Baozun's Q3 2025: Contradictions Emerge in Consumer Sentiment, Brand Strategy, and Instant Shopping Focus

Date of Call: November 25, 2025

Financials Results

• Revenue: RMB 2.2 billion, up 5% YOY (E‑Commerce RMB 1.8B, +2.4% YOY; Brand Management RMB 396M, +20% YOY). Services revenue RMB 1.4B, +6.3% YOY; BEC product sales RMB 413.4M, -8.9% YOY; BBM product sales RMB 395.2M, +20% YOY.
• Gross Margin: Group blended product gross margin 34.3%, up 620 bps YOY; E‑Commerce product sales margin 13.1% vs 10.2% a year ago; BBM gross margin 56.5% vs 52.8% a year ago.
• Operating Margin: Non‑GAAP operating loss of RMB 10.8 million, improved from a non‑GAAP loss of RMB 85.2 million a year ago; BEC non‑GAAP operating profit RMB 28.1M vs loss RMB 29.8M LY; BBM non‑GAAP operating loss RMB 38.7M, improved ~30% YoY.

Guidance:

• Management is confident in delivering a solid Q4 for both BEC and BBM and expects Gap to reach its first breakeven quarter in Q4.
• Company expects 2026 to be an inflection year shifting from transformation investment to sustained profitable growth with “big improvement in profitability.”
• BEC priority for 2026: margin expansion via more distribution model adoption and lean cost/efficiency initiatives.
• BBM priority: make each brand profitable, expand synergies with BEC, cautiously add new brands; continue AI and data investments to drive efficiency.

Business Commentary:

* Revenue and Profitability Improvement: - Baozun Group's total net revenues for Q3 2025 increased by 5% year-over-year to RMB 2.2 billion. - Non-GAAP operating loss narrowed to RMB 11 million from RMB 85 million a year ago. - The improvement was driven by strong gross margin expansion and a significant reduction in operating losses across both core business units.

• BEC Performance and Profitability:
• BEC's non-GAAP operating profit reached RMB 28 million, marking the most profitable third quarter in recent years.
• Services revenue grew by 6.3% year-over-year to RMB 1.4 billion.

• This was due to revenue growth in online store operations and digital marketing and IT solutions, as well as a strategic focus on a quality-driven distribution portfolio.

• BBM Revenue Growth and Brand Expansion:

• BBM's revenue rose by 20% year-over-year to RMB 396 million.
• Gross profit margin expanded to 56.5%, up 370 basis points from the previous year.

• This growth was driven by impactful merchandising and marketing initiatives, notably the appointment of an influential brand ambassador and successful themed product launches.

• Strategic Initiatives and Future Outlook:

• The strategic focus is on expanding margin and optimizing cost efficiencies in BEC, and achieving profit growth for BBM brands.
• The company is leveraging synergy between BBM and BEC to enhance ownership in distribution models, particularly in soft goods categories.
• Baozun aims to further develop its brand management capabilities and expand its portfolio, focusing on successful partnerships with existing brands and selecting new opportunities strategically.

Sentiment Analysis:

Overall Tone: Positive

• Management described a "strong quarter marked by 5% total revenue growth and a big improvement in profitability" and stated "2026 to mark our inflection point, shifting from transformation investment to sustained profitable growth." They highlighted BEC returning to profitability and BBM strong top‑line and margin expansion.

Q&A:

• Question from Alicis a Yap (Citigroup Inc.): Can you provide observations on latest consumer sentiment, shifts in spending behavior especially around Singles' Day, categories outperforming/underperforming, and brand willingness to spend on marketing during Singles' Day? Also any comments on 2026 outlook by segment, top strategic priorities, margin targets, brand expansions, and role of AI?
  Response: Consumer sentiment is improving with buyers seeking value; sports/apparel and FMCG outperform while appliances underperformed. Brands are prioritizing P&L and increasing ROI‑driven marketing. For 2026, management expects an inflection to sustained profitable growth: BEC will drive margin expansion via distribution models and lean operations; BBM will focus on making each brand profitable and carefully add brands; AI/data investments will support efficiency and margins.

• Question from Jiawei Yin (Citic Securities Co., Ltd.): Has premium consumption recovery benefited your categories? With content e‑commerce and new platforms (RedNote, Bilibili) changing the landscape, how should brands shift strategy and how is Baozun adapting?
  Response: Yes — premium/luxury categories are leading post‑Double 11 and benefit from content‑driven, scenario‑based selling. Content and commerce are converging; Baozun is investing in content creation, platform partnerships and ROI‑driven tools to help brands harmonize marketing and e‑commerce operations.

• Question from Joanna Ma (CMB International Securities Limited): Can management share revenue and profitability outlook for the last quarter and for full year 2026? Also development plan for BBM in 2026 for Gap, Hunter and other initiatives?
  Response: Management is confident in Q4 results and expects significant profitability improvement in 2026 across both BEC and BBM. BBM will prioritize making each existing brand successful (Gap, Hunter), expand store productivity and expansion cautiously, and leverage synergies with BEC rather than indiscriminate brand additions.

• Question from Tao Xiaoming (Huatai Securities): Have you seen any positive impact from Taobao main‑app quick commerce traffic on Q3 performance and will it persist into Q4? And has the recent ad spend/tax regulation impacted advertising operations, particularly in beauty?
  Response: Quick commerce benefits categories like FMCG but is not a material channel for Baozun's core fashion/luxury/electronics business, so limited impact; company targets top traffic pools rather than instant‑shopping traffic. No material impact observed yet from recent ad/tax regulations on clients' advertising spend.

