Baozun Announces Fourth Quarter and Fiscal Year 2023 Unaudited Financial Results
SHANGHAI, March 21, 2024 /PRNewswire/ -- Baozun Inc. (Nasdaq: BZUN and HKEX: 9991) ("Baozun", the "Company" or the "Group"), a leading brand e-commerce solution provider and digital commerce enabler in China, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2023.
Mr. Vincent Qiu, Chairman and Chief Executive Officer of Baozun, stated, "In 2023, we started our transformation journey, expanding into three business divisions. Throughout the year, we solidified our leadership in the digital commerce industry, and further enhanced operational efficiency. I am grateful for the resilience and adaptability demonstrated by the Baozun team amid the ever-changing market environment. Additionally, we are honored to be recognized as the sole Asian supplier in Gartner's 2024 Market Guide for Distributed Order Management Systems. Looking ahead to 2024, despite macro uncertainties, we remain committed to sustainably executing our plans with diligence and patience. The improved health of our business fundamentals gives us confidence to enhance value proposition to our brand partners."
Mr. Arthur Yu, Chief Financial Officer of Baozun and President of BEC, commented, "We closed 2023 with a 5% year-over-year revenue growth to RMB8.8 billion, marking new records for both annual operating cash flow and free cash flow. For Baozun eCommerce, we're delighted to highlight tangible advancements in improving customer satisfaction, strengthening our position as an all-encompassing omni-channel enabler, and improving our efficiency and cost management. Positioned to seize emerging opportunities, we're confident in our solid foundation for growth and success, driving forward Baozun Group's second wave of expansion."
Fourth Quarter 2023 Financial Highlights
-- Total net revenues were RMB 2,780.4 million (US$([1])391.6 million),
representing an increase of 8.9 % compared with RMB 2,553.2 million in
the same quarter of last year.
-- Income from operations was RMB 6.4 million (US$0.9 million), compared
with RMB124.1 million in the same quarter of last year. Operating margin
was 0.2%, compared with 4.9% for the same period of 2022.
-- Non-GAAP income from operations([2]) was RMB75.7 million (US$10.7
million), compared with RMB182.6 million in the same quarter of last
year. Non-GAAP operating margin was 2.7%, compared with 7.2% for the
same period of 2022.
-- Adjusted operating profit of E-Commerce([3]) was RMB118.2 million
(US$16.6 million).
-- Adjusted operating loss of Brand Management([3]) was RMB42.5 million
(US$6.0 million).
-- Net loss attributable to ordinary shareholders of Baozun was RMB48.4
million (US$6.8 million), narrowed from RMB284.3 million for the same
period of 2022.
-- Non-GAAP net income attributable to ordinary shareholders of Baozun([4])
was RMB28.8 million (US$4.1 million), compared with RMB138.3 million for
the same period of 2022.
-- Basic and diluted net loss attributable to ordinary shareholders of
Baozun per American Depositary Share ("ADS([5])") were both RMB0.80
(US$0.11), compared with both RMB4.84 for the same period of 2022.
-- Basic and diluted non-GAAP net income attributable to ordinary
shareholders of Baozun per ADS([6]) were RMB0.48 (US$0.07) and RMB0.47
(US$0.07), compared with RMB2.35 and RMB2.32 for the same period of
2022.
-- Cash and cash equivalents, restricted cash, and short-term investments
totaled RMB3,072.8 million (US$432.8 million), as of December 31, 2023,
compared with RMB3,141.1 million as of December 31, 2022.
[1] This announcement contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) at a specified rate solely for the convenience of the reader. Unless otherwise noted, the translation of RMB into US$ has been made at RMB7.0999 to US$1.00, the noon buying rate in effect on December 29, 2023 as set forth in the H.10 Statistical Release of the Federal Reserve Board.
[2] Non-GAAP income (loss) from operations is a non-GAAP financial measure, which is defined as income (loss) from operations excluding the impact of share-based compensation expenses, amortization of intangible assets resulting from business acquisition, acquisition-related expenses, and impairment of goodwill.
[3] Following the acquisition of Gap Shanghai, the Group updated its operating segment structure resulting in two segments, which were (i) E-Commerce; (ii) Brand Management, for more information, please refer to Supplemental Information.
[4] Non-GAAP net income (loss) attributable to ordinary shareholders of Baozun is a non-GAAP financial measure, which is defined as net income (loss) attributable to ordinary shareholders of Baozun excluding the impact of share-based compensation expenses, amortization of intangible assets resulting from business acquisition, acquisition-related expenses, impairment of goodwill and investments, loss on variance from
expected contingent acquisition payment, cancellation fees of repurchased ADSs and returned ADSs, fair value loss (gain) on derivative liabilities, loss on disposal of subsidiaries and investment in equity investee, and Unrealized investment (gain) loss.
[5] Each ADS represents three Class A ordinary shares.
[6] Basic and diluted non-GAAP net income (loss) attributable to ordinary shareholders of Baozun per ADS are non-GAAP financial measures, which are respectively defined as non-GAAP net income (loss) attributable to ordinary shareholders of Baozun divided by weighted average number of shares used in calculating basic and diluted net income (loss) per ordinary share multiplied by three, respectively.
Fiscal Year 2023 Financial Highlights
-- Total net revenues were RMB8,812.0 million (US$1,241.1 million),
representing an increase of 4.9 % compared with RMB8,400.6 million in
the fiscal year of 2022.
-- Loss from operations was RMB206.4 million (US$29.1 million), compared
with income from operations RMB33.3 million in the fiscal year of 2022.
Operating margin was negative 2.3%, compared with positive 0.4% for the
fiscal year of 2022.
-- Non-GAAP loss from operations was RMB23.7 million (US$3.3 million),
compared with non-GAAP income from operations RMB256.1 million for the
fiscal year of 2022. Non-GAAP operating margin was negative 0.3%,
compared with positive 3.0% for the fiscal year of 2022.
