BZUN

Good morning, ladies and gentlemen, and thank you for standing by for Baozun's first quarter 2026 earnings conference call. At this time, all participants are in listen only mode. After management's prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded. I would now like to turn the call over to your host for today's call, Ms. Wendy Sun, Senior Director of Corporate Development and Investor Relations of Baozun. Please proceed, Wendy.

Thank you, operator. Hello, everyone, and thank you for joining us today. Our first quarter 2026 earnings release was distributed earlier before this call, and is available on our IR website at ir.baozun.com, as well as on PR Newswire services. We have also posted a PowerPoint presentation that accompanies our comments to the same IR website, where they are available for download. On the call today from Baozun, we have Mr. Vincent Qiu, Chairman and Chief Executive Officer, Ms. Catherine Zhu, Chief Financial Officer, Mr. Junhua Wu, Director and Chief Strategy Officer of Baozun Group, and Mr. Ken Huang, Chief Financial Officer of Baozun Brand Management. Ms. Zhu will share first stage about our business strategy and company highlights. Ms. Zhu will then discuss our financials, followed by Mr. Wu and Mr. Huang, who will share more regarding our e-commerce and brand management segment respectively.

They will all be available to answer your questions during the Q&A session that follows. Before we begin, I would like to remind you that this conference call contains forward-looking statements within the meaning of the U.S. Securities Act of 1933 as amended, the U.S. Securities Exchange Act of 1934 as amended, and the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management current expectations and current market and operating conditions, and relates to events that involve known or unknown risk, uncertainties, and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results to differ materially from those in the forward-looking statements.

Further information regarding these and other risks, uncertainties or factors is included in the company's filings with the U.S. Securities and Exchange Commission, and its announcement, notice, or other documents published on the website of The Stock Exchange of Hong Kong Limited. All information provided in this call is as of the date hereof, and is based upon assumptions that the company believes to be reasonable as of this date. The company does not undertake any obligation to update any forward-looking statements except as required under applicable law. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in RMB. You may now turn to slide two for the executive highlights for the quarter. It is now a pleasure to introduce my Chairman and Chief Executive Officer, Mr. Vincent Qiu. Vincent, please go ahead.

Thank you, Wendy. Hello, everyone, and thank you for joining us. Q1 2026 was solid throughout. We achieved growth across every key metric, revenue, profitability, and working capital tenure efficiency. For the quarter, group revenue grew 15% year-over-year to RMB 2.4 billion. Non-GAAP operating income turned profitable at RMB 8 million, a significant improvement compared to a loss of RMB 67 million a year ago. Both business lines delivered solid growth in top line and bottom line. Importantly, these are not just financial improvements. They reflect notable progress in sales quality, profitability, and cash generation across both engines. BEC resumed the sustainable top line growth this quarter with a 10% year-over-year revenue increase. Compared with scale, what is even more critical is actually the quality of this growth.

We will continue to prioritize our revenue streams towards enhancing business quality, refining service satisfaction, and ultimately improving overall profitability. With growing synergies with BBM and integration of this brand management mindset, we aim to engage more deeply with our clients, understand their businesses at a gradual level, and collaborate closely to drive sustainable growth. BBM delivered acceleration this quarter with revenue up 39% year-over-year and continued improvement in profitability. GAAP reached operating break-even for the second consecutive quarter. This is especially impressive given the relatively smaller seasonal cycle in the first quarter. We believe this performance is a testament to our methodologies in MMC, merchandising, marketing and channel. We will continue to leverage this proven approach to nurture smaller niche brands within our portfolio to expand our addressable market.

The strong Q1 results bolster our confidence in the full year outlook, and more importantly, in our ability to excel during the acceleration phase of our business transformation over the next three years. Our two engines are each playing distinct yet reinforcing roles. BEC is not simply resuming growth, it is becoming a higher quality and a value-driven business. Meanwhile, BBM is accelerating with GAAP on a clear path towards 2026 annual operating break-even. Both engines are performing in sync and operating synergy is beginning to emerge, opening up broader development opportunities and unlocking new growth potential for our company. Now I'll hand over the call to the team for a deeper dive in our financials and business performance.