• Question from Jiawei Yin (Citic Securities Co., Ltd.): Regarding Gap's new brand ambassador and BBM's strong growth, what impact has the collaboration had on Gap's brand awareness and user profile, synergies with other lines like kids, and long‑term profit potential?
  Response: The Gap campaign materially boosted younger customer share (+25%), AIPL and UGC engagement, increased units per transaction and omnichannel demand (adult + kids). Management expects continued double‑digit growth (~20% in Q4) and sees Gap reaching first breakeven in Q4, with ongoing store remodelling and expansion to improve profitability.

Contradiction Point 1

Consumer Sentiment and Brand Marketing Strategies

It highlights a shift in consumer behavior and brand marketing strategies, which are crucial for understanding Baozun's market positioning and sales performance.

Has consumer sentiment or purchase willingness changed regarding Singles' Day promotions? - Alicia Yap(Citigroup Inc., Research Division)

2025Q3: Consumer sentiment is improving, with consumers paying for value. There is a strong finish expected for Double 11. Preferences remain towards sports, apparel, and FMCG categories. - Junhua Wu(CSO)

What are your expectations for this year's 618 campaign, including any preliminary results and trends across e-commerce platforms? - Alicia Yap(Citigroup)

2025Q1: I'll share some early insights on the 618 campaign. First, the warm-up period prior to the 618 event was longer than last year due to the brand's cautious approach towards marketing spending. - Junhua Wu(CSO)

Contradiction Point 2

Brand Expansion and Strategic Focus

It involves differing priorities and strategies for brand expansion, which are crucial for understanding Baozun's growth strategy and market positioning.

Can you provide revenue and profit outlook for Q4 and 2026, as well as BBM business development plans for Gap, Hunter, and new initiatives? - Joanna Ma(CMB International Securities Limited, Research Division)

2025Q3: We are confident for the results in the coming quarter. For 2026, we expect big improvements in profitability for both BEC and BBM. The focus for BBM is on the success of each brand and developing synergy with BEC. We'll be cautious in bringing new brands in. - Wenbin Qiu(CEO)

What is the updated strategy for Gap and how will the company balance scale expansion with profitability? Are there plans to acquire new brands? - Unidentified Analyst

2025Q1: BBM aims for double-digit scale growth and breakeven by the end of the year. No specified plans for new brand acquisitions, but a strong pipeline exists. - Ken Huang(CFO)

Contradiction Point 3

Strategic Focus on Instant Shopping

It reflects a shift in the company's strategic focus on instant shopping, which could impact resource allocation and market positioning.

Did the increase in Taobao's main site traffic positively impact Q3 performance, and will there be sustained effects or actions in quick commerce? - Unknown Analyst (Huatai Securities)

2025Q3: Baozun is not mainly focused on instant shopping. The traffic pools are different, with Baozun targeting higher-tier traffic. The company's strategy is to focus on top-quality, not quick, shopping. - Junhua Wu(CSO)

What portion of revenue comes from Tmall vs. non-Tmall platforms? What is the impact of instant retail shopping? Will BBM's momentum continue and when could profitability be achieved? - Alicia Yap (Citigroup Inc., Research Division)

2025Q2: Baozun is exploring instant retail shopping. - Junhua Wu(CSO)

Contradiction Point 4

Impact of E-commerce Platforms on Sales Seasonality

It highlights changes in the e-commerce landscape and how Baozun adapts to these changes, impacting business strategy and growth.

How has consumer sentiment toward Singles' Day promotions changed, and has consumer willingness to purchase changed? How are brands adjusting their marketing budgets for this year's event, and what impact is expected on Q4 outlook? - Alicia Yap(Citigroup Inc., Research Division)

2025Q3: The new sales promotion strategies by e-commerce platforms require brands to adapt. Baozun can leverage value-added services to help brands navigate these shifts, focusing on efficiency, return on investment, and integrated online-offline operations. - Arthur Yu(CFO)

How will diversified sales promotions by ecommerce platforms affect the seasonality of Baozun's domestic sales? - Violet Yi(China Renaissance)

2022Q4: The new sales promotion strategies by e-commerce platforms require brands to adapt. Baozun can leverage value-added services to help brands navigate these shifts, focusing on efficiency, return on investment, and integrated online-offline operations. - Arthur Yu(CFO)

Contradiction Point 5

Brand Ambassador Impact on Gap Sales and User Profile

It involves diverging statements on the impact of a brand ambassador campaign on Gap's sales and user profile, which could reflect varying internal assessments or communication issues.

What impact has the collaboration with a top-tier brand ambassador had on Gap's brand awareness and user profile, and has it driven synergistic sales growth in other business lines like children's wear? - Yin Jiawei (Citic Securities Co., Ltd., Research Division)

2025Q3: The campaign increased customer base by 25%, leading to more UGC content. The brand ambassador promoted key products, enhancing brand and product awareness. Synergy is seen in increased units per transaction for both adult and kids products. - Ken Huang(CFO of Baozun Brand Management)

Are there plans for brand acquisitions or expanded partnerships? - Unidentified Analyst (CITIC)

2025Q2: Baozun is actively exploring partnerships with more premium brands, including Gap and Hunter. - Ken Huang(CFO of Baozun Brand Management)