Baozun shares rise as earnings beat forecasts and profitability improves

Baozun Inc. (NASDAQ:BZUN) shares gained 1.77% in pre-market trading on Thursday after the e-commerce solutions provider delivered second-quarter earnings above expectations, while revenue came in slightly below Wall Street forecasts.

The company reported adjusted earnings per ADS of RMB0.42 (US$0.06), exceeding consensus expectations. Revenue increased 7.5% year over year to RMB2.74 billion (US$404.3 million) from RMB2.55 billion, although it was marginally below the analyst forecast of RMB2.77 billion.

Baozun returns to quarterly profit

Profitability showed a substantial improvement during the period, with Baozun recording net income of RMB17.0 million (US$2.5 million). That marked a turnaround from the RMB34.0 million net loss reported in the comparable quarter last year.

Adjusted operating income climbed to RMB74.3 million (US$10.9 million) from RMB6.1 million a year earlier. The improvement reflected stronger profitability within the company’s E-Commerce division alongside a reduction in losses at Brand Management.

The E-Commerce business generated adjusted operating profit of RMB107.1 million (US$15.8 million), compared with RMB41.1 million in the previous year. Meanwhile, the Brand Management division narrowed its adjusted operating loss to RMB33.0 million (US$4.9 million) from RMB35.0 million.

“We delivered another solid second quarter, with total revenue growing 7% year-over-year and earnings quality continuing to improve with record operating profits in recent years for the second quarter, amid soft consumer sentiment,” said Vincent Qiu, Chairman and Chief Executive Officer.

Services and Brand Management deliver growth

Baozun’s E-Commerce revenue increased 4.6% year over year, supported by a 10.0% rise in services revenue to RMB1.76 billion.

Brand Management recorded an even stronger expansion, with revenue jumping 21.9% to RMB485.6 million. The increase was primarily driven by higher sales from the Gap brand, demonstrating continued momentum within this part of the business.

The performance highlights Baozun’s progress in strengthening its earnings profile even as consumer sentiment remains subdued.

Baozun raises long-term profit target

Alongside its second-quarter results, Baozun increased its annual adjusted operating income target for 2028 to at least RMB700 million, up from its previous objective of RMB550 million.

The higher target adds to the positive longer-term picture following the company’s return to net profitability and significant improvement in adjusted operating income. While quarterly revenue narrowly missed analyst forecasts, stronger earnings, expanding services revenue and continued Brand Management growth helped support the positive reaction in Baozun shares.

Baozun stock price