Thanks, Vincent, and hello, everyone. Let me provide a more detailed overview of financial results for the first quarter of 2026. Please turn to slide number three. Baozun Group's total net revenues for the first quarter of 2026 increased by 15% year-over-year to RMB 2.4 billion. Of this total, e-commerce revenue grew by 10% to RMB 1.9 billion, while brand management revenue grew by 39% to RMB 538 million. Breaking down e-commerce revenue by business model. Services revenue increased 7% year-over-year to RMB 1.4 billion, while BEC product sales revenue increased by 21% year-over-year to RMB 510 million. Please turn to slide number four.

From a profitability perspective, gross profits for product sales increased by 33.6% year-over-year to RMB 350 million for the quarter. Our group level blended gross margin for product sales was 33.5%, representing an expansion of 110 basis points year-over-year. Within this, gross margin for e-commerce product sales expanded to 15.9%, reflecting a 98 basis point improvement from 15% a year ago. Gross margin for BBM was 50% for the quarter, compared with 51.6% in the same period of last year. Now please turn to slide number five for a walkthrough of our OPEX. Sales and marketing expenses increased by RMB 93 million to RMB 893 million.

This included an increase of RMB 43 million for BEC, which was mainly due to higher spending on creative content and market initiatives on Douyin and VANOAD, consistent with growth in digital marketing revenue. BBM sales and marketing expenses increased by RMB 56 million, mainly driven by the expansion of offline stores and marketing activities in the quarter. Fulfillment costs for the quarter decreased slightly by 1% to RMB 590 million, reflecting our ongoing efforts in cost optimization. Technology and content expenses increased by 7% to RMB 125 million, primarily due to more revenue contribution from technology monetization. G&A expenses decreased by 4% to RMB 164 million, reflecting our continued focus on cost control and operational efficiency. Turning to bottom line items, please refer to slide number six.

During the quarter, our non-GAAP income from operations was RMB 8 million, compared to a non-GAAP loss from operations of RMB 67 million in the same period of last year. BEC's adjusted non-GAAP income from operations was RMB 13 million, significantly improved from loss of RMB 46 million a year ago. BBM reported a non-GAAP operating loss of RMB 4.9 million, compared with a loss of RMB 21.1 million a year ago. Lastly, with the growing significance of our distribution business across both operating segments, we would like to share key metrics related to capital turnover efficiency and inventory turnover days, first enhancing our transparency and accountability. For the first quarter of 2026, our working capital turnover improved to 109 days, compared with 193 days a year ago.

Within this, inventory turnover shortened to 113 days from 185 days a year ago. This improvement was driven by both BEC and the BBM segments. As of March 31, 2026, our cash equivalents, restricted cash and short-term investments totaled RMB 2.9 billion. Let me now pass the call over to Junhua to update you on BEC, our e-commerce business.

Thanks, Catherine, and hello, everyone. BEC delivered a solid first quarter, with revenue growing 10% year-over-year and non-GAAP operating income of RMB 13 million, a meaningful turnaround from a non-GAAP operating loss of RMB 46 million in the same period last year. This performance reflects both a return to sustainable growth and a meaningful progress on a broader priority of improving revenue quality and expanding margins. Please turn to slide number seven. Our product sales revenue grew 21% year-over-year, with broad-based growth across all key categories, benefiting from both deeper and relationships that improves execution on major platforms. It is encouraging to see apparel product sales deliver high double-digit growth as our efforts expanding to non-standard categories begin to scale. We continue to deepen our engagement with brand partners in refining go-to-market strategies through channel diversification and merchandising segmentation.

We are pleased to have achieved not only healthy top line growth and product sales, but also improvements in gross margin and inventory efficiency. Please turn to slide number eight. Services revenue from the quarter grew 7% year-over-year, led by digital marketing and IT solutions, as well as online store operations. We continue to gain market share in key categories like luxury, sports, and outdoor, reflecting the depth and trust of brand partnerships in these high-value segments. In the recently disclosed 2025 annual rating rewards, we were recognized across major marketplaces as top-tier service provider, achieving a grand slam of awards across all platforms. These recognitions including Tmall 6-star service provider, JD.com Excellence Partner, Douyin Diamond Service Provider, Tencent Qianyu certified excellent partner and Weimob e-commerce operation partner, reflecting our expanding ability to activate brands across an increasingly complex multi-channel landscape.

Returning to growth is only part of the story. We are equally focused on the quality of that growth. We have begun conducting comprehensive profitability and productivity analysis across service layers, business models, and margin continuous by revenue stream. With the explicit goal of concentrating on higher value work while reducing exposure to lower ROI services, gross margin improvement is an active priority across both our product sales and service business. We continue to focus on strengthening our bottom line. To support this, we are rolling out enterprise-wide lean initiatives to drive operational agility and cost optimization while scaling the adoption of AI tools across functions to unlock higher productivity. The improvement in quality non-GAAP operating income from a loss of RMB 46 million to a profit of RMB 13 million is an early and tangible signal of this progress.

