Baozun (NASDAQ:BZUN) reported a stronger first quarter of 2026, with management pointing to revenue growth across both its e-commerce and brand management businesses, improved profitability and faster working capital turnover.
Chairman and Chief Executive Officer Vincent Qiu said on the company’s earnings call that the quarter was “solid throughout,” citing growth in revenue, profitability and working capital efficiency. Total net revenue rose 15% year over year to RMB 2.4 billion. Non-GAAP operating income was RMB 8 million, compared with a non-GAAP operating loss of RMB 67 million in the same period a year earlier.
Qiu said the performance reflected progress beyond headline financial results, including better “sales quality, profitability, and cash generation” across Baozun’s two main businesses: Baozun E-Commerce, or BEC, and Baozun Brand Management, or BBM.
E-commerce business returns to growth
Baozun’s e-commerce revenue increased 10% year over year to RMB 1.9 billion in the first quarter. Within that segment, services revenue rose 7% to RMB 1.4 billion, while e-commerce product sales revenue grew 21% to RMB 510 million.
Junhua Wu, director and chief strategy officer of Baozun Group, said BEC delivered “a return to sustainable growth” while also improving revenue quality and margins. BEC posted adjusted non-GAAP operating income of RMB 13 million, a sharp improvement from a non-GAAP operating loss of RMB 46 million in the prior-year period.
Wu said product sales grew across key categories, with apparel product sales delivering high double-digit growth as the company expanded into non-standard categories. He also said services revenue was led by digital marketing, IT solutions and online store operations. Baozun continued to gain share in categories including luxury, sports and outdoor, according to Wu.
The company also emphasized improvements in service quality and platform recognition. Wu said Baozun received several 2025 annual marketplace awards, including recognition as a Tmall 6-star service provider, JD.com Excellence Partner, Douyin Diamond Service Provider, Tencent Qianyu certified excellent partner and Weimob e-commerce operation partner.
Brand management grows on Gap momentum
BBM revenue rose 39% year over year to RMB 538 million in the first quarter. Ken Huang, chief financial officer of Baozun Brand Management, said the segment’s growth was mainly driven by Gap, and that the quarter benefited from winter sales, the Spring Festival period and climate-related traffic trends.
Huang said Gap achieved record same-store sales growth “in the 20s” during the first quarter, supported by gains in traffic, conversion and average transaction value. BBM’s gross margin was 50% in the quarter, compared with 51.6% a year earlier. Management said the segment delivered its second consecutive break-even quarter on a non-GAAP operating profit basis, while BBM’s non-GAAP operating loss narrowed to RMB 4.9 million from RMB 21.1 million a year ago.
Huang outlined several Gap initiatives during the quarter, including product localization, more fashion-forward online assortments and marketing campaigns tied to Chinese New Year and women’s apparel. The company launched a Peking Opera collaboration during the Lunar New Year period and later introduced its “Flow in the GAP” spring women’s campaign with dance artist Xie Xin.
On the store side, Huang said Baozun remodeled and upgraded two Gap stores in Beijing and opened a flagship store at Taikoo Li Sanlitun. The company remains on track to open 50 new Gap stores in 2026, including about 10 planned in the second quarter.
Margins, expenses and working capital improve
Gross profit for product sales increased 33.6% year over year to RMB 350 million. Baozun’s blended gross margin for product sales expanded 110 basis points to 33.5%. E-commerce product sales gross margin rose to 15.9% from 15% a year earlier, while BBM’s gross margin was 50%.
Sales and marketing expenses increased by RMB 93 million to RMB 893 million. Management said BEC’s increase was mainly due to spending on creative content and marketing initiatives on Douyin and VANOAD, while BBM’s increase reflected offline store expansion and marketing activities. Fulfillment costs decreased 1% to RMB 590 million, technology and content expenses rose 7% to RMB 125 million, and general and administrative expenses declined 4% to RMB 164 million.
Baozun also reported improved capital efficiency. Working capital turnover improved to 109 days from 193 days a year ago, while inventory turnover shortened to 113 days from 185 days. The company had RMB 2.9 billion in cash equivalents, restricted cash and short-term investments as of March 31, 2026.
Management discusses consumer sentiment, 618 and AI
During the question-and-answer portion of the call, Wu said the company saw a strong first quarter helped by the timing of Chinese New Year and a longer Women’s Day period. He said Baozun was in the middle of the 618 shopping festival and expected a strong finish.
Asked about marketing budgets, Wu said brands were shifting some spending from traditional performance marketing toward content-driven platforms, including RedNote, with more emphasis on building consumer engagement before transactions. He said Baozun’s end-to-end capabilities allow it to help brands allocate budgets across content, performance marketing and sales channels.
Wu also discussed artificial intelligence, saying Baozun is using AI primarily to improve bottom-line efficiency through automation in areas such as digital asset management and customer service. On the revenue side, he said AI is being used to support operating teams with competitor data, digital analytics and decision-making assistance.
Qiu said Baozun expects margin trends to improve as BBM, which currently has higher margins, contributes more growth to the overall business. He also said synergies between BEC and BBM could create additional margin opportunities with existing brand partners.
Acquisitions to remain selective
Responding to a question about future brand acquisitions, Qiu said Baozun will be cautious and selective. He said the company is entering an “acceleration phase” after building its current model over the past three years, and that scale will be an important consideration for future opportunities.
Qiu said Baozun will continue to focus on fashion apparel, where it can apply experience gained from operating Gap. He added that new opportunities should be able to bring profit immediately. He said Baozun’s merchandising, marketing and channel capabilities make its model distinct from traditional e-commerce service providers that mainly operate online channels for brands.
For BBM’s full-year outlook, Huang said the segment’s 2026 growth objective is above 20%. After delivering 39% revenue growth in the first quarter, he said management is confident BBM can continue delivering growth “in the twenties” in coming quarters.
About Baozun (NASDAQ:BZUN)
Baozun Inc is a leading pure-play e-commerce solutions provider based in Shanghai, China. The company specializes in helping global and domestic brands establish and manage their online stores across major Chinese platforms, including Tmall, JD.com, and WeChat. By offering a one-stop service model, Baozun enables brand owners to outsource the complexities of digital retail operations and focus on product development and customer engagement.
The company's suite of services encompasses store design and setup, digital marketing and promotion, technology integration, order fulfillment, warehousing and logistics, customer care, and data analytics.
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