China Net Finance, December 11th (Reporter Liu Xiaofei) Baozun E-commerce recently released its third quarter performance announcement. During the reporting period, Baozun E-commerce achieved a total net revenue of 1.824 billion yuan, a year-on-year increase of 4.7%; The operating loss was 136 million yuan, compared to 26 million yuan in the same period last year; The operating loss rate was 7.4%, compared to 1.5% in the same period last year; The net loss attributable to ordinary shareholders of the listed company was 126 million yuan, compared to 169 million yuan in the same period last year.
For the growth in net revenue, Baozun E-commerce stated that it was mainly due to the launch of a new business line in the first quarter, which contributed to the incremental sales revenue of brand managed products. Data shows that the revenue of Baozun E-commerce in the third quarter was 296 million yuan, a decrease of 8.64% compared to 324 million yuan in the second quarter.
GAP reduces discounts and promotions
It is understood that the brand management revenue of Baozun E-commerce is mainly generated by GAP's Shanghai business. In November 2022, Baozun E-commerce announced the acquisition of GAP's Greater China business for a stock price transaction consideration of $40 million, obtaining production, promotion, and omnichannel sales authorization.
After being acquired by Baozun E-commerce, GAP is indeed undergoing changes. For example, in the Chinese market, a local product design team was established for the first time, and the original in store display shifted from a large store style category promotion to a multi scene overall combination.
In this year's third quarter report, Baozun E-commerce mentioned that it will gradually transform GAP from a discount driven brand in the past to a brand that wins with consumer mentality. However, in the GAP Tmall flagship store, the recent promotional slogan is "50% off for 1 piece", and there are also many products on sale in the store, with a discount of up to 60% for a certain autumn and winter thick coat.
Zhuopu Consulting stated that instead of reducing discounts and promotions, it is better to return to the golden instinct and find the most suitable differentiation for the brand's own transformation of GAP in Baozun E-commerce. Specifically, brands should excavate their brand advantage endowments based on five dimensions: history, geography, product background, resources, and values, also known as the advantage genes accumulated in entrepreneurial inheritance, extract the brand's golden instinct, and then allocate resources and sales around the golden instinct.
In the 2022 annual report, Baozun E-commerce stated that the acquisition of GAP China business became the first milestone in Baozun E-commerce brand management, and brand management business will be a key sector for the company's growth and profitability in the next three years and beyond. At the recent analyst conference, the management of Baozun E-commerce proposed GAP China's five-year strategic goal of turning losses into profits by 2025 and doubling revenue by 2027.
We will wait and see whether GAP China can achieve the above goals on schedule and whether its brand management business can shoulder the company's banner of turning losses around.
Sales of fast-moving consumer goods in e-commerce decreased by 52%
Unlike the growth in product sales revenue under brand management, the sales of products in Baozun's e-commerce business decreased by 17.2% to 412 million yuan during the same period. The year-on-year declines in fast-moving consumer goods, electronic products, and small household appliances were 52%, 49%, and 15%, respectively.
Baozun E-commerce has also launched service business. The service revenue in the third quarter was 1.116 billion yuan, a decrease of 10.3% compared to the same period last year. Baozun E-commerce stated that this was mainly due to the disposal of a loss making subsidiary in the same period last year, resulting in a decrease of 65.7 million yuan in warehousing and fulfillment revenue. In addition, due to a decrease in effective advertising marketing activities, the revenue from digital marketing and technical services of Baozun E-commerce decreased by 44.3 million yuan.
According to a research report by CITIC Securities, considering that the GMV performance of the company's operating brand has been weaker than previous expectations since the third quarter, the 2023E~25E revenue forecast for Baozun E-commerce has been lowered to 8.84 billion yuan, 9.31 billion yuan, and 9.87 billion yuan, with previous forecasts of 9.24 billion yuan, 9.93 billion yuan, and 10.53 billion yuan, respectively. The net profit forecast for Non GAAP has been lowered to 0.23 billion yuan, 179 million yuan, and 266 million yuan, with previous forecasts of 12 million yuan, 219 million yuan, and 318 million yuan, respectively.
Huatai Securities pointed out in its research report that there are a series of risks in Baozun E-commerce, including lower than expected consumer recovery, termination of cooperation with top cooperating brands, and lower than expected e-commerce growth rate. The non GAAP net profit attributable to shareholders of Baozun E-commerce for 2023-2025 has been lowered to -0.1 billion yuan, 130 million yuan, and 290 million yuan, with previous values of 40 million yuan, 150 million yuan, and 300 million yuan, respectively.