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Baozun Reports 40% Earnings Growth, Shares Soar

Anna Vodopyanova 2018-11-19 14:52 PM
Baozun Reports 40% Earnings Growth, Shares Soar

Shares of Baozun Inc. (Nasdaq: BZUN) jumped nearly 20 percent in early trading to $53.90 per American depositary share after the company reported a 41 percent gain in income in the first quarter.

The company, a Chinese e-commerce servicer to some of the world's top brands, including Philips, Honda, Calvin Klein, and Microsoft, said its earnings jumped to $2.4 million, or 4 cents per share in the first three months, compared with $1.7 million, or 3 cents per share, year-over-year.

In all, revenue for the same period increased 14 percent to $146.9 million, which Baozun, backed by e-commerce giant Alibaba Group Holding Ltd. (NYSE: BABA), attributed to the growth of its online stores.

The chief financial officer of Baozun, Beck Chen, noted in a statement that the gross merchandise volume in the first quarter increased 66 percent from last year thanks to the company's additional investments of $2.2 million in "innovation and productization."

"We believe the investments we are now making will enable us to expand our addressable market, further strengthen our long-term competitiveness, and provide more value to our brand partners over the long run," Chen said.

Baozun has been hosting the Global Brand E-commerce Summit annually in Shanghai. This year, the summit took place on May 11 and was themed "Eyes on the Data," focusing on big data, artificial intelligence, and cloud computing.

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The chairman and chief executive officer of Baozun, Vincent Qiu, said in a Smarter Analyst article in April: "Big data and customer relationships are playing increasingly important roles in e-commerce, and their combination with artificial intelligence can help reduce much of the cumbersome work needed to maintain the back end of e-commerce platforms, and help brands create value for their customers and increase competitiveness."

Qiu said that China's e-commerce has become a huge marketing and promotional platform which heavily influences market trends. "For us, despite the many challenges, this era brings an opportunity to quickly organize and deploy resources to benefit from the growing volume of transactions," he added.

For the second quarter, the company said it expected to generate revenue in the range of $169 million to $175 million, representing an increase of 15 to 19 percent from the first quarter results. As the company has been transitioning to a non-distribution business model, it is expecting services revenue to surge more than 50 percent year-over-year in the second quarter.

In the company's earnings release on Thursday, Qiu stated: "We are firmly focused on becoming the leading brand e-commerce business partner and technology development and solution services provider."

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Baozun stock soared to a high of $53.90 per share, up 20 percent in early trading after the company reported its quarterly results. 

Shares were trading at $52.91 per ADS intraday Thursday. 

(Source: Thomson Reuters Eikon)