-- Adjusted operating profit of E-Commerce was RMB164.0 million (US$23.1
million).
-- Adjusted operating loss of Brand Management was RMB187.7 million
(US$26.4 million).
-- Net loss attributable to ordinary shareholders of Baozun was RMB278.4
million (US$39.2 million), narrowed from RMB653.3 million for the fiscal
year of 2022.
-- Non-GAAP net loss attributable to ordinary shareholders of Baozun was
RMB65.1 million (US$9.2 million), compared with non-GAAP net income
attributable to ordinary shareholders of Baozun RMB132.2 million for the
fiscal year of 2022.
-- Basic and diluted net loss attributable to ordinary shareholders of
Baozun per American Depositary Share ("ADS") were both RMB4.68
(US$0.66), compared with both RMB10.69 for the fiscal year of 2022.
-- Basic and diluted non-GAAP net loss attributable to ordinary
shareholders of Baozun per ADS were both RMB1.09 (US$0.15), compared
with basic and diluted non-GAAP net income attributable to ordinary
shareholders of Baozun per ADS RMB2.16 and RMB2.13 for the fiscal year
of 2022.
Reconciliations of GAAP measures to non-GAAP measures presented above are included at the end of this results announcement.
Adjusted operating profits/losses are included in the Segments data of Segment Information.
Business Highlights
Baozun e-Commerce, or "BEC"
BEC includes our China e-commerce businesses, such as brands' store operations, customer services and value-added services in logistics and supply chain management, IT and digital marketing. As of December 31, 2023, we served more than 450 brand partners.
Omni-channel expansion remains a key theme for our brand partners. By the end of the fourth quarter, approximately 44.7% of our brand partners engaged with us for store operations of at least two channels, compared with 41.8% for the end of same quarter of last year.
With excellent technical expertise, Baozun was recognized as the only Asian supplier shortlisted for the prestigious Gartner 2024 Market Guide for Distributed Order Management System. This professional recognition from Gartner further cements our professional technological capability and leadership position in the industry.
Baozun Brand Management, or "BBM"
BBM engages in holistic brand management, including strategy and tactic positioning, branding and marketing, retail and e-commerce operations, supply chain and logistics and technology empowerment. We aim to leverage our portfolio of technologies to forge longer and deeper relationships with brands.
In the fourth quarter of 2023, BBM continued to focus on transforming Gap Shanghai - from a discount-driven approach to one that focuses on building consumer love for our brand and products. During the quarter, product sales for BBM totaled RMB455.5 million. Gross profit margin of product sales for BBM in the fourth quarter of 2023 was 52.9%.
Fourth Quarter 2023 Financial Results
Total net revenues were RMB2,780.4 million (US$391.6 million), an increase of 8.9% from RMB2,553.2 million in the same quarter of last year. The increase in total net revenues was mainly due to the incremental revenue contribution from BBM, a new line of business the Company launched in the first quarter of 2023.
Total product sales revenue was RMB1,053.0 million (US$148.3 million), compared with RMB772.4 million in the same quarter of last year, of which,
-- Product sales revenue of E-Commerce was RMB597.5 million (US$84.2
million), a decrease of 22.6% from RMB772.4 million in the same quarter
of last year. The decrease was primarily attributable to the
macro-economic weakness, as well as the Company's optimization of its
brand portfolio in distribution model.
The following table sets forth a breakdown of product sales revenues of E-Commerce by key categories( [7]) for the periods indicated:
For the three months ended December 31,
2022 2023
RMB % of RMB US$ % of YoY
Net Net Change
Revenues Revenues
(In millions, except for percentage)
Product Sales of E-Commerce
Appliances 387.0 15 % 255.6 36.0 8 % -34 %
Beauty and cosmetics 92.8 4 % 131.1 18.5 5 % 41 %
Home and furnishing 83.8 3 % 46.1 6.5 2 % -45 %
Fast moving consumer goods 81.0 3 % 46.3 6.5 2 % -43 %
Others 127.8 5 % 118.4 16.7 4 % -8 %
Total net revenues from 772.4 30 % 597.5 84.2 21 % -23 %
product sales of E-
Commerce
[7] Key categories refer to the categories that accounted for no less than 10% of product sales of BEC during the periods indicated.
-- Product sales revenue of Brand Management was RMB455.5 million (US$64.1
million), which mainly comprised retail revenue from Gap Shanghai
business, including both offline store sales and online sales.
Services revenue was RMB1,727.4 million (US$243.3 million), a decrease of 3.0% from RMB 1,780.8 million in the same quarter of last year. The decrease was primarily due to revenue reduction of RMB56.2 million from warehousing and fulfillment due to lower volume of warehousing business, partially offset by the increase of value-added services revenue in digital marketing and IT solutions.
The following table sets forth a breakdown of services revenue by business models for the periods indicated:
For the three months ended December 31,
2022 2023
RMB % of RMB US$ % of YoY
Net Net Change
Revenues Revenues
(In millions, except for percentage)
Services revenue
Online store operations 514.4 20 % 511.8 72.0 18 % -1 %
Warehousing and fulfillment 752.5 30 % 704.8 99.3 25 % -6 %
Digital marketing and IT 513.9 20 % 549.4 77.4 20 % 7 %
solutions
Inter-segment eliminations[8] (38.6) (5.4) -1 % n/a
Total net revenues from 1,780.8 70 % 1,727.4 243.3 62 % -3 %
services
[8]
The inter-segment eliminations mainly consist of revenues from online store operations, digital marketing and IT services provided by E-Commerce to Gap, a brand under Brand Management.
