Q2 2026 Baozun Inc Earnings Call

August 27, 2026

Speaker #1: Good morning, ladies and gentlemen, and thank you for standing by for Baozun's second quarter 2026 earnings conference call. At this time, all participants are on listen-only mode.

Operator 2: Good morning, ladies and gentlemen, and thank you for standing by for Baozun's Q2 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the 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. Please proceed, Wendy.

Operator: Good morning, ladies and gentlemen, and thank you for standing by for Baozun's Q2 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the 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. Please proceed, Wendy.

Speaker #1: After the 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.

Speaker #1: Senior Director of Corporate Development and Investor Relations at Baozun, please proceed, Wendy.

Speaker #2: Thank you, Operator. Hello, everyone, and thank you for joining us today. Our second quarter 2026 earnings release was distributed earlier before this call, and it's 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 Q2 2026 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 Mr. Ken Huang, Chief Financial Officer of Baozun Brand Management. Mr. Qiu will first share our business strategy and company highlights. Ms. Zhu will then discuss our financials, followed by Mr. Wu and Mr. Huang, who will share more regarding our e-commerce and brand management segments respectively.

Speaker #2: 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. Minseung Choo, Chairman and Chief Executive Officer.

Speaker #2: Ms. Katherine Joo, Chief Financial Officer; Mr. Junhua Wu, Director and Chief Strategy Officer of Baozun Group; and Mr. Ken Huang, Chief Financial Officer of Baozun Brand Management.

Speaker #2: Ms. Choo will first share our business strategy and company highlights. Ms. Choo will then discuss our financials, followed by Mr. Wu and Mr. Huang, who will share more regarding our e-commerce and brand management segments, respectively.

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 within the meaning of U.S. securities laws.

Wendy Sun: 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 US Securities Act of 1933 as amended, the US Securities Exchange Act of 1934 as amended, and the US Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management current expectations and current market and operating conditions and relates to events that involve known or unknown risks, uncertainties, or 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: Securities Act of 1933 as a mandate, the U.S. Securities Exchange Act of 1934 as a mandate, and the U.S. Private Securities Litigation Reform Act of 1995.

Speaker #2: These forward-looking statements are based upon management current expectations and current market and operating conditions, and relate to events that involve no or unknown risk and certainties or other factors, of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual result to differ materially from those in the forward-looking statement.

Speaker #2: Further information regarding these and other risk uncertainties or factors is included in the company's filings with the United States Securities and Exchange Commission, and its announcement notices or other documents published on the website of the Stock Exchange of Hong Kong Limited.

Wendy Sun: Further information regarding these and other risks, uncertainties, or factors is included in the company's filings with the United States 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 on assumptions the company believes to be reasonable as of this date. The company does not take any obligation to update any forward-looking statements except as required in the applicable law. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in RMB. In addition, we may elect to use adjusted in place of non-Generally Accepted Accounting Principles or non-GAAP in order to reduce oral confusion that may arise from our discussions about financial related to the Gap brand.

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

Speaker #2: The company does not take any obligation to update any forward-looking statement except as required by applicable law. Finally, please note that, unless otherwise stated, all figures mentioned during this conference call are in RMB.

Speaker #2: In addition, we may elect to use adjusted measures of non-generally accepted accounting principles, or non-GAAP, in order to reduce overall confusion that may arise from our discussions about financials related to the GAAP brand.

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

Wendy Sun: You may now turn to slide number 2 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: Vincent, please go ahead.

Speaker #3: Thank you, Wendy. Hello, everyone, and thank you for joining us. We delivered another solid second quarter, with earnings quality continuing to improve. Group revenue grew 7% to $2.7 billion, while non-GAAP operating income reached $74 million.

Vincent Qiu: Thank you, Wendy. Hello, everyone, and thank you for joining us. We delivered another solid Q2 with earnings quality continuing to improve. Group revenue grew 7% to RMB 2.7 billion, while non-GAAP operating income reached RMB 74 million, a year-over-year improvement of 25% compared with adjusted base of RMB 59 million in the same period of last year. Both BBM and BEC have contributed solid results, demonstrating the strength and the resilience of our business in a competitive market. BEC achieved resilient 5% year-over-year revenue growth. More importantly, BEC improved its efficiency and profitability with expanded non-GAAP operating profit margin. Against a weak e-commerce industry backdrop, we view this performance as a clear demonstration of BEC improving business quality. Our deep brand know-how has been instrumental in understanding and anticipating market trends, consumer behaviors, and the brand needs.

Speaker #3: The year-over-year improvement was 25%, compared with an adjusted base of 59 million in the same period last year. Both BBM and BEC have contributed solid results.

Speaker #3: Demonstrating the strengths and resilience of our business in a competitive market, BEC achieved resilient 5% year-over-year revenue growth. More importantly, BEC improved its efficiency and profitability, with an expanded non-GAAP operating profit margin.

Speaker #3: Against a weak e-commerce industry backdrop, we view this performance as a clear demonstration of BEC improving business quality. Our deep brand know-how has been instrumental in understanding and anticipating market trends, consumer behaviors, and brand needs.

Speaker #3: This expertise enables us to engage with our brand partners more strategically, while keeping value creation at the heart of our approach. BBM sustained strong brand momentum, delivering 22% year-over-year top-line growth, double-digit same-store growth, solid gross margin expansion, and further improvement in operating profitability.

Vincent Qiu: This expertise enables us to engage with our brand partners more strategically while keeping value creation at the heart of our approach. BBM sustained strong brand momentum, delivering 22% year-over-year top-line growth, double-digit same-store growth, solid gross margin expansion, and a further improvement in operating profitability. Gap remains the primary driver of this performance, supported by our effective MMC initiatives and increased consumer engagements from our seasonal brands ambassador program. At the same time, our emerging brands are progressing according to plan and are beginning to make more contribution to the top line as we start to invest in building their long-term presence. We also are very excited to share our advancements in technology innovation and the AI empowerment. We recently began piloting AI and automation initiatives within our Gap e-commerce operations to streamline selected processes.

Speaker #3: GAAP remains the primary driver of this performance, supported by our effective MMC initiatives, and an increase in our seasonal brand ambassador program. At the same time, our emerging brands are progressing according to plan and beginning to make more contributions to the top line, as we start to invest in building their long-term presence.

Speaker #3: We are also very excited to share our advancements in technology innovation and the involvement of AI. We recently began piloting AI and automation initiatives within our GAAP e-commerce operations to streamline selected processes.

Speaker #3: The initial results have demonstrated substantial productivity gains, highlighting the potential to extend these capabilities across a broader BEC ecosystem. We are glad that the success of our strategic transformation over the past three years has laid a strong foundation for a more flexible and scalable business model.