Multiple AI power tools have already been deployed across daily operations. We are expected to drive meaningful and efficiency gains. We also have several initiatives aimed at restructuring and re-engineering our end-to-end operational process, creating even greater opportunities to capitalize on fast-moving AI advancements. We are encouraged by BEC's first quarter results. Looking ahead, our focus remaining on deepening client relationships, driving service innovation, and continuously improving operational excellence and the margin quality within this business. I'll pass to Ken for an update on Baozun Brand Management.

Thank you, Junhua, and hello, everyone. Please turn to slide number nine for BBM's performance in the first quarter of 2026. BBM carried its strong momentum into the first quarter, with revenue growing 39% year-over-year. We also achieved a significant improvement in the bottom line, with GAAP delivering its second consecutive break-even quarter in non-GAAP operating profits. More encouragingly, the solid growth was driven by gains across key operating metrics, including traffic, conversion, and the average transaction value. Leveraging our omni-channel capabilities and the agile integration, Gap achieved record same-store sales growth in the 20s in first quarter. Gross margin remained healthy at 50% with optimized commercial strategy during the Spring Festival to maximize traffic and conversion during the peak window.

Inventory management also improved significantly with BBM inventory turnover reduced to 114 days from 157 days a year ago. Now let me share our key initiatives around merchandising, marketing and the channel for Gap during the quarter. Merchandising, our ability to blend the Gap's American casual aesthetic with locally appealing features is connecting strongly with our target consumers. Our online segmentation strategy also moved beyond price-driven initiatives toward a more fashion-forward and tailored assortment, an increasingly important driver of our online growth. Underpinning both is improved internal alignment. Our merchandising design and product development teams have operated in close coordination for several quarters, translating to tighter supply chain execution, stronger vendor relationships, and more consistent cost management. Marketing. Our Q1 campaign strategy reflected a display in the seasonal sequencing.

During Chinese New Year, we activated our Peking Opera collaboration, a new tradition of classical opera, reinterpreting traditional aesthetics through modern design. This marked our second consecutive CNY anchored by a major culture IP following the Forbidden City collaboration in first quarter of 2025. In mid-March, we launched our spring women's campaign, Flow in the GAP, in collaboration with dance artist Xie Xin. Through expressive movement and storytelling, the campaign explores themes of self-expression and personal growth among modern women. In fact, the women's division was the standout performer during the quarter. Channels. Following the successful launch of new stores featuring enhanced visual merchandising and upgraded store image in the fourth quarter, we remodeled and upgraded two additional stores in Beijing Florentia Village and the Shine Hills in Q1.

We also combined the charm of traditional Chinese aesthetics with contemporary culture in our newly launched flagship store at the Taikoo Li Sanlitun, creating a unique and engaging shopping experience. The grand opening not only drove strong foot traffic, but also generated a significant social buzz. We remain on track to deliver our full year target of 50 new Gap stores openings, including about 10 new stores planned in Q2. Looking beyond the quarter, our April brand ambassador campaign with Cheng Yi, Moving Forward in Gap, continued to outperform. This gives us strong confidence in the momentum and reaffirms the power of well-executed China for China storytelling. Our partnership with Gap Inc. continues to strengthen, including the Victoria Beckham collaboration launched recently and additional IP collaborations planned for the second half of this year.

With double-digit top-line growth on track, a second consecutive break-even quarter delivered, we are well-positioned to achieve our full year target. That concludes our prepared remarks. Thank you. Operator, we are now ready to begin the Q&A session.

Yes. Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. Any time your question has been addressed and you would like to withdraw it, please press star then two. Now we will pause momentarily to assemble the roster. The first question comes from Frank Tao with CMBI.

Yeah, thank you. Hi, management. Congrats on the solid set of results. Actually help us unpack the drivers behind the strong revenue growth of your BBM business, and how should we think about growth trajectory in the coming quarters? Thank you.

The major driver for BBM growth in first quarter is from Gap. Also I think from the consumption's environment in Q1 because of the effect of winter sale of the Spring Festival and also the climate change, it helps drive more traffic as we expected. The overall increase objective for us in 2026 is over 20%. In the first quarter, we achieved 39%. In the coming quarters, we are confident to deliver the twenties increase continuously.