Breakdown of total net revenues of online store operations of services by key categories([9]) of services for the periods indicated:
For the three months ended December 31,
2022 2023
RMB % of RMB US$ % of YoY
Net Net Change
Revenues Revenues
(In millions, except for percentage)
Online store operations
in Services revenue
Apparel and accessories 366.8 14 % 372.7 52.5 13 % 2 %
- Luxury 132.5 5 % 123.2 17.4 4 % -7 %
- Sports 121.5 5 % 133.9 18.8 5 % 10 %
- Other apparel 112.8 4 % 115.6 16.3 4 % 2 %
Others 147.6 6 % 139.1 19.5 6 % -6 %
Inter-segment eliminations[10] (18.6) (2.6) -1 % n/a
Total net revenues from 514.4 20 % 493.2 69.4 18 % -4 %
online store operations
in services
[9]
Key categories refer to the categories that accounted for no less than 10% of services revenue during the periods indicated.
[10]
The inter-segment eliminations mainly consist of revenues from store operation services provided by E-Commerce to Gap, a brand under Brand Management.
Total operating expenses were RMB2,774.0 million (US$390.7 million), compared with RMB2,429.1 million in the same quarter of last year. The increase in operating expenses is mainly attributing to the acquisition of Gap Shanghai. Excluding operating expenses from GAP Shanghai, the remaining operating expenses decreased by RMB105.5 million, representing a 4.3% improvement from a year ago.
-- Cost of products was RMB737.8 million (US$103.9 million), compared with
RMB643.3 million in the same quarter of last year. The increase was
primarily due to the incremental cost of product of RMB212.2 million
related to Gap Shanghai, a subsidiary the Company acquired in the first
quarter of 2023.
-- Fulfillment expenses were RMB768.0 million (US$108.2 million), compared
with RMB789.5 million in the same quarter of last year. The decrease was
primarily due to the additional savings in customer services expenses
resulting from the Company's expanding use of regional service centers.
-- Sales and marketing expenses were RMB892.4 million (US$125.7 million),
compared with RMB787.7 million in the same quarter of last year. The
increase was mainly due to the incremental sales and marketing expenses
of RMB121.9 million related to Gap Shanghai, a subsidiary the Company
acquired in the first quarter of 2023.
-- Technology and content expenses were RMB140.8 million (US$19.8 million),
compared with RMB112.1 million in the same quarter of last year. The
increase was mainly due to the Company's ongoing investment in
technological innovation and productization, partially offset by the
Company's cost control initiatives and efficiency improvements.
-- General and administrative expenses were RMB228.7 million (US$32.2
million), compared with RMB91.5 million in the same quarter of last
year. The increase was primarily due to an incremental expense of
RMB109.2 million related to Brand Management, including the expenses
related to Gap Shanghai, a subsidiary the Company acquired in the first
quarter of 2023, as well as strategic investments expenses in Creative
Content to Commerce business unit and brand management.
Income from operations was RMB6.4 million (US$0.9 million), compared with RMB124.1 million in the same quarter of last year. Operating margin was 0.2%, compared with 4.9% in the same quarter of last year. The decrease was mainly due to lower profitability in BEC businesses due to weak macro conditions, along with the loss from Gap Shanghai, a subsidiary the Company acquired in the first quarter of 2023, which has been significantly narrowed on a comparable basis.
Non-GAAP income from operations was RMB75.7 million (US$10.7 million), compared with non-GAAP income from operations RMB182.6 million in the same quarter of last year.
Adjusted operating profit of E-Commerce was RMB118.2 million (US$16.6 million), compared with RMB182.6 million in the same quarter of last year. Adjusted operating loss of Brand Management was RMB42.5 million (US$6.0 million).
Unrealized investment loss was RMB8.4 million (US$1.2 million), compared with unrealized investment gain RMB5.0 million in the same quarter of last year. The unrealized investment loss of this quarter was mainly related to the decrease in the trading price of Lanvin Group, a company successfully listed on the New York Stock Exchange in December 2022 that the Company invested in June 2021 and was partially offset by the unrealized investment gain RMB5.6 million, which was related to the increase in the trading price of iClick Interactive, a public company listed on the Nasdaq Global Market that the Company invested in January 2021.
Net loss attributable to ordinary shareholders of Baozun was RMB48.4 million (US$6.8 million), narrowed from RMB284.3 million in the same quarter of last year, which was primarily due to a fair value loss on derivative liabilities of RMB364.8 million in the same period of last year.
Basic and diluted net loss attributable to ordinary shareholders of Baozun per ADS were both RMB0.80 (US$0.11 million), compared with both RMB4.84 for the same period of 2022.
Non-GAAP net loss attributable to ordinary shareholders of Baozun Inc. was RMB28.8 million (US$4.1 million), compared with RMB138.3 million in the same quarter of last year.
Basic and diluted non-GAAP net loss attributable to ordinary shareholders of Baozun per ADS were both RMB0.48 (US$0.07) and RMB0.47 (US$0.07), compared with RMB2.35 and 2.32 for the same period of 2022.
Fiscal Year 2023 Financial Results
Total net revenues were RMB8,812.0 million (US$1,241.1 million), an increase of 4.9% from RMB8,400.6 million in the fiscal year of 2022. The increase in total net revenues was mainly due to the incremental revenue contribution from BBM, a new line of business the Company launched in the first quarter of 2023.
Total product sales revenue was RMB3,357.2 million (US$472.9 million), compared with RMB2,644.2 million in the fiscal year of 2022, of which,
-- Product sales revenue of E-Commerce was RMB2,092.2 million (US$ 294.7
million), a decrease of 20.9% from RMB2,644.2 million in the fiscal year
of 2022. The decrease was primarily attributable to the macro-economic
weakness, as well as the Company's optimization of its brand portfolio
in distribution model.