Vincent Qiu: The initial results have demonstrated substantial productivity gains, highlighting the potential to extend these capabilities across the broader BEC ecosystem. We are glad that the success of our strategic transformation over the past three years have laid a strong foundation for a more flexible and scalable business model. Leveraging AI and our established technology infrastructure, BBM provides an environment where we can develop and prove new operating capabilities, while BEC provides a scale to deploy them across a broader portfolio of brands. With continued AI-driven empowerment and the deeper synergies between our two business segments, we are raising our 2028 non-Gap operating profit target from RMB 550 million to RMB 700 million, reflecting our increased confidence in long-term growth potential. Now I will hand over the call to our team for a deeper dive into our financials and business performances.

Speaker #3: Leveraging AI and our established technology infrastructure, BBM provides an environment where we can develop and prove new operating capabilities, while BEC provides the scale to deploy them across a broader portfolio of brands.

Speaker #3: With continued AI-driven involvement and deeper synergies between our two business segments, we are raising our 2028 non-GAAP operating profit target from $550 million to $700 million.

Speaker #3: Reflecting our increased confidence in long-term growth potential. Now, I will hand over the call to our team for a deeper dive into our financials and business performance.

Speaker #2: Thanks, Vincent. And hello, everyone. Now, let me provide a more detailed overview of financial results for the second quarter of 2026. Please turn to slide number three.

Catherine Zhu: Thanks, Vincent, and hello everyone. Now let me provide a more detailed overview of financial results for the second quarter of 2026. Please turn to slide number 3. Baozun Group's total net revenues for the second quarter of 2026 increased by 7% year-over-year to RMB 2.7 billion. Of this total, e-commerce revenue grew by 5% to RMB 2.3 billion, while brand management revenue grew by 22% to RMB 486 million. Breaking down e-commerce revenue by business model, services revenue increased 10% year-over-year to RMB 1.8 billion, while BEC product sales revenue decreased by 10% year-over-year to RMB 541 million, as we prioritize business quality. Please turn to slide number 4. From a profitability perspective, gross profit for product sales increased by 21.3% year-over-year to RMB 343 million for the quarter. Our group-level blended gross margin for product sales was 33%, representing an expansion of 499 basis points year-over-year.

Speaker #2: Baozun Group's total net revenues for the second quarter of 2026 increased by 7% year-over-year to $2.7 billion. Of this total, e-commerce revenue grew by 5% to $2.3 billion.

Speaker #2: While brand management revenue grew by 22% to $1 million. Breaking down e-commerce revenue by business model, services revenue increased 10% year-over-year to $1.8 billion, while BEC product sales revenue decreased by 10% year-over-year to $541 million.

Speaker #2: As we prioritize business quality, please turn to slide number four. From a profitability perspective, gross profits for product sales increased by 21.3% year-over-year to $343 million for the quarter.

Speaker #2: Our group-level blended gross margin for product sales was 33%, representing an expansion of 499 basis points year-over-year. Within this, the gross margin for e-commerce product sales was 13%, compared with 4.8% in the same period last year.

Catherine Zhu: Within this, gross margin for e-commerce product sales was 13%, compared with 12.8% in the same period of last year. And the gross margin for BBM was 56.1% for the quarter, compared with 52% in the same period of last year. Now please turn to slide number 5 for a walkthrough of our OPEX. Sales and marketing expenses increased by RMB 239 million to RMB 1.2 billion. This included an increase of RMB 188 million for BEC, which was mainly due to higher spending on creative content and marketing initiatives on Douyin and Xiaohongshu. Consistent with the growth in digital marketing revenue, BBM sales and marketing expenses increased by RMB 46 million, mainly driven by the expansion of offline stores and marketing activities in the quarter. Fulfillment costs for the quarter decreased by 9% to RMB 549 million. Technology and content expenses decreased by 0.4% to RMB 114 million.

Speaker #2: And gross margin for BBM was 56.1% for the quarter, compared with 52.0% in the same period last year. Now, please turn to slide number five.

Speaker #2: For a walkthrough of our OPEX, sales and marketing expenses increased by $239 million to $1.2 billion. This included an increase of $188 million for BEC, which was mainly due to higher spending on creative content and marketing initiatives under Ying and Red Note.

Speaker #2: Consistent with the growth in digital marketing revenue, BBM sales and marketing expenses increased by $46 million, mainly driven by the expansion of offline stores and marketing activities in the quarter.

Speaker #2: Fulfillment costs for the quarter decreased by 9% to $549 million; technology and content expenses decreased by 0.4% to $114 million; G&A expenses decreased by 22% to $175 million. The reduction in these OPEX items reflected our focus on cost control and operational efficiency.

Catherine Zhu: G&A expenses decreased by 22% to RMB 175 million. The reduction in these three OpEx items reflected our focus on cost control and operational efficiency. Turning to bottom line items, please refer to slide number 6. During the quarter, our non-GAAP income from operations was RMB 74 million compared to RMB 6 million in the same period of last year, or RMB 59 million in the rebased same period of last year, if we exclude the one-time write-off cost. BEC's adjusted non-GAAP income from operations was RMB 107 million, a record level for the Q2 since 2022. BBM reported a non-GAAP operating loss of RMB 33 million, compared with a loss of RMB 35 million a year ago. For the Q2 of 2026, our working capital turnover improved to 107 days, compared with 148 days a year ago. Within this, inventory turnover shortened to 112 days from 134 days a year ago.

Speaker #2: Turning to bottom line items, please refer to slide number six. During the quarter, our non-GAAP income from operations was $74 million, compared to $6 million in the same period last year.

Speaker #2: Or ¥59 million in the rebased same period of last year. If we exclude the one-time write-off cost, BEC's adjusted non-GAAP income from operations was ¥107 million, a record level for the second quarter since 2022.

Speaker #2: BBM reported a non-GAAP operating loss of $33 million, compared with a loss of $35 million a year ago. For the second quarter of 2026, our working capital turnover improved to 107 days, compared with 148 days a year ago.

Speaker #2: Within this, inventory turnover shortened to 112 days from 134 days a year ago. This improvement was driven by both BEC and BBM segments. As of June 30, 2026, our cash, cash equivalents, restricted cash, and short-term investments total $2.9 billion.

Catherine Zhu: This improvement was driven by both BEC and BBM segments. As of 30 June 2026, our cash equivalents, restricted cash, and short-term investments total RMB 2.9 billion. Let me now pass the call over to Junhua to update us on BEC, our e-commerce business.

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

Speaker #3: Thanks, Catherine, and hello, everyone. For BEC, we have been focused on the quality of growth, with greater emphasis on the business where we can deliver high-value results.