Thank you.

Thank you. The next question comes from Vicky Wei with Citi.

Thanks management for taking my question. My question is mostly related to consumption sentiment and the 618. Would management share your observation on the current consumption sentiment and the 618 preparation of brands? What is your expectations for that? Lastly, would you please share some latest update about Gap performance and margin trend? Thank you.

Okay, this is Junhua. Let me answer your first two questions. First one is regarding the consumer sentiment. We had a strong Q1 that was due to we had a late CNY, and we had a longer period of the Queen's Day. For the Q1, we had a very strong finish on the first quarter, and we foreseen the consumer sentiment is growing faster. For the 618 preparation, actually we are in the progress of the 618 right now. Tonight is the night for the second big wave of second campaign. We are looking forward to also foreseeing a strong finish of 618 this time. Thank you.

For Gap's margin, for Gap it's our objective is still to keep a relatively stable gross margin during the year. Try to increase the scale effect through both online and offline channels, as well as the BBM headquarters. By this scale effect, the result is trying to keep improving the store level contribution margin and also in the end of the overall operating margin. Our current performance is on track and also our current expansion plan is also on track. Thank you.

This is Vincent. Some more words on this on the margin trend. Actually, in general, the business is contributed by two parts, BEC and BBM. You can see that BBM with a higher margin right now is contributing more growth to the total business. We can expect the whole business, the margin trend will be improved in the coming quarters. That is what we are expected. Along with the synergy in between BEC and BBM, this give us more opportunities working with our existing brands in BEC portfolio, which can give us more, you know, potentials to generate more margin. That is also a good thing for, you know, general margin trend. Thank you.

Thank you. The next question comes from Jiawei Yin of CITIC.

Good evening, management. Thank you for taking my questions. Congratulations on this quarter's strong performance. I have two questions. The first is regarding BEC. As growth rates across different e-commerce platforms converge, what new trends are emerging in brands marketing budget allocation across different channels? What impact does this have on the company's service pricing and the bargaining power? My second question is regarding BBM. In the chairman's letter to shareholders, the company mentioned that it will be very cautious about new brand acquisitions. Could you elaborate on the specific screening criteria such as category positioning, business scale, profitability level, and/or deal structure? Thank you.

Okay, this is Junhua. Let me answer your first question. In terms of the platform allocation between different platform in terms of the marketing budget. Both platforms and the brands are maintain a relatively the same CMRTR rate. We don't have see any significant kind of shipment or movement about the budget allocation. In terms of the spending, the most of brand are switching a little bit from the traditional performance marketing to the content-driven platform, like RedNote, like seeding platform, like creating a lot of creative content, you know, facilitated by the AI and powered by Baozun. We realized that this kind of new allocation tends to moving from a traditional performance traffic driving to transaction, to setting up an emotion linkage before making transactions based on the content-driven.

This is the overall kind of the trend we're foreseeing for leading brands in different categories. For those kind of the impacts does our company, as a service provider, which has the bargaining power, is we can provide an end-to-end solutions for all those brands in terms of content creating and the performance marketing. If the brands are dedicated everything to Baozun, we are able to help them to allocate from the oversight to see how do you allocate the overall budget from performance marketing, to content-driven, to RedNote, to RedNote, and then to back to the CPS, et cetera. We can leverage from the omni-channel perspective to use their money wisely. Thank you.

Vincent here. Let me talk about the brand acquisition sub-processes. I, the letter is written by me, not AI, so I can clearly remember this sentence. In the past three years, I think we have already forged a model, a new model of the development of Baozun. Right now, the model, we are going to next phase, which is the acceleration phase. Talking about the standards when we talk about the new brands to work with, I think the scale is quite important 'cause we want to accelerate. We want to harvest what they have, what we have built in the past. You know, talking about the scale, we want the bigger scale opportunities.

Category wise, we of course, we focus on fashion apparel, which we can utilize the experiences we get from the Gap operation process. That is a category. Also, we want the new opportunities to bring us profit immediately 'cause we think we right now a lot of opportunities, you know, emerges in the market. We are in a very good position in talking with this kind of potential opportunities. 'Cause Baozun's model today is very unique and very valuable. No one today, or maybe just very, very few ones who can do MMC from our industry. 'Cause in the past, you know, talking about the e-commerce service sector, we only operate the online channel for brands.