The following table sets forth a breakdown of product sales revenues of E-Commerce by key categories for the periods indicated:
For the fiscal year ended December 31,
2022 2023
RMB % of RMB US$ % of YoY
Net Net Change
Revenues Revenues
(In millions, except for percentage)
Product Sales of E-
Commerce
Appliances 1,313.8 16 % 936.3 131.9 11 % -29 %
Beauty and cosmetics 311.9 4 % 378.2 53.3 4 % 21 %
Electronics 332.2 4 % 147.2 20.7 2 % -56 %
Others 686.3 8 % 630.5 88.8 7 % -8 %
Total net revenues from 2,644.2 32 % 2,092.2 294.7 24 % -21 %
product sales of E-
Commerce
-- Product sales revenue of Brand Management was RMB 1,265.0 million
(US$178.2 million), which mainly comprised retail revenue from Gap
Shanghai business, including both offline store sales and online sales.
Services revenue was RMB5,454.8 million (US$768.3 million), a decrease of 5.2% from RMB5,756.4 million in the fiscal year of 2022. The decrease was primarily due to revenue reduction of RMB202.6 million from warehousing and fulfillment due to lower volume of warehousing business and the disposal of a loss-making subsidiary during the fourth quarter of 2022.
The following table sets forth a breakdown of services revenue by business models for the periods indicated:
For the fiscal year ended December 31,
2022 2023
RMB % of RMB US$ % of YoY
Net Net Change
Revenues Revenues
(In millions, except for percentage)
Services revenue
Online store operations 1,624.1 19 % 1,604.7 226.0 18 % -1 %
Warehousing and 2,380.9 29 % 2,194.4 309.1 25 % -8 %
fulfillment
Digital marketing and IT 1,751.4 21 % 1,735.8 244.5 20 % -1 %
solutions
Inter-segment (80.1) (11.3) -1 % n/a
eliminations[11]
Total net revenues from 5,756.4 69 % 5,454.8 768.3 62 % -5 %
services
[11]
The inter-segment eliminations mainly consist of revenues from online store operations, digital marketing and IT services provided by E-Commerce to Gap, a brand under Brand Management.
Breakdown of total net revenues of online store operations of services by key categories of services for the periods indicated:
For the fiscal year ended December 31,
2022 2023
RMB % of RMB US$ % of YoY
Net Net Change
Revenues Revenues
(In millions, except for percentage)
Online store operations
in Services revenue
Apparel and accessories 1,107.3 13 % 1,134.8 159.8 13 % 2 %
- Luxury 407.0 5 % 406.4 57.2 4 % 0 %
- Sportswear 373.5 4 % 419.1 59.0 5 % 12 %
- Other apparel 326.8 4 % 309.3 43.6 4 % -5 %
Others 516.8 6 % 469.9 66.2 5 % -9 %
Inter-segment eliminations[12] (44.4) (6.3) -1 % n/a
Total net revenues from 1,624.1 19 % 1,560.3 219.7 17 % -4 %
online store operations
in services
[12]
The inter-segment eliminations mainly consist of revenues from store operation services provided by E-Commerce to Gap, a brand under Brand Management.
Total operating expenses were RMB9,018.4 million (US$1,270.2 million), compared with RMB8,367.3 million in the fiscal year of 2022. The increase in operating expense is mainly attributing to the acquisition of Gap Shanghai in February 2023. Excluding operating expense from GAP Shanghai, the remaining operating expenses decreased by RMB704.4 million, representing a 8.4% decrease compared with the same period of last year.
-- Cost of products was RMB2,409.1 million (US$339.3 million), compared
with RMB2,256.0 million in the fiscal year of 2022. The increase was
primarily due to the incremental cost of product of RMB581.4 million
related to Gap Shanghai, a subsidiary the Company acquired in the first
quarter of 2023.
-- Fulfillment expenses were RMB2,507.3 million (US$353.1 million),
compared with RMB2,719.7 million in the fiscal year of 2022. The
decrease was primarily due to the additional savings in customer
services expenses resulting from the Company's expanding use of regional
service centers.
-- Sales and marketing expenses were RMB2,829.0 million (US$398.5 million),
compared with RMB2,674.4 million in the fiscal year of 2022. The
increase was mainly due to the incremental sales and marketing expenses
of RMB339.2 million related to Gap Shanghai, a subsidiary the Company
acquired in the first quarter of 2023.
-- Technology and content expenses were RMB505.2 million (US$71.2 million),
compared with RMB428.0 million in the fiscal year of 2022. The increase
was mainly due to the Company's ongoing investment in technological
innovation and productization, partially offset by the Company's cost
control initiatives and efficiency improvements.
-- General and administrative expenses were RMB855.9 million (US$120.6
million), compared with RMB371.5 million in the fiscal year of 2022. The
increase was primarily due to an incremental expense of RMB405.8 million
related to Brand Management, including the expenses related to Gap
Shanghai, a subsidiary the Company acquired in the first quarter of
2023, as well as strategic investments expenses in Creative Content to
Commerce business unit and brand management.
Loss from operations was RMB206.4 million (US$29.1 million), compared with income from operations RMB33.3 million in the fiscal year of 2022. Operating margin was negative 2.3%, compared with positive 0.4% in the fiscal year of 2022.
Non-GAAP loss from operations was RMB23.7 million (US$3.3 million), compared with non-GAAP income from operations RMB256.1 million in the fiscal year of 2022. The decrease was mainly due to lower profitability in BEC businesses due to weak macro conditions, strategic investment in Creative Content to Commerce, along with the loss from Gap Shanghai, a subsidiary the Company acquired in the first quarter of 2023, which has been significantly narrowed on a comparable basis.
Adjusted operating profit of E-Commerce was RMB164.0 million (US$23.1 million), compared with adjusted operating profit of RMB256.1 million in the fiscal year of 2022. Adjusted operating loss of Brand Management was RMB187.7 million (US$26.4 million).
Net interest income was RMB40.8 million (US$5.7 million), compared with net interest expense of RMB11.1 million in the fiscal year of 2022.
Unrealized investment loss was RMB68.0 million (US$9.6 million), compared with RMB97.8 million in the fiscal year of 2022. The unrealized investment loss of this year was mainly related to the decrease in the trading price of Lanvin Group, a company successfully listed on the New York Stock Exchange in December 2022 that the Company invested in June 2021.