Junhua Wu: Thanks, Catherine, and hello everyone. For BEC, we have been focused on the quality of growth, with greater emphasis on the business where we can deliver high-value results. We believe this approach better aligns the interests of our brand partners with our own, which will ultimately translate into improved productivity and margin expansion for BEC. During the Q2, BEC's revenue grew by 5% year-over-year, and non-GAAP operating income reached RMB 107 million, the highest Q2 level since 2022. This highlights the improvement in our financial performance and the successful execution of our strategy. Underlying these impressive results, we have taken a proactive approach to refining our service model. We expanded market share in key categories including luxury, sports, and outdoor, driving 10% year-over-year growth in service revenue. Enhanced consumer engagement through content creation, digital marketing, and Douyin initiative has also helped strengthen consumer awareness.

Speaker #3: We believe this approach better aligns the interests of our brand partners with our own, which will ultimately translate into improved productivity and margin expansion for BEC.

Speaker #3: During the second quarter, BEC's revenue grew by 5% year-over-year, and non-GAAP operating income reached $107 million, the highest second-quarter level since 2022.

Speaker #3: This highlights the improvement in our financial performance and the successful execution of our strategy. Underlying these impressive results, we have taken a proactive approach to refining our service model.

Speaker #3: We expanded market share in key categories, including luxury, sports, and outdoor, driving 10% year-over-year growth in service revenue. Enhanced consumer engagement through content creation, digital marketing, and our Douyin initiative has also helped strengthen consumer awareness.

Speaker #3: For example, this June, we produced a large-scale live broadcast of a women's night run for one of our sportswear brand partners. More than just a race, the event was designed to empower women and foster a sense of community.

Junhua Wu: For example, this June, we produced a large-scale live broadcast of a women's night run for one of our sportswear brand partners. More than just a race, the event was designed to empower women and foster a sense of community. Our live broadcast enabled millions of viewers to join the excitement virtually, amplifying the brand's value while creating a memorable experience that resonates with its target audience. This event set a new benchmark for how we can leverage digital platforms to amplify business opportunities while driving both brand value and sales. We are proud to have once again been awarded Douyin E-commerce Diamond Service Provider Certification for the Q2. These achievements validate our strategy of prioritizing high-quality revenue streams and expanding margins, and reinforce our confidence in growth momentum of our service business.

Speaker #3: Our live broadcast enabled millions of viewers to join the excitement virtually, amplifying the brand's value while creating a memorable experience that resonates with its target audience.

Speaker #3: This event set a new benchmark for how we can leverage digital platforms to amplify business opportunities while driving both brand value and skills, as well as sales.

Speaker #3: We are proud to have once again been awarded Douyin E-commerce Diamond Service Provider certification for the second quarter. These achievements validate our strategy of prioritizing high-quality revenue streams and expanding margins.

Speaker #3: And reinforce our confidence in the growth momentum of our service business. We also made a strategic decision to scale back our participation in certain product sales categories where intense price competition and lower margins limit their attractiveness.

Junhua Wu: We also made a strategic decision to scale back our participation in certain product sales categories where intense price competition and lower margins limit their attractiveness, particularly during the 618 campaign. This was most evident in standardized categories such as home and furnishing, beauty and cosmetics, and appliances. As a result, product sales declined 10% year-over-year for the quarter. For H1, total product sales reached RMB 1 billion, up slightly by 3% year-over-year and in line with our plans. What is strategic, however, is our investment in the infrastructure and capabilities needed to build on apparel product sales business. While this business requires a longer preparation period, we have made solid progress in supply chain management, advanced data analytics, and product development.

Speaker #3: Particularly during the 6/18 campaign, this was most evident in standardized categories such as home and furnishing, beauty and cosmetics, and appliances. As a result, product sales declined 10% year over year for the quarter.

Speaker #3: For the first half of the year, total product sales reached $1 billion, up slightly by 3% year-over-year and in line with our plans. What is strategic, however, is our investment in infrastructure and capabilities needed to build a parallel product sales business.

Speaker #3: While this business requires a longer preparation period, we have made solid progress in supply chain management, advanced data analytics, and product development. We believe this model can leverage our deep brand know-how to build a differentiated and scalable product sales business, contributing to both the top line and the bottom line from 2027 onward.

Junhua Wu: We believe this model can leverage our deep brand knowhow to build a differentiated and scalable product sales business, contributing to both the top line and the bottom line from 2027 onwards. Turning to this profitability, we remain focused on driving greater operating leverage through disciplined cost management and structural efficiency improvements. This significant improvement in BEC's operating performance this quarter reflects the benefits of those efforts. While our increased use of automation provides an additional opportunity to improve productivity over time. As Vincent just highlighted, our trials of AI-enabled systems position us well to re-engineer our operation process and unlock significant productivity gains. Over the next 18 months, we expect to accelerate the development of these initiatives across our operations, with a particular focus on optimizing resources and aligning them with streamlined workflows.

Speaker #3: Turning to profitability, we remain focused on driving greater operating leverage through disciplined cost management and structural efficiency improvements. This significant improvement in BEC's operating performance this quarter reflects the benefits of those efforts.

Speaker #3: While our increased use of automation provides an additional opportunity to improve productivity over time, as Vincent just highlighted, our trials of AI-enabled systems position us well to re-engineer our operation process and unlock significant productivity gains.

Speaker #3: Over the next 18 months, we expect to accelerate the development of these initiatives across our operations, with a particular focus on optimizing resources and aligning them with streamlined workflows.

Speaker #3: Over time, we believe BEC can evolve into a linear operation model, allowing us to improve margins while also increasing our capacity to serve a broader range of addressable markets.

Junhua Wu: Over time, we believe BEC can evolve into a linear operation model, allowing us improved margins while also increasing our capacity to serve a broader range of addressable markets. Now I will pass to Ken for an update on BBM.

Speaker #3: Now I'll pass to Ken for an update on BBM.

Speaker #4: Thank you, team. And hello, everyone. Please turn to slide number nine for BBM's performance in the second quarter of 2026. BBM sustained strong momentum into the second quarter.

Ken Huang: Thank you, team, and hello everyone. Please turn to slide number 9 for BBM's performance in Q2 2026. BBM sustained its strong momentum into Q2, with revenue growing 22% year-over-year and the non-GAAP operating loss further narrowing despite increased investment in emerging brands. For the Gap brand alone, our non-GAAP operating loss improved by more than 40% year-over-year. Solid top-line growth was driven by improvements across key operating metrics, including traffic, offline store productivity per square meter, and the blended gross margin. Leveraging our omni-channel capabilities and agile integration, Gap delivered another same-store sales growth in the 20s. Our performance continues to validate the competitive advantage of our brand management model. By combining Baozun's local operating capabilities with Gap's global brand, we are able to develop products faster, localize assortments more effectively, execute integrated marketing campaigns, and respond more quickly to changing consumer demand.