Right now, channel, we can do both online and offline, and the channel is only one, you know, factor in the MMC methodology. Right now, we know how to do merchandising, how to do marketing, how to do the channel business together. In this position, where we will be very unique and valuable to all the potential, you know, brands within the BEC portfolio and outside brands. Our position is so good, so we can have good opportunities. Our standard will be very high. Yeah. At least what we say, you know, we will be very cautious. Thank you.

Thank you.

Thank you. Once again, please press star then one if you would like to ask a question. The next question comes from Chris Cao with Huatai Securities.

Hi management. Thank you for taking my question. I have two questions. The first one is regarding the AI technology. With the advancement of AI technology, are there any ongoing changes to our service systems and mechanisms for merchants during major promotion events or in our daily operations? In the long run, how do we view the impact of AI on the key competitive factors in the e-commerce industry? How will the company seize the opportunities and tackle the challenges presented by this shift? The second question is about the trend in the recent sale. We see that the growth rate of overall online retail sales saw a month-on-month decline in April, with the growth of social retail sales data for apparel also narrowing sequentially.

How will our e-commerce business and the brand management business respectively leverage our strength to sustain our far growth momentum that outperforms the whole market? Thank you.

Okay. Let me ask your first question and first half of the second question. In terms of the AI, we're leveraging AI mostly focused on our bottom line efficiency. We know that we have a lot of AI agent which can do automatically a lot of job in terms of saving human powers. Right now we have a dedicated team in Baozun E-Commerce services segment to really just leverage a lot of AI technology like large scale mode and AI agent to increasing our efficiency like digital asset management, like customer service, and like a lot of kind of the automation work we used to use a lot of intense labor.

In terms of the top line, we haven't realized that the current public service of AI can really help us to do a creative job because they are learning business mode. We leveraging those large scale mode on a top line, more focused on to facilitate our operation team to make decisions. Like collecting a lot of competitors' data, digital analytics, and forming a lot of data formats and giving us a lot of kind of the suggestions based on their learning and their data. That's more focused on the facilitate our top line growing. In the long run that we will closely work with the large platform like Tmall and the other platform, Alibaba and the other platform, to leveraging their public services, even if they can provide a closed loop like a GEO kind of services within their ecosystem.

We also will keep maintenance about our in-house system, upgrading our backbone systems based on our AI. Hopefully we can share you more the end of next year. Thank you. The second half of the second question is, in terms of the full overall business, for online business we haven't seen a big drop of our online business. The April business are still maintained the same within our budget. Because this is also the beginning of a pre-warm stage before the 618 period. We can realize that a lot of our brands, they are saving their budgeting, and they are saving their assortment allocation for the 618. The 618 kind of campaign has a longer period than last year.

We can realize that within that kind of saving until right now, I mean, the beginning of May, we really just see a big growth compared to the last year in this, in the beginning of the 618 campaign. Today is also the first wave of the 618 campaign. We're forward to see the strong finish will be happening this year for 618. That's from the online perspective.

For BBM, I think we have proved in Q1 that our alpha grow momentum with a very high growth rates. Even in April, we still continue to keep the growing trend. Not only from online, but also from offline, through our well-planned marketing activities and our merchandise plan. For BBM, because we first we have Gap target mass market with attractive price range. We also have Hunter, Sweaty Betty, which target different market segments. I think the BBM, our strength is not to use up any brand value, but try to increase the brand value in the same time of increasing the scale.

We have, after three years, we have already deep understanding of online/offline channels. Our faster reaction to the market changes. We also build up strong supply chain of anywhere woven and denim. We also have approved ability in MMC model. All of these will help us try to meet the consumers needs. I think in the end it's better understand brands, better understand the consumers, and then you gain your alpha growth momentum. Thank you.

Thank you. The next question comes from Thomas Chong with Jefferies. Go ahead, Thomas, your line is live. Jefferies?

Hello, can you hear me? Thanks Management for taking my question. I have two questions. The first one is, can Management share some color about the recent amount sales performance? My second question is for different categories, can Management share some outlook for different categories like luxury apparel, FMCG, consumer electronics, and appliance? Thanks.

Okay. Let me give you the outlook of the category segmentation. The premium and luxury is follow up with sports outdoor. FMCG maintain the similar kind of the growth rate compared to last year. Consider about the, we just after the Queen's Day. FMCG, especially the cosmetic category, they already just digested too much of the campaign, so they need to just wait a little bit for several months, maybe one or two quarters until the Double Eleven coming this year. The consumer electronics, especially for home appliance and electronic devices.