Exchange loss was RMB8.5 million (US$1.2 million), due to exchange rate fluctuation between Renminbi and U.S. dollar in the year ended December 31, 2023, compared to RMB32.4 million last year.
Net loss attributable to ordinary shareholders of Baozun was RMB278.4 million (US$39.2 million), narrowed from RMB653.3 million in the fiscal year of 2022, which was primarily due to a fair value loss on derivative liabilities of RMB364.8 million in the same period of last year.
Basic and diluted net loss attributable to ordinary shareholders of Baozun per ADS were both RMB4.68 (US$0.7), compared with both RMB10.69 in the fiscal year of 2022.
Non-GAAP net loss attributable to ordinary shareholders of Baozun Inc. was both RMB65.1 million (US$9.2 million), compared with non-GAAP net income attributable to ordinary shareholders of Baozun Inc. RMB132.2 million in the fiscal year of 2022.
Basic and diluted non-GAAP net loss attributable to ordinary shareholders of Baozun per ADS were both RMB1.09 (US$0.15), compared with Basic and diluted non-GAAP net income attributable to ordinary shareholders of Baozun per ADS RMB2.16 and RMB2.13 in the fiscal year of 2022.
Segment Information
(a) Description of segments
Following the acquisition of Gap Shanghai, the Group updated its operating segments structure resulting in two segments, which were (i) E-Commerce and (ii) Brand Management;
The following summary describes the operations in each of the Group's operating segment:
(i) E-Commerce focuses on Baozun traditional e-commerce service business and comprises two business lines, BEC (Baozun E-Commerce) and BZI (Baozun International).
a> BEC includes our mainland China e-commerce businesses, such as brands' store operations, customer services and value-added services in logistics and supply chain management, IT and digital marketing.
b> BZI includes our e-commerce businesses outside of mainland China, including locations such as Hong Kong, Macau, Taiwan, South East Asia and Europe.
(ii) Brand Management engages in holistic brand management, encompassing strategy and tactic positioning, branding and marketing, retail and e-commerce operations, supply chain and logistics and technology empowerment to leverage our portfolio of technologies to forge into longer and deeper relationships with brands.
(b) Segments data
The table below provides a summary of the Group's reportable segment results for the three months ended December 31, 2022 and 2023, with prior periods' segment information retrospectively recast to conform to current period presentation:
For the three months ended December
31,
2022 2023
RMB RMB
Net revenues:
E-Commerce 2,553,164 2,361,066
Brand Management 457,961
Inter-segment eliminations * (38,612)
Total consolidated net revenues 2,553,164 2,780,415
Adjusted Operating Profits (Losses) **:
E-Commerce 182,613 118,190
Brand Management (42,535)
Total Adjusted Operating Profits 182,613 75,655
Inter-segment eliminations *
Unallocated expenses:
Share-based compensation expenses (13,690) (24,667)
Amortization of intangible assets resulting from business acquisition (8,511) (7,911)
Acquisition-related expenses (13,694) (1,467)
Loss on variance from expected contingent acquisition payment (9,495) -
Impairment of goodwill (13,155) (35,212)
Total other
ex
penses (358,346) (165)
Profit before income tax (234,278) 6,233
The table below provides a summary of the Group's reportable segment results for the fiscal year of 2022 and 2023, with prior periods' segment information retrospectively recast to conform to current period presentation:
For the fiscal year ended December
31,
2022 2023
RMB RMB
Net revenues:
E-Commerce 8,400,631 7,621,114
Brand Management 1,271,027
Inter-segment eliminations * (80,128)
Total consolidated net revenues 8,400,631 8,812,013
Adjusted Operating Profits (Losses) **:
E-Commerce 256,093 163,990
Brand Management (187,663)
Total Adjusted Operating Profits 256,093 (23,673)
Inter-segment eliminations *
Unallocated expenses:
Share-based compensation expenses (142,381) (103,449)
Amortization of intangible assets resulting from business acquisition (39,431) (31,875)
Acquisition-related expenses (13,694) (12,171)
Cancellation fees of repurchased shares (4,650) -
Loss on variance from expected contingent acquisition payment (9,495) -
Impairment of goodwill (13,155) (35,212)
Total other
ex
penses (613,595) (10,646)
Loss before income tax (580,308) (217,026)
*The inter-segment eliminations mainly consist of revenues from services provided by E-Commerce to Brand Management.
**Adjusted Operating Profits (Losses) represent segment profits (losses), which is income (loss) from operations from each segment without allocating share-based compensation expenses, acquisition-related expenses and amortization of intangible assets resulting from business acquisition.
Conference Call
The Company will host a conference call to discuss the earnings at 7:30 a.m. Eastern Time on Thursday, March 21, 2024 (7:30 p.m. Beijing time on the same day).
Dial-in details for the earnings conference call are as follows:
United States: 1-888-317-6003
Hong Kong: 800-963-976
Singapore: 800-120-5863
Mainland China: 4001-206-115
International: 1-412-317-6061
Passcode: 5145633
A replay of the conference call may be accessible through March 28, 2024 by dialing the following numbers:
United States: 1-877-344-7529
International: 1-412-317-0088
Canada: 855-669-9658
Replay Access Code: 6010962
A live webcast of the conference call will be available on the Investor Relations section of Baozun's website at http://ir.baozun.com. An archived webcast will be available through the same link following the call.
Use of Non-GAAP Financial Measures
The Company also uses certain non-GAAP financial measures in evaluating its business. For example, the Company uses non-GAAP income (loss) from operations, non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net margin, non-GAAP net income (loss) attributable to ordinary shareholders of Baozun and non-GAAP net income (loss) attributable to ordinary shareholders of Baozun per ADS, as supplemental measures to review and assess its financial and operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation, or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP.
