Baozun Inc (ADR) (BZUN) Q3 Numbers Beat Estimates

Baozun Inc (ADR) (NASDAQ:BZUN) reported its third-quarter results on Tuesday beating the consensus estimates on the top and bottom line. Despite the earnings beat, shares of the Chinese e-commerce services provider were down over 15% as of this writing.

For the quarter, the Chinese company posted adjusted earnings of 9 cents per share, beating consensus estimates of 8 cents per share. Revenue for the quarter came in at $133.8 million, compared to consensus of $132.1 million. Revenue was up 19% from the same quarter last year.

Revenue breakup reveals that the product sales came in at RMB472.5 million ($71.0 million), down 1.5% from last year.  Services revenue, on the other hand, increased 55% from RMB269.5 million last year to RMB417.7 million ($62.8 million) this year.  The robust performance of the service business was mainly due to the growth of Baozun’s consignment and service fee business model and the growth in sales of the apparel products.

For the fourth quarter, the company expects services revenue to rise by 55% on a year-over-year basis. For the fourth-quarter, the Chinese company forecasts a net revenue between RMB1,490 million and RMB1,530 million.

“We are pleased to report another outstanding quarter where we continued to strengthen our long-term competitive advantages, drove strong growth from our existing online stores and optimized efficiency with innovative new tools,” Baozun’s Chairman and CEO – Vincent Qiu, said.

Baozun delivered robust performance during the Singles Day, recording a total order value of about RMB5 billion, an increase of over 100% from last year, Qiu informed. Further, the CEO said that the company would continue to invest in the technology, which plays a “central role in our strategy.”

Total GMV (Gross Merchandise Volume) came in at RMB4,104 million, a jump of about 71% from last year.  The company also succeeded in raising the number of brand partners from 127 (as of September 30, 2016) to 146 this year. “With strong confidence in our strategy and operations, we expect GMV during the fourth quarter of 2017 to grow faster than 70% on a year-over-year basis as services revenue continues to rapidly grow,” said Baozun’s Chief Financial Officer – Beck Chen.

The cash, cash equivalents and short-term investment for the company stood at RMB510.2 million ($76.7 million) as of September 30, 2017, a drop from 957.3 million as of December 31, 2016. According to the Chinese company, this was mainly due to the investments made for the preparations (logistics and procurement) of the Singles Day. Also, operating margin was reported at 3.1%, compared to 3.0% last year.



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