of AI capabilities. Thank you.

Speaker #5: So that's why we're so confident that we will be the best practice for not only e-commerce , but also apparel industry in China will be the , you know , we're quite confident to , to , to be the most advanced utilization of AI capability .

Peishan Wang: Thank you.

Speaker #5: Thank you .

Operator: The next question is from Joanna Ma with CMBI. Please go ahead.

Speaker #8: Thank you

Speaker #3: The next question is from Shuang Gu with CMB. Please go ahead.

Joanna Ma: Hi, management. Thank you for taking my question. My question is regarding your development strategy for overseas business. Can management share with us the update regarding your overseas strategies? Can management share with us your development plan regarding Baozun International business? Thank you.

Speaker #10: Hi, management. Thank you for taking my question. My question is regarding your development strategy for overseas business. Can management share with us the update regarding your overseas strategies, and can management share with us your development plan regarding the international business?

Speaker #10: Thank you

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

Speaker #5: Yeah . Let me first address some you know about our international business right now for the priority , of course , you know , BB , BBM and B are contributing the major share of our business and also growth .

Speaker #5: So these two are very important. So that's why we talked more about these two sections for BCI. I think you know recently we have a very solid progress, but still, it's a minor contribution to the whole company.

Speaker #5: And growth . We are we are quite solid in , in , you know , outside the business , outside of China . Hunter is already in in Southeast Asia and making progress .

Speaker #5: We have several major e-commerce projects improving , you know , and to be profitable in the region as well . We have opportunities in , you know , career and also South Korea and also several very big projects going on is going on in Hong Kong and Taiwan .

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

Speaker #5: You know , we are seeing this improving . You know , pro with a promising future . And we are confident that the growth of the international business will be solid .

Speaker #5: But we are not expecting a big contribution from, you know, international business yet in the coming two years. Yeah, I think you just talked about the new brands of BBM as well.

Vincent Qiu: BBM new brands.

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

Speaker #5: Right now , I think we are in a very good situation because , you know , we are we are we are having a quite big base of brands from DC .

Speaker #5: So when you know there’s opportunity emerges in the market, we’ll be the first one, you know, to have the opportunity to work with them. Recently, we see a lot.

Speaker #5: Yeah , the trust us and we have such a solid track record for BBM in the coming in the past two years . So , you know , people just want to work with us .

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

Speaker #5: But for us, I think we know what we need to have. So at least we will not have a lot more brands in the future.

Speaker #5: But definitely during , you know , in the coming three years , I think we will have new brands , you know , carefully selected .

Speaker #5: You know, better profitable brands to add to our portfolio. Thank you.

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

Speaker #3: Thank you. This concludes our question-and-answer session. I would now like to turn the conference back over to Wendy Sun for closing comments.

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

Speaker #3: Over to you

Speaker #11: Thank you, operator. On behalf of the management team, we would like to thank you again for your participation in today's call.

Speaker #11: If you require any further information, feel free to reach out to us. Thank you for joining us again. This concludes the call.

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

Speaker #11: Thank you

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