The Company defines non-GAAP income (loss) from operations as income (loss) from operations excluding the impact of share-based compensation expenses, amortization of intangible assets resulting from business acquisition and acquisition-related expenses. The Company defines non-GAAP operating margin as non-GAAP income (loss) from operations as a percentage of total net revenues. The Company defines non-GAAP net income (loss) as net income (loss) excluding the impact of share-based compensation expenses, amortization of intangible assets resulting from business acquisition, acquisition-related expenses, impairment of goodwill and investments, loss on variance from expected contingent acquisition payment, cancellation fees of repurchased ADSs and returned ADSs, fair value loss(gain) on derivative liabilities, loss on disposal of subsidiaries and investment in equity investee, and unrealized investment loss. The Company defines non-GAAP net margin as non-GAAP net income (loss) as a percentage of total net revenues. The Company defines non-GAAP net income (loss) attributable to ordinary shareholders of Baozun as net income (loss) attributable to ordinary shareholders of Baozun excluding the impact of share-based compensation expenses, amortization of intangible assets resulting from business acquisition, acquisition-related expenses, impairment of goodwill and investments, loss on variance from expected contingent acquisition payment, cancellation fees of repurchased ADSs and returned ADSs, fair value loss(gain) on derivative liabilities, loss on disposal of subsidiaries and investment in equity investee, and unrealized investment loss. The Company defines non-GAAP net income (loss) attributable to ordinary shareholders of Baozun per ADS as non-GAAP net income (loss) attributable to ordinary shareholders of Baozun divided by weighted average number of shares used in calculating net income (loss) per ordinary share multiplied by three.
The Company presents the non-GAAP financial measures because they are used by the Company's management to evaluate the Company's financial and operating performance and formulate business plans. Non-GAAP income (loss) from operations, non-GAAP net income (loss), non-GAAP net income (loss) attributable to ordinary shareholders of Baozun and Non-GAAP net income (loss) attributable to ordinary shareholders of Baozun per ADS reflect the Company's ongoing business operations in a manner that allows more meaningful period-to-period comparisons. The Company believes that the use of the non-GAAP financial measures facilitates investors to understand and evaluate the Company's current operating performance and future prospects in the same manner as management does, if they so choose. The Company also believes that the non-GAAP financial measures provide useful information to both management and investors by excluding certain expenses, gain/loss and other items that are not expected to result in future cash payments or that are non-recurring in nature or may not be indicative of the Company's core operating results and business outlook.
The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using non-GAAP income (loss) from operations, non-GAAP net income (loss), non-GAAP net income (loss) attributable to ordinary shareholders of Baozun, and non-GAAP net income (loss) attributable to ordinary shareholders of Baozun per ADS is that they do not reflect all items of income and expense that affect the Company's operations. Further, the non-GAAP measures may differ from the non-GAAP measures used by other companies, including peer companies, potentially limiting the comparability of their financial results to the Company's. In light of the foregoing limitations, the non-GAAP income (loss) from operations, non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net margin, non-GAAP net income (loss) attributable to ordinary shareholders of Baozun and non-GAAP net income (loss) attributable to ordinary shareholders of Baozun per ADS for the period should not be considered in isolation from or as an alternative to income (loss) from operations, operating margin, net income (loss), net margin, net income (loss) attributable to ordinary shareholders of Baozun and net income (loss) attributable to ordinary shareholders of Baozun per ADS, or other financial measures prepared in accordance with U.S. GAAP.
The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measures, which should be considered when evaluating the Company's performance. The company encourages you to review the company's financial information in its entirety and not rely on a single financial measure. For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, "Reconciliations of GAAP and Non-GAAP Results."
Safe Harbor Statements
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident," "potential," "continues," "ongoing," "targets," "guidance," "going forward," "looking forward," "outlook" or other similar expressions. Statements that are not historical facts, including but not limited to statements about Baozun's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to Baozun'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 announcement is as of the date hereof and is based on assumptions that Baozun believes to be reasonable as of this date, and Baozun undertakes no obligation to update such information, except as required under applicable law.
About Baozun Inc.
Founded in 2007, Baozun Inc. is a leader in brand e-commerce service, brand management, and digital commerce service. It serves more than 450 brands from various industries and sectors around the world, including East and Southeast Asia, Europe and North America.
Baozun Inc. comprises three major business lines - Baozun e-Commerce (BEC), Baozun Brand Management (BBM) and Baozun International (BZI) and is committed to accelerating high-quality and sustainable growth. Driven by the principle that "Technology Empowers the Future Success", Baozun's business lines are devoted to empowering their clients' business and navigating their new phase of development.
For more information, please visit http://ir.baozun.com.
For investor and media inquiries, please contact:
Baozun Inc.