Speaker #4: With revenue growing 22% year-over-year and the non-GAAP operating loss further narrowing despite increased investment in emerging brands. For the core brand alone, our non-GAAP operating loss improved by more than 40% year-over-year.

Speaker #4: Solid top-line growth was driven by improvements across key operating metrics, including traffic, offline store productivity per square meter, and the blended gross margin.

Speaker #4: Leveraging our omnichannel capabilities and agile integration, GAAP delivered another same-store sales growth in the 20s. Our performance continues to validate the competitive advantage of our brand management model.

Speaker #4: By combining Baozun's local operating capabilities with Gap's global brand, we are able to develop products faster, localize assortments more effectively, execute integrated marketing campaigns, and respond more quickly to changing consumer demand.

Speaker #4: Overall, BBM gross margin expanded to 56.1%, an improvement of 383 basis points year-over-year. Now, let me share our key initiatives around merchandising, marketing, and the channel for GAAP during the quarter.

Ken Huang: Overall, BBM gross margin expanded to 56.1%, an improvement of 383 basis points year-over-year. Now let me share our key initiatives around the merchandising, marketing, and the channel for Gap during the quarter. Merchandising remained a key strength during the quarter. By optimizing our product assortments and leveraging data-driven insights, we are better able to meet consumer demand and to drive sales growth. We are pleased to have achieved double-digit growth across all three categories of women, men, and kids. An improved product mix, tactical pricing initiatives, and better supply chain management drove healthy gross margin expansion. Inventory also remained healthy, with Gap inventory turnover days at 128, reflecting disciplined inventory management and healthy sales. Our marketing efforts focused on building strong brand equity and deepening customer loyalty.

Speaker #4: Merchandising remained a key strength during the quarter. By optimizing our product assortments and leveraging data-driven insights, we are better able to meet consumer demand and drive sales growth.

Speaker #4: We are pleased to have achieved double-digit growth across all three categories: women, men, and kids. An improved product mix, technical pricing initiatives, and better supply chain management drove healthy gross margin expansion.

Speaker #4: Inventory also remained healthy, with GAAP inventory turnover days at 128, reflecting disciplined inventory management and healthy sales growth. Our marketing efforts focused on building strong brand equity and deepening customer loyalty.

Speaker #4: Our Cheney brand ambassador campaign, together with the Victoria Beckham collaboration and other global partnerships, generated strong consumer engagement during the second quarter. These campaigns, combined with strong execution around the Spring Break, Labor Day, 6/18, and other sales, also drove excellent sales momentum.

Ken Huang: Our Chen Yi brand ambassador campaign, together with the Victoria Beckham collaboration and other global partnerships, generated strong consumer engagement during Q2. These campaigns, combined with strong execution around Spring Break, Labor Day, 618, and summer sales, also drove excellent sales momentum. Turning to our store network, we opened 8 new stores during the quarter, bringing our total network to 167 stores. We remained disciplined in our site selection, and we are glad that new store productivity has consistently outperformed, reinforcing our confidence in the strength of our expansion strategy and the long-term productivity opportunity across our store base. We remain on track to open more than 50 new stores in 2026, with a focus on expanding into tier 1 to tier 2 cities. This July and August, we are seeing further improvements in month-over-month momentum.

Speaker #4: Turning to our store network, we opened a new store during the quarter, bringing our total network to 167 stores. We remained disciplined in our site selection, and we are glad that new store productivity has consistently outperformed.

Speaker #4: Reinforcing our confidence in the strengths of our expansion strategy and the long-term productivity opportunity across our store base, we remain on track to open more than 50 new stores in 2026, with a focus on expanding into tier-one to tier-two cities.

Speaker #4: This July and August, we are seeing further improvements in month-over-month autumn launch, and the QiXi campaign featuring our brand ambassador has reinforced GAAP China's marketing strengths, giving us increased confidence in the brand's trajectory for the second half of the year.

Ken Huang: Our latest autumn launch and the Qixi campaign, featuring our brand ambassador, have reinforced Gap China's marketing strengths, giving us increased confidence in the brand's trajectory for H2 of the year. Now let me also elaborate our key efforts for Hunter brand in H1 of 2026. Following our MMC philosophy for brand management, we have stepped up our efforts to strengthen Hunter's brand equity. In H1 of 2026, we opened 3 flagship stores in high-profile shopping malls, bringing Hunter's total store count to 16 by end of June. We also enriched Hunter's product offering. Beyond the brand's renowned rain boots, we introduced new lines of urban apparel and outdoor wear, enabling us to reach a broader consumer base and address diverse lifestyle needs. These initiatives are positioning Hunter as an energetic lifestyle brand that resonates with fashion-forward consumers and supports its long-term goals.

Speaker #4: Now, let me also elaborate on our key efforts for the Hunter brand in the first half of 2026. Following our MMC philosophy for brand management, we have stepped up our efforts to strengthen Hunter's brand equity.

Speaker #4: In the first half of 2026, we opened three flagship stores in high-profile shopping malls, bringing Hunter's total store count to 16 by the end of June.

Speaker #4: We also enriched Hunter's product offering beyond the brand's.

Speaker #1: Renowned rain boots were introduced, along with a new line of urban apparel and other wear in April in the U.S., to reach a broader consumer base and address diverse lifestyle needs. These initiatives are positioning Hunter as an energetic lifestyle brand that resonates with fashion-forward consumers and supports its long-term goals.

Speaker #1: In summary , the second quarter reinforced the progress we have made throughout 2026 . Of our differentiated brand management model continues to position our brands for outperformance through faster localization , stronger omnichannel execution , and operational excellence We remain confident in delivering on our full year objectives .

Ken Huang: In summary, Q2 reinforced the progress we have made throughout 2026. Our differentiated brand management model continues to position our brands for outperformance through faster localization, stronger omni-channel execution, and operational excellence. We remain confident in delivering on our full-year objectives. That concludes our prepared remarks. Thank you. Operator, we are now ready to begin the Q&A session.

Speaker #1: That concludes our prepared remarks. Thank you. Operator, we are now ready to begin the Q&A session.

Speaker #2: We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone.

Operator 2: We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone 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. The first question today comes from Alicia Yap with Citigroup. Please go ahead.

Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone 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. The first question today comes from Alicia Yap with Citigroup. Please go ahead.

Speaker #2: 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 The first question today comes from Alicia Yap with Citigroup .

Speaker #2: Please go ahead

Speaker #3: Hi . Good evening management . Thanks for the opportunity to ask questions . So congrats on the solid results . Two questions for me First is that regarding the revised 2028 annual non-GAAP Operating Income Forecast , which obviously , you know , increased substantially from 550 million to 700 million .

