Baozun Inc. (NASDAQ: BZUN) reported Q4 EPS of $0.40. Revenue for the quarter came in at $399.9 million.

Fourth Quarter 2019 Financial Highlights

• Total net revenues were RMB2,784.1 million (US$1399.9 million), an increase of 26.4% year-over-year. Services revenue was RMB1,491.0 million (US$214.2 million), an increase of 21.6% year-over-year.
• Income from operations was RMB195.9 million (US$28.1 million), a decrease of 14.7% year-over-year. Operating margin was 7.0%, compared with 10.4% in the same quarter of last year.
• Non-GAAP income from operations2 was RMB216.6 million (US$31.1 million), a decrease of 12.3% year-over-year. Non-GAAP operating margin was 7.8%, compared with 11.2% in the same quarter of last year.
• Net income attributable to ordinary shareholders of Baozun Inc. was RMB140.9 million (US$20.2 million), a decrease of 25.2% year-over-year.
• Non-GAAP net income attributable to ordinary shareholders of Baozun Inc.3 was RMB161.3 million (US$23.2 million), a decrease of 21.4% year-over-year.
• Basic and diluted net income attributable to ordinary shareholders of Baozun Inc. per American Depository Share (“ADS4”) were RMB2.42 (US$0.35) and RMB2.36 (US$0.34), respectively, compared with RMB3.29 and RMB3.17, respectively, for the same period of 2018.
• Basic and diluted non-GAAP net income attributable to ordinary shareholders of Baozun Inc. per ADS5 were RMB2.77 (US$0.40) and RMB2.71 (US$0.39), respectively, compared with RMB3.59 and RMB3.46, respectively, for the same period of 2018.

Fourth Quarter 2019 Operational Highlights

• Total Gross Merchandise Volume (“GMV”)6 was RMB17,771.8 million, an increase of 47.6% year-over-year.
• Distribution GMV7 was RMB1,448.8 million, an increase of 29.5% year-over-year.
• Non-distribution GMV8 was RMB16,323.0 million, an increase of 49.5% year-over-year.
• Number of brand partners increased to 231 as of December 31, 2019, from 185 as of December 31, 2018.
• Number of GMV brand partners increased to 222 as of December 31, 2019, from 178 as of December 31, 2018.

“We accomplished our 2019 objectives as reflected in the standout 35% revenue growth rate, the highest for our Company in the last four years, coupled with a record high increase in GMV and record net addition of new brand partners,” commented Mr. Vincent Qiu, Chairman and Chief Executive Officer of Baozun. “We continued to strengthen our competitive position in 2019 through innovation, which allows us to adopt a more strategic, flexible, and responsive approach to the evolving e-commerce industry. Our strategy in 2020 remains unchanged as we prioritize high-quality growth, with enhanced emphasis on margin expansion, by driving further optimization of our brand portfolio and improving operational efficiency through digitalization and productization. Despite the global economic impact the outbreak of COVID-19 is having, China’s e-commerce sector continues to demonstrate tremendous resilience. We believe our strategy will ultimately yield more balanced and sustainable growth with operating profitability expansion.”

Mr. Robin Lu, Chief Financial Officer of Baozun commented, “Despite a loss in the fourth quarter related to a third-party warehouse fire currently estimated to be RMB45.5 million in the fourth quarter, we were able to sustain growth momentum in our bottom line for full year 2019. Excluding the impact from the fire-related loss, net income would have grown 21% year-over-year. In addition, we closed out the year with positive free cash flow which we believe is not only an indication of improving working capital efficiency but also a validation of our strategic focus on high-quality growth. With market turbulence from macroeconomic-uncertainties and the outbreak of COVID-19 increasing, we believe it is more essential than ever to accelerate the execution of our high-quality growth strategy which will support the scaling of our business in a more sustainable way. As things stand, provided the macroeconomic environment does not deteriorate further, we anticipate that our GMV for the first quarter of 2020 will grow by at least 10% when compared with the same period last year, and we reaffirm our expectation to achieve steady operating margin recovery for full year 2020.”

Business Outlook

Based on the market and operational conditions, the Company expects total net revenues to be between RMB1,400 million and RMB1,450 million for the first quarter of 2020, which represents a year-over-year growth rate of 9% to 13%. The above forecast reflects the Company’s current and preliminary view, which is subject to substantial uncertainty as the COVID-19 situation in China and other countries is evolving.

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