Ms. Wendy Sun
Email: ir@baozun.com
Baozun Inc.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands, except for share and per share data and per ADS data)
December 31, December 31, December 31,
2022 2023 2023
RMB RMB US$
ASSETS
Current assets
Cash and cash equivalents 2,144,020 2,149,531 302,755
Restricted cash 101,704 202,764 28,559
Short-term investments 895,425 720,522 101,483
Accounts receivable, net 2,292,678 2,184,729 307,712
Inventories 942,997 1,045,116 147,202
Advances to suppliers 372,612 311,111 43,819
Prepayments and other current assets 554,415 590,350 83,149
Amounts due from related parties 93,270 86,661 12,206
Total current assets 7,397,121 7,290,784 1,026,885
Non-current assets
Investments in equity investees 269,693 359,129 50,582
Property and equipment, net 694,446 851,151 119,882
Intangible assets, net 310,724 306,420 43,158
Land use right, net 39,490 38,464 5,418
Operating lease right-of-use assets 847,047 1,070,120 150,723
Goodwill 336,326 312,464 44,010
Other non-current assets 65,114 45,316 6,383
Deferred tax assets 162,509 200,628 28,258
Total non-current assets 2,725,349 3,183,692 448,414
Total assets 10,122,470 10,474,476 1,475,299
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities
Short-term loan 1,016,071 1,115,721 157,146
Accounts payable 474,732 563,562 79,376
Notes payable 487,837 506,629 71,357
Income tax payables 46,828 18,768 2,643
Accrued expenses and other current liabilities 1,025,540 1,188,179 167,350
Derivative liabilities 364,758
Amounts due to related parties 30,434 32,118 4,524
Current operating lease liabilities 235,445 332,983 46,900
Total current liabilities 3,681,645 3,757,960 529,296
Non-current liabilities
Deferred tax liabilities 28,082 24,966 3,516
Long-term operating lease liabilities 673,955 799,096 112,550
Other non-current liabilities 62,450 40,718 5,735
Total non-current liabilities 764,487 864,780 121,801
Total liabilities 4,446,132 4,622,740 651,097
Redeemable non-controlling interests 1,438,082 1,584,858 223,223
Baozun Inc. shareholders' equity:
Class A ordinary shares (US$0.0001 par 116 93 13
value; 470,000,000 shares authorized,
163,100,873 and 167,901,880 shares issued
and outstanding as of December 31,
2022, and December 31, 2023, respectively)
Class B ordinary shares (US$0.0001 par 8 8 1
value; 30,000,000 shares authorized,
13,300,738 shares issued and outstanding
as of December 31, 2022, and December
31, 2023, respectively)
Additional paid-in capital 5,129,103 4,571,439 643,874
Treasury shares (832,578)
Accumulated deficit (228,165) (506,587) (71,349)
Accumulated other comprehensive income 15,678 32,251 4,542
Total Baozun Inc. shareholders' equity 4,084,162 4,097,204 577,081
Non-controlling interests 154,094 169,674 23,898
Total Shareholders' equity 4,238,256 4,266,878 600,979
Total liabilities, redeemable non- 10,122,470 10,474,476 1,475,299
controlling interests and
Shareholders' equity
Baozun Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands, except for share and per share data and per ADS data)
For the three months ended December
31, For the year ended December 31,
2022 2023 2022 2023
RMB RMB US$ RMB RMB US$
Net revenues
Product sales(1) 772,375 1,053,022 148,315 2,644,214 3,357,202 472,852
Services 1,780,789 1,727,392 243,298 5,756,417 5,454,811 768,294
Total net revenues 2,553,164 2,780,414 391,613 8,400,631 8,812,013 1,241,146
Operating expenses
(2)
Cost of products (643,311) (737,813) (103,919) (2,255,950) (2,409,110) (339,316)
Fulfillment(3) (789,459) (768,028) (108,174) (2,719,749) (2,507,306) (353,147)
Sales and marketing (3) (787,684) (892,401) (125,692) (2,674,358) (2,829,016) (398,459)
Technology and content(3) (112,146) (140,788) (19,830) (427,954) (505,203) (71,156)
General and administrative(3) (91,508) (228,697) (32,211) (371,470) (855,914) (120,553)
Other operating income, net 8,167 28,923 4,074 95,292 123,368 17,377
Impairment of goodwill (13,155) (35,212) (4,960) (13,155) (35,212) (4,960)
Total operating expenses (2,429,096) (2,774,016) (390,712) (8,367,344) (9,018,393) (1,270,214)
Income (loss) from operations 124,068 6,398 901 33,287 (206,380) (29,068)
Other income (expenses)
Interest income 21,073 19,508 2,748 45,816 82,113 11,565
Interest expense (13,647) (9,436) (1,329) (56,917) (41,344) (5,823)
Unrealized investment gain (loss) 5,037 (8,352) (1,176) (97,827) (68,031) (9,582)
(Loss) gain on disposal/acquisition of (7,511) (2,620) (369) (107,032) 631 89
subsidiaries
Gain on repurchase of 1.625% convertible senior - 7,907
notes due 2024
Impairment loss of investments - (8,400)
Fair value (loss) gain on derivative liabilities (364,758) (364,758) 24,515 3,453
Exchange gain (loss) 1,460 735 104 (32,384) (8,530) (1,201)
(Loss) gain before income tax (234,278) 6,233 879 (580,308) (217,026) (30,567)
Income tax expense (4) (15,600) (5,952) (838) (26,480) (12,003) (1,691)
Share of (loss) income in equity (6,573) (2,264) (319) (3,586) 6,253 881
method investment, net of tax
of nil
Net loss (256,451) (1,983) (278) (610,374) (222,776) (31,377)
Net (income) loss attributable to (3,652) (22,368) (3,150) 843 (9,677) (1,363)
noncontrolling interests
Net income attributable to (24,166) (24,063) (3,389) (43,759) (45,969) (6,475)
redeemable noncontrolling interests
Net loss attributable to ordinary (284,269) (48,414) (6,817) (653,290) (278,422) (39,215)
shareholders of Baozun Inc.
Net loss per share attributable to ordinary
shareholders of Baozun Inc.:
Basic (1.61) (0.27) (0.04) (3.56) (1.56) (0.22)
Diluted (1.61) (0.27) (0.04) (3.56) (1.56) (0.22)
Net loss per ADS attributable to
ordinary shareholders of Baozun Inc.:
Basic (4.84) (0.80) (0.11) (10.69) (4.68) (0.66)
Diluted (4.84) (0.80) (0.11) (10.69) (4.68) (0.66)
Weighted average shares used in
calculating net loss per ordinary share
Basic 176,341,513 180,642,328 180,642,328 183,274,855 178,549,849 178,549,849
Diluted 176,341,513 180,642,328 180,642,328 183,274,855 178,549,849 178,549,849
Net loss (256,451) (1,983) (278) (610,374) (222,776) (31,377)
Other comprehensive income, net of tax of nil:
Foreign currency translation adjustment (39,718) (23,783) (3,350) 118,281 134,854 18,994
Comprehensive loss (296,169) (25,766) (3,628) (492,093) (87,922) (12,383)
(1) Including product sales from E-Commerce and Brand Management of RMB597.5 million and RMB455.5 million for the three months period ended December 31, 2023, respectively, compared with product sales from e-Commerce of RMB772.4 million for the three months period ended December 31, 2022. Including product sales from E-Commerce and Brand Management of RMB2,092.2 million and RMB1,265.0 million for the fiscal year ended December 31, 2023, respectively, compared with product sales from e-Commerce of RMB2,644.2 million for the fiscal year period ended December 31, 2022.