Alicia Yap: Hi. Good evening, management. Thanks for the opportunity to ask questions, and congrats on the solid results. Two questions from me. First is that regarding the revised 2028 annual non-GAAP operating income forecast, which obviously increased substantially from RMB 550 million to RMB 700 million. So wonder what gives management the confidence to project this higher profitability, and what is the anticipated top-line growth that underpins this revised forecast? The second question, in light of the weak macro conditions and also muted consumption trends, have you observed any significant shifts in the spending budget of your brand partners or their expectations for the China market in the future? Additionally, concerning the adoptions of the AI tools, is there any noticeable divergence in sales growth between brands that have embraced the AI enhanced tools versus those that have been slower to adopt them? If you could share some examples.

Speaker #3: So I wonder what gives management the confidence to project this higher profitability. And what is the anticipated top-line growth that enters into this revised forecast?

Speaker #3: And then the second question , in light of , you know , the weak macro conditions and also , you know , muted consumption trends , have you observed any significant shifts in the spending budgets of your brand partners or are there expectations for the China market in the future And additionally , concerning the adoption of the AI tools , is there any noticeable divergence in sales growth between brands that have embraced the AI enhanced tool versus those that have been slower to adopt that ?

Speaker #3: If you could share some examples, thank you.

Alicia Yap: Thank you.

Speaker #4: Thank you . Alicia Vincent here . Let me answer your this first question . And Jinhua is will answer the second one . Yes , we are quite excited to announce this updated are forward looking results for the 2028 .

Vincent Qiu: Thank you, Alicia. Vincent here. Let me answer this first question, and Junhua will answer the second one. Yes, we are quite excited to announce these updated forward-looking results for the 2028. We carefully analyzed all the facts, all the aspects we think can help us to achieve this one, this new goal. The first thing is that we are seeing a stronger trend for BBM. In the past two, three years, we keep strengthening BBM's positioning and also day-to-day operations, and we are seeing good results. So for a stronger trend for BBM, we are much more confident right now. This is the first consideration. Secondly, recently we did a lot of experiments and pioneer for the AI tools and also along with other infrastructural tools we developed along these years. We see quite exciting results.

Speaker #4: We carefully analyzed all the all the facts , all the aspects we . We think can help us to achieve this one . This new goal .

Speaker #4: The first thing is that we think we are seeing a stronger trend for BBM and in the past , you know , 2 or 3 years we keep , you know , strengthening Bbms positioning and also day to day operations .

Speaker #4: And we are seeing a good results . So for a stronger trend for BBM , we are much more confident right now . This is the first consideration Secondly , secondly , recently we did a lot of experiments and pioneer , you know , for the AI tools and also along with other infrastructural tools , we developed along the this years .

Speaker #4: And we see quite , you know , exciting results . So we think given that the scale of our business base , our potential , you know , to be released from this tools and automation will be huge .

Vincent Qiu: We think given that the scale of our BEC business base, our potential to be released from these tools and automation will be huge. That is a quite important reason why we just raised that up. Also, despite the consumption is not very strong recently, we still think combining these two factors and also the potentials we can deploy these kind of tools and AI capabilities into our broad client base will have quite a big potential. This gives us confidence for this new goal.

Speaker #4: So that is quite important reason why we are going to just read that up . And also , you know , also , despite the , the consumption , it's not very strong .

Speaker #4: Recently, but still, we think combining these two factors and also the potential, we can deploy this kind of tools and, you know, AI capabilities into our broad client base.

Speaker #4: Will have quite big potential, and this gives us confidence for this new goal.

Speaker #5: Okay . Thank you . Vincent . So for the second question . So first of all , so we have not seen any significant shifts in spending budgets of brand partners .

Junhua Wu: Okay. Thank you, Vincent. For the second question. First of all, we have not seen any significant shifts in spending budgets of brand partners. But we still see they focus on making solid their marketing allocation in terms of the traffic fees, and they focus more on the content-driven, and they focus more on shifting allocations of inventory towards the live stream kind of platform like Douyin and the others, from the original shelf-based e-commerce systems. The second part is, the AI tools, just like Vincent mentioned, we leveraging AI scenarios more focused on driving our operation efficiency rather than just driving the top line. AI tools also can facilitate a lot of top line, providing a lot of tools to facilitate our top line operator, more focused on digital analytics, more focused on how do we analyze all those sales results data.

Speaker #5: But we still see they focus on making solid marketing allocation in terms of the traffic fees . And they focus more on the content driven and they focus more on , you know , shifting allocations and of inventory towards the live stream kind of platform like the yin and the others from the original shelf based e-commerce systems .

Speaker #5: And the second part is the AI tools. Just like Vincent mentioned, we are leveraging AI scenarios more focused on driving our operational efficiency rather than just driving the top line.

Speaker #5: So AI tools also can facilitate a lot of top line , providing a lot of tools to facilitate our top line operator more focused on digital analytics , more focused on how do we analyze all those sales results , data .

Speaker #5: So for sales growth, we have not leveraged a lot in terms of AI, but we are also focused on automation-driven, efficiency-driven initiatives, that kind of stuff.

Junhua Wu: For sales growth, we have not leveraged a lot in terms of AI, but also focused on automation-driven, efficiency-driven, that kind of stuff. Thank you.

Speaker #5: Thank you

Speaker #6: Thank you

[Analyst]: Thank you.

Speaker #2: The next question comes from Chu Chu with Huitang Securities. Please go ahead.

Operator 2: The next question comes from Chumming Tao with Hui Pang Securities. Please go ahead.

Operator: The next question comes from Chumming Tao with Hui Pang Securities. Please go ahead.

Speaker #7: Hi . Thank you , for taking my question . I have two questions . The first one is regarding the Nike . And we have observed some adjustments to its channel strategy .

Chumming Tao: Hi. Thank you management for taking my question. I have two questions. The first one is regarding Nike, and we have observed some adjustments to its channel strategy. As Nike's core partner, have we observed any changes in consumer habits across channels recently? How do we plan to capture the related opportunities going forward? My second question is about Hunter. I have observed that Hunter has seen a significant increase in attention on some China social media recently. Have we noticed this trend, and could we introduce any additional details? Could we share or update any outlook for Hunter in more detail? Thank you.

Chuming Chao: Hi. Thank you management for taking my question. I have two questions. The first one is regarding Nike, and we have observed some adjustments to its channel strategy. As Nike's core partner, have we observed any changes in consumer habits across channels recently? How do we plan to capture the related opportunities going forward? My second question is about Hunter. I have observed that Hunter has seen a significant increase in attention on some China social media recently. Have we noticed this trend, and could we introduce any additional details? Could we share or update any outlook for Hunter in more detail? Thank you.