(2) Share-based compensation expenses are allocated in operating expenses items as follows:
For the three months ended December For the year ended December
31, 31,
2022 2023 2022 2023
RMB RMB US$ RMB RMB US$
Fulfillment 805 1,873 264 13,730 6,443 907
Sales and marketing 1,709 5,239 738 57,548 33,955 4,782
Technology and 1,476 3,681 519 22,512 12,184 1,716
content
General and 9,700 13,874 1,953 48,591 50,867 7,165
administrative
13,690 24,667 3,474 142,381 103,449 14,570
(3) Including amortization of intangible assets resulting from business acquisition, which amounted to RMB8.5 million and RMB7.9 million for the three months period ended December 31, 2022 and 2023, respectively. Including amortization of intangible assets resulting from business acquisition, which amounted to RMB39.4 million and RMB31.9 million for the fiscal year ended December 31, 2022 and 2023, respectively.
(4) Including income tax benefits of RMB1.6 million and RMB1.5 million related to the reversal of deferred tax liabilities, which was recognized on business acquisition for the three months period ended December 31, 2022 and 2023, respectively. Including income tax benefits of RMB7.9 million and RMB6.1 million related to the reversal of deferred tax liabilities, which was recognized on business acquisition for the fiscal year ended December 31, 2022 and 2023, respectively.
Baozun Inc.
Reconciliations of GAAP and Non-GAAP Results
(in thousands, except for share and per ADS data)
For the three months ended December
31, For the year ended December 31,
2022 2023 2022 2023
RMB RMB US$ RMB RMB US$
Income (loss) from operations 124,068 6,398 901 33,287 (206,380) (29,068)
Add: Share-based compensation expenses 13,690 24,667 3,474 142,381 103,449 14,570
Amortization of intangible assets resulting 8,511 7,911 1,114 39,431 31,875 4,489
from business acquisition
Acquisition-related expenses 13,694 1,467 207 13,694 12,171 1,714
Impairment of goodwill 13,155 35,212 4,960 13,155 35,212 4,960
Loss on variance from expected 9,495 9,495
contingent acquisition payment
Cancellation fees of repurchased ADSs - 4,650
and returned ADSs
Non-GAAP income (loss) from 182,613 75,655 10,656 256,093 (23,673) (3,335)
operations
Net loss (256,451) (1,983) (278) (610,374) (222,776) (31,377)
Add: Share-based compensation expenses 13,690 24,667 3,474 142,381 103,449 14,570
Amortization of intangible assets resulting 8,511 7,911 1,114 39,431 31,875 4,489
from business acquisition
Acquisition-related expenses 13,694 1,467 207 13,694 12,171 1,714
Impairment of goodwill and investments 13,155 35,212 4,960 21,555 35,212 4,960
Loss on variance from expected 9,495 9,495
contingent acquisition payment
Cancellation fees of repurchased ADSs - 4,650
and returned ADSs
Fair value loss (gain) on derivative liabilities 364,758 364,758 (24,515) (3,453)
Loss (gain) on disposal/acquisition of 7,511 2,620 369 107,032 (631) (89)
subsidiaries and investment in equity
investee
Unrealized investment (gain) loss (5,037) 8,352 1,176 97,827 68,031 9,582
Less: Tax effect of amortization of intangible -1,640 -1,507 -212 -7,880 -6,086 -857
assets resulting from business acquisition
Non-GAAP net income (loss) 167,686 76,739 10,810 182,569 (3,270) (461)
Net loss attributable to ordinary shareholders (284,269) (48,414) (6,817) (653,290) (278,422) (39,215)
of Baozun Inc.
Add: Share-based compensation expenses 13,690 24,667 3,474 142,381 103,449 14,570
Amortization of intangible assets resulting 6,537 5,991 844 30,076 24,206 3,409
from business acquisition
Acquisition-related expenses 13,694 1,467 207 13,694 12,171 1,714
Impairment of goodwill and investments 13,155 35,212 4,960 21,555 35,212 4,960
Loss on variance from expected contingent acquisition payment 9,495 9,495
Cancellation fees of repurchased ADSs and returned ADSs - 4,650
Fair value loss (gain) on derivative liabilities 364,758 364,758 (24,515) (3,453)
Loss (gain) on disposal/acquisition of subsidiaries and investment in equity investee 7,511 2,620 369 107,032 (652) (92)
Unrealized investment (gain) loss (5,037) 8,352 1,176 97,827 68,031 9,582
Less: Tax effect of amortization of intangible (1,252) (1,127) (159) (5,972) (4,569) (644)
assets resulting from business acquisition
Non-GAAP net income (loss) 138,282 28,768 4,054 132,206 (65,089) (9,169)
attributable to
ordinary shareholders of Baozun Inc.
Non-GAAP net income (loss)
attributable to
ordinary shareholders of Baozun Inc. per ADS:
Basic 2.35 0.48 0.07 2.16 (1.09) (0.15)
Diluted 2.32 0.47 0.07 2.13 (1.09) (0.15)
Weighted average shares used in
calculating net income (loss) per ordinary share
Basic 176,341,513 180,642,328 180,642,328 183,274,855 178,549,849 178,549,849
Diluted 178,885,101 182,780,715 182,780,715 185,897,231 178,549,849 178,549,849
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SOURCE Baozun Inc.