Speaker #7: And as Nike's core partner, have we observed any changes in consumer habits across channels recently? And how do we plan to capture the related opportunities going forward?

Speaker #7: And my second question is about Hunter. I have observed that Hunter has seen a significant increase in attention on some China social media recently. Have we noticed this trend?

Speaker #7: And could we introduce any additional details? Could we share our update? Any outlook for Hunter in more detail? Thank you.

Speaker #5: Okay, I'll answer the first question, and Vincent or Ken can answer the second one. I apologize to you that I will not mention a specific brand in terms of a strategy.

Junhua Wu: Okay. I will answer the first question, and Vincent or Ken can answer the second one. So, I apologize to you that I will not mention a specific brand in terms of a strategy and their roadmap. So I will give you feedback in general. Baozun is a very strong DTC partner of a lot of brand partners since our founding back in 2007. In terms of behavior like a DTC partner, Baozun definitely has a great advantage in just serving them, supporting them in DTC strategy based on their growth strategy. If any brands are shifting their strategy back to DTC or focusing on more investing or more resources in driving DTC-based net GMV or growth, Baozun is definitely going to be your top choice. That is my first answer. Thank you.

Speaker #5: And there their roadmap . So I'll give you a feedback in general . So Beijing is a very strong DTC partner of a lot of brand partners from a founded back in the year 2007 .

Speaker #5: So in terms of behave like a DTC partner , Belgium is definitely has a great advantage . You know , in , in , in just serving them , supporting them in DTC strategy based on their growth strategy .

Speaker #5: So if any brands , they are shifting their strategy back to DTC or focus on more investing more , resources in driving DTC based net GMV or growth .

Speaker #5: So Belgium is definitely going to be a top choice. That's my first answer. Thank you.

Speaker #1: For Hunter . Yes , we as we mentioned , we are continuing investing in our emerging brands , especially this year . And with Gibbs , the improvement of Gibbs and also the community experience in Gibbs past experience .

Vincent Qiu: For Hunter, yes, as we mentioned, we are continuing investing in our emerging brands, especially this year. With Gap's, the improvement of Gap's P&L and also the community experience in Gap's past experience. Now we are trying to strengthen our emerging markets. Your observation of the continuous more

Ken Huang: For Hunter, yes, as we mentioned, we are continuing investing in our emerging brands, especially this year. With Gap's, the improvement of Gap's P&L and also the community experience in Gap's past experience. Now we are trying to strengthen our emerging markets. Your observation of the continuous more voices and investment in the brand equity, especially in Xiaohongshu for Hunter, is happening. Our strategy for Hunter during the H2 of the year, firstly, we will continue open Hunter stores in high-profile shopping malls, especially mixed-city malls. Second, we are expanding our apparel category, as we mentioned. We do see the sales contribution of apparels in certain stores have exceeded 30% during the Q2. Third, we are also doing a lot of collaborations with both local and international brands for Hunter. Finally, as the IP owner, we are also actively looking for other category business opportunities to enhance the brand's equity and also the profit performance. Thank you.

Speaker #1: Now we are trying to strengthen our emerging markets. Your observation of the continuous increase in voices and investment in brand equity, especially in Xiaohongshu for Hunter, is happening, and it aligns with our strategy for Hunter during the second half of the year.

Ken Huang: Voices and investment in the brand equity, especially in Xiaohongshu for Hunter, is happening. Our strategy for Hunter during the H2 of the year, firstly, we will continue open Hunter stores in high-profile shopping malls, especially mixed-city malls. Second, we are expanding our apparel category, as we mentioned. We do see the sales contribution of apparels in certain stores have exceeded 30% during the Q2. Third, we are also doing a lot of collaborations with both local and international brands for Hunter. Finally, as the IP owner, we are also actively looking for other category business opportunities to enhance the brand's equity and also the profit performance. Thank you.

Speaker #1: Firstly , we will continue to open 100 stores in high profile shopping malls , especially big city malls . And the second , we are expanding our apparel category , as we mentioned , and we do see the sales contribution of apparel in certain stores have exceeded 30% during the second quarter , and the third , we are also doing a lot of collaborations with local , both local and international brands for Hunter and finally , as the IPO , we are also actively looking for other category business opportunities to enhance the brand .

Speaker #1: The brand equity, and also the profit performance. Thank you.

Speaker #2: The next question comes from Frank Tao with CMB International. Please go ahead.

Operator 2: The next question comes from Frank Tao with CMB International. Please go ahead.

Operator: The next question comes from Frank Tao with CMB International. Please go ahead.

Speaker #8: Yeah . Hello . Hi . Thanks for taking my question . And my congrats on the set of operating results as well . My question is regarding we have seen more international brands exploring strategic alternatives for their China operations , including divestment and other forms of capital restructuring .

Frank Tao: Yeah, hello. Hi, management. Thanks for taking my question. My congrats on solid set of operating results as well. My question is regarding, we have seen more international brands exploring strategic alternatives for their China operations, including divestments and other forms of category restructuring. How does Baozun view this trend, and could it create a meaningful pipeline of opportunities for BBM? Will management become more aggressive in pursuing such opportunities? What are Baozun's key competitive advantages in winning these deals and creating value after the transaction? Thank you.

Speaker #8: How do you view this trend, and could it create a meaningful pipeline of opportunities for PBM, with management becoming more aggressive in pursuing such opportunities?

Speaker #8: And what are Baozun's key competitive advantages in winning these deals and creating value after the transactions? Thank you.

Speaker #4: Thank you . Frank . This is Vincent . I'm happy to answer your question Yes , we are seeing that in the market .

Vincent Qiu: Thank you, Frank. This is Vincent. Happy to answer your question. Yes, we are seeing that in the market there are more and more this kind of opportunity, which is just as we expected, because that's one of the reasons that we stepped into the brand management market. We kept talking to different brands for this. We are quite active in dealing with our portfolio brand partners or some other partners outside of our portfolio. They're trying to find new opportunities. That's the truth, yeah. Talking about our strategy and the link between our strategy with the new updated 2028 goals, we think there are four important aspects which can make us to be more confident for the goal. The first one will be the AI efforts we have made. This can contribute a majority of the contribution in the midterm of our plan.

Speaker #4: There are , you know , more and more these kind of opportunity , which is just as we expected because that's why one of the reasons that we you know , stepped into the brand management market .

Speaker #4: So we are talking to—we kept talking to different brands for this. We are quite active in dealing with our portfolio brand partners or some other partners outside of our portfolio, trying to find new opportunities.

Speaker #4: That's the truth . Yeah . But talking about the , you know , our strategy and , and the link between our strategy with a new updated 2028 goals , we think there are four important aspects which can make , you know , us to be more confident for the goal .

Speaker #4: The first one will be , you know , the , the AI efforts we have made . This can contribute to majority of the contribution in the mid term of our , you know , plan .

Speaker #4: And we mentioned this, and we counted this factor in. Secondly, there will be a very strong synergy between B, C, and DBM.

Vincent Qiu: And we mentioned this, we counted this factor in. Secondly, there will be a very strong synergy between BEC and BBM. BBM, along with its efforts, will accumulate a lot of experiences and know-how for the whole group. We can utilize this in talking to potential brands and the existing portfolio brands, no matter acquiring new brands or deepening the relationship between the existing ones. This can also deliver very good contribution to us for the future goals. The third one is about BBM itself. We call this BBM Organic. BBM organically includes the three major brands, Gap, Hunter, and Sweaty Betty, and they are doing well. For example, Gap is doing extremely well. The others are following. So we believe this BBM Organic is also a very important factor in the source of our confidence. Number four is what you just talked about, the BBM new opportunities.

Speaker #4: BBM, along with its efforts, will accumulate a lot of experience and know-how for the whole group. We can utilize this in talking to potential brands and existing portfolio brands.

Speaker #4: No matter acquiring new brands or , you know , deepening the relationship between the existing ones . So and also this can also , you know , deliver very good contribution to us , you know , for the future goals .

Speaker #4: The third one is about BBM itself . We call this BBM organic BBM organically , including , you know , the three major brands , gap Hunter and Sweaty Betty .

Speaker #4: And they are doing well . There is , for example , gap is doing extremely well . The others are following . So we believe this BBM organic is also very important factor .

Speaker #4: You know, in the source of our confidence. And number four is what you just talked about, the BBM new opportunities.

Speaker #4: Yeah . We are talking to different brands , but our priority is to make the existing existing BBM brands better . And we are expecting there are some really , really good opportunities .

Vincent Qiu: Yeah. We are talking to different brands, but our priority is to make the existing BBM brands better. We are expecting there are some really, really good opportunities, and then we can have this kind of BBM new organic growth opportunity. We also hope this can come true. This gives us more, how to say, possibility to deliver a better goal than before. But of course, this is not counted yet. Thanks for the question.

Speaker #4: And then we can have this kind of DBM inorganic growth opportunity. We also hope this can come true. This gives us more, how to say, possibility to deliver a better goal than before.

Speaker #4: But of course, this is not counted yet. Thanks for the question.

Speaker #8: Yeah . Thank you Vincent

Frank Tao: Yeah. Thank you, Vincent.

Speaker #2: As a reminder, if you would like to ask a question, please press star then one to be joined into the question queue.

Operator 2: As a reminder, if you would like to ask a question, please press star then one to be joined into the question queue. That's star then one to ask a question. The next question comes from Yin Jiwei with CITIC Securities. Please go ahead.

Operator: As a reminder, if you would like to ask a question, please press star then one to be joined into the question queue. That's star then one to ask a question. The next question comes from Yin Jiwei with CITIC Securities. Please go ahead.

Speaker #2: That's star. Then one to ask a question. The next question comes from Yin J with Sidex. Please go ahead.

Speaker #9: Good evening . Management team . Congratulations on this quarter . Strong performance and thank you for taking my questions . My question is , as I develops rapidly , many service providers are building their own AI source system .

[Analyst] (CITIC Securities): Good evening, management team. Congratulations on this quarter's strong performance, and thank you for taking my question. My question is, as AI development looks rapidly, many service providers are building their own AI SaaS system. Does company believe its differentiation versus other e-commerce agency service provider is widening or narrowing? What impact is AI having on industry concentration at this stage? Thank you.

Yin Jiawei: Good evening, management team. Congratulations on this quarter's strong performance, and thank you for taking my question. My question is, as AI development looks rapidly, many service providers are building their own AI SaaS system. Does company believe its differentiation versus other e-commerce agency service provider is widening or narrowing? What impact is AI having on industry concentration at this stage? Thank you.

Speaker #9: Does the company believe its differentiation versus other e-commerce agency service providers is widening or narrowing? And what impact is AI having on industry concentration at this stage?

Speaker #9: Thank you

Speaker #5: Okay . Thank you for the question , Jiawei . This is so if you have deeply tracking for a while . So you will know that from day one , when Belgium was founded .

Junhua Wu: Okay, thank you for the question, Jiawei. This is Junhua. If you have deeply tracking Baozun for a while, you will know that from day one when Baozun was founded, technology was the key to our success. Our mission is leveraging technology to make our business results more successful. During the past 19 years, we have been investing a lot in our IT resources. We still maintain the highest IT resources in terms of the IT payroll and different kind of the investment during technology. Under the AI age, I will be very proud to say that Baozun is definitely taking the leadership among all other competitors during that sector.

Speaker #5: So, technology was the key to our success, and our mission is leveraging technology to make our business results more, more, more successful.

Speaker #5: So , you know , during the past 19 years , so we've been investing a lot in our IT resources . So we still maintain the highest IT resources in terms of IT payroll and different kind of the investment during technology .

Speaker #5: So, under the AI, I’ll be very proud to say that Belgian is definitely taking the leadership among all other competitors during that sector.

Speaker #5: So we have definitely leveraged a lot of our resources to help our existing brand partners—over 480—to successfully deliver a lot of their backbone systems, different kinds of SaaS systems.

Junhua Wu: We have definitely leveraged a lot of our resources to help our existing brand partner, over 480, to successfully deliver a lot of their backbone system, different kind of their sales system, their O2O system, among all other kind of scenarios and categories. Under the AI age, as we have so many resources and foreseeing a lot of opportunities, Baozun is definitely going to leverage a lot of AI-powered technology to increase our efficiency of operation, facilitate our sales growth in terms of the top line growth. Definitely among this period, we are still strengthening and wider the distance between us and our competitors. As you can see that AI is really powerful, a lot of industry. We do not see there is many things we can compromise in the future foreseeing.

Speaker #5: They are auto system among all other kind of scenarios . And categories . So under the AI age , as we have so many resources and foreseeing a lot of opportunities , so Baldwin is definitely going to leverage a lot of AI powered technology to increase our efficiency of operation in facilitate our sales growth .

Speaker #5: In terms of the top line growth . So definitely among this period . So we are we're still strengthening and the distance between us and our competitors .

Speaker #5: So, as you can see, AI is really powerful. A lot of industries. So, we don't see there are many things we can compromise in the future for seeing.

Speaker #5: So we still focus on a lot of other category . Basically , AI data focused automation , increasing AI knowledge base and geo consumer behaviors .

Junhua Wu: We still focus on a lot of all the category, basically, AI data focus, automation increasing, AI knowledge base, and GEO consumer behaviors, a lot of scenarios we can help. Thank you for the question.

Speaker #5: There are a lot of scenarios where we can help. Thank you for the question.

Speaker #2: The next question comes from Thomas Chong with Jefferies. Please go ahead.

Operator 2: The next question comes from Thomas Chung with Jefferies. Please go ahead.

Operator: The next question comes from Thomas Chung with Jefferies. Please go ahead.

Speaker #10: Hey , thanks for taking my question . So my question is , as we see . BBM top line , 22% double digit , sales growth rate .

Thomas Chung: Thanks, Amanda, for taking my question. My question is, as we see BBM top line 22% on double digits in store growth, right? This is quite impressive compared to many peers in the retail industry. How should we think about the latest trends for Q3 or so, when we have relative high base for the same period last year? Could management provide update on annual BBM top line growth guidance of 15% to 20%? Thanks.

Speaker #10: So, which is quite impressive to many peers in the retail industry. So, how should we think about the latest trend for the third quarter?

Speaker #10: Also, when we have a relatively high base from last year, and also good management provided an update on the annual BBM top line growth guidance of 15% to 20%.

Speaker #10: Thanks

Speaker #1: Thank you . This is Ken . Yes , BBM is especially gap continues to deliver double digit Increase especially same stores in 20 for the second quarter and even for the third quarter quarter to date .

Ken Huang: Thank you. This is Ken. Yes, BBM, especially Gap, continues to deliver a double digit increase, especially same stores in 20s for Q2. Even for Q3 to date, we are seeing the trend of even stronger same store increase. I would say it will contribute to our MMC strategy. First is the merchandising. After several seasons product improvement, we better understand our customers. When we launch our fall products in August, we see even better acceptance of the products from our consumers than before. Our merchandising operating capabilities are also keep enhanced. We have our better category and assortment planning. We have better pricing and discounting strategy. All these experiences and the initiatives of our merchandising help us to improve the productivity of our performance. Second for marketing, we continue to deliver strong brand ambassador campaigns.

Speaker #1: We are seeing the trend of even stronger same store increase . So I would say we're contribute to our MC strategy . So first is the merchandising after several seasons , product improvement , we have better understand our customer's when we launch our for products in Or August , we see even better acceptance of the products from our consumers than before .

Speaker #1: And our merchandising operating capabilities are also improving. We have better category and assortment planning. We have a better strategy, pricing, and discounting strategy.

Speaker #1: So all these experience is . And the initiatives of our merchandising help us to improve the productivity of our moments . And the second , for marketing , we continue to deliver strong brand and campaigns .

Speaker #1: In the second quarter is April and in the third quarter is in August . Both of them are exceeding our expectation . The sales elements and we this year , we also benefited a lot from Gap's global assets .

Ken Huang: In Q2 is April, and in Q3 is in August. Both of them are exceeding our expectation, the sales performance. This year, we also benefit a lot from Gap's global brand assets. In Q3, we have the Hailey Bieber collaboration, and today we also just announced the collaboration with Malbon, the golf brands, fashion golf brands. Third, I think, is the channel. The channel, as we mentioned, we are going to deliver over 50 new stores in this year. In Q2, we have opened many good stores, including Shanghai PRISMA, Beijing APM, Tianjin TeeMall, we just opened in Q3, and also Nanning The MixC. We are also going to open our first Macau store in Venetian next month.

Speaker #1: In the third quarter , we have the Hailey Bieber collaboration . And today we are also just announced the collaboration with marble , the golf brand , fashion , fashion , golf brands and The third , I think , is the channel .

Speaker #1: The channel , as we mentioned , we are . We are going to deliver over 50 new stores in this year and in the in the second quarter , we have opened many good stores , including Shanghai , New Prisma , Beijing , APM , Tianjin , Timor .

Speaker #1: We just opened in the third quarter and also in 1960. And we're also going to open our first Macau store in the Venetian next month.

Speaker #1: So I think with this merchandising , marketing and also channel strategy working well , we are very confident to have to keep the strong same store growth and also the increase of the total scale for the full year .

Ken Huang: I think with this merchandising, marketing, and also our channel strategy working well, we are very confident to keep the strong same store growth and also the increase of the total scale. For the full year, we believe we will achieve a 20% to 25% increase. Thank you.

Speaker #1: We believe we will achieve a 20% to 25% increase. Thank you.

Speaker #2: The next question comes from Yin Jiwei with Sedex. Please go ahead.

Operator 2: The next question comes from Yin Zhewei with CITIC Securities. Please go ahead.

Operator: The next question comes from Yin Zhewei with CITIC Securities. Please go ahead.

Speaker #9: High . Imagine that team . Thanks for taking my question again . I have another question . Is that the NBS data in July 2026 points to subdued consumption that the company observe any changes in sales trends across different platforms and different categories .

[Analyst] (CITIC Securities): Hi, management team. Thanks for taking my question again. I have another question, is that the NBS data in July 2026 points to subdued consumption. Does the company observe any trends in sales trends across different platforms and different categories? Thank you.

Yin Jiawei: Hi, management team. Thanks for taking my question again. I have another question, is that the NBS data in July 2026 points to subdued consumption. Does the company observe any trends in sales trends across different platforms and different categories? Thank you.

Speaker #9: Thank you .

Speaker #5: Okay . Thank you for the question , Jiawei . This is Zhong Hua again . So we haven't seen , you know , a big change .

Junhua Wu: Okay, thank you for the question, Jiawei. This is Junhua again. We haven't seen a big change in sales trends among different kind of platforms. But we can share something to you is the shelf-based e-commerce is becoming very stable, especially after the past 618. We can foresee and also expect a very strong finish in the coming Double 11. For categories-wise, we're still seeing very strong growth in premium luxury sector, sports and outdoor sector, fashion sector, and health and caring sector. Thank you.

Speaker #5: Sales trends among different kinds of platforms. But what we can share with you is that shelf-based e-commerce is becoming very stable, especially after the past 6.18.

Speaker #5: We can foresee and also expect a very strong finish in the coming Double 11. And the live streaming platform is still growing.

Speaker #5: For example , like Douyin and different kind of the live stream platform . And for categories wise . So we still seeing very strong growth in premium luxury sector sports and outdoor sector , fashion sector and health and health and caring sector .

Speaker #5: Thank you

Speaker #9: Thank you

[Analyst] (CITIC Securities): Thank you.

Yin Jiawei: Thank you.

Speaker #2: This concludes our question-and-answer session. I would like to turn the conference back over for any closing remarks.

Operator 2: This concludes our question and answer session. I would like to turn the conference back over for any closing remarks.

Operator: This concludes our question and answer session. I would like to turn the conference back over for any closing remarks.

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

Wendy Sun: Thank you, operator. On behalf of the Baozun management team, we would 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 today. This concludes the call.

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

Operator 2: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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