We have a strong growth rate for the first part of this 618 campaign. We're looking forward to see a strong finish for consumer electronics category also. Overall, the apparel, fashion apparel category is still taking the lead follow up with FMCG and consumer electronics. Thank you. For recently the month's sales performance, Catherine, do you wanna share some kind of?

Okay. Thank you for your question. I think, as you see that we have done quite good for the first quarter of 2026. We are now quite optimistic with the several this month's sales performance regarding our top line and also bottom line. The management still hold very high confidence for our whole group's performance, including both e-commerce part and also our BBM part. That's all for the question.

Thank you. As there are no questions at the present time, I would like to return the floor to management for any closing comments.

Thank you, operator. On behalf of Baozun management team, we'd like to thank you again for your participation in today's call. If you require any further information, feel free to reach out to us. Thank you for joining us today. This concludes the call.

Thank you. As mentioned, that concludes today's presentation. Thank you for attending today's event. You may now disconnect your lines.

Good morning, ladies and gentlemen, and thank you for standing by for Baozun's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded. I will now turn the meeting over to your host for today's call, Ms. Wendy Sun. Senior Director of Corporate Development and Investor Relations of Baozun. Please proceed, Wendy.

Thank you, operator. Hello, everyone, and thank you for joining us today. Our fourth quarter 2025 earnings release was distributed earlier before this call and is available on our IR website at ir.baozun.com as well as on PR Newswire services. We have also posted a PowerPoint presentation that accompanies our comments to the same IR website, where they are available for your download. . On the call today from Baozun, we have Mr. Vincent Qiu, Chairman and Chief Executive Officer; Ms. Catherine Zhu, Chief Financial Officer; Mr. Junhua Hao, Director and Chief Strategy Officer of Baozun Group, and Ms. Ken Huang, Chief Executive Officer of Baozun Brand Management. Ms. Qiu will first share our business strategy and company highlights. Ms. Zhu then will discuss our financial outlook, followed by Ms. Wu and Ms. Huang -- Mr. Wu and Mr. Huang, who will share more about our e-commerce and brand management segment, respectively. They will all be available to answer your questions during the Q&A session that follows. Before we begin, I would like to remind you that this conference call contains forward-looking statements within the meaning of the U.S. Securities Act of 1933 as amended, the U.S. Securities Exchange Act of 1934 as amended and the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management's current expectations and current market and operating conditions and relate to events that involve unknown risks, uncertainties and other factors, of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the company's filings with the U.S. Exchange Commission and its announcement, notice or other documents published on the website of the Stock Exchange of Hong Kong Limited. All information provided in this call is as of the date hereof and is based upon assumptions that the company believes to be reasonable as of this date, and the company does not undertake any obligation to update any forward-looking statements, except as required under applicable law. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in RMB. In addition, we may elect to use adjusted in place of nongeneral accepted accounting principle on non-GAAP in order to reduce overall confusion that may arise from our discussion of our financials related to the GAAP brand. You may now turn to Slide 2 for the executive highlights for the quarter. It is now my pleasure to introduce our Chairman and Chief Executive Officer, Mr. Vincent Qiu. Vincent, please go ahead.

Thank you, Wendy. Hello, everyone, and thank you for joining us. I'm pleased that Baozun delivered a strong fourth quarter closing 2025 on a high note and successfully completing our 3-year strategic transformation. Over the past 3 years, we have rebuilt our company with focus and intention driving consistent sequential momentum throughout 2025. In the fourth quarter, our revenue increased 6% to RMB 3.2 billion while non-GAAP operating profit grew 91% to RMB 198 million. This was not just about short-term recovery. It was about fundamentally improving the quality and the potential of our business. BEC has become a sustainable cash engine. Through sharper execution and continued cost rigor, BECs are more agile and consistently profitable. We have moved from pursuing scale to focusing on value, prioritizing margin expansion and reliable cash generation. and most importantly, build alignment with BBM. BBM, meanwhile, has reached a defining inflection point. After 3 years of repositioning and localization, our brand management platform achieved its first quarterly breakeven in fourth quarter '25. This milestone validates the sustainability of our model. Importantly, scale is beginning to translate into tangible operating leverage, marking the transition from a turnaround to profitable growth. Our financial profile has strengthened alongside operational progress. Margins have expanded, profitability has improved meaningfully and our balance sheet remains solid. In addition, our operating cash flow more than tripled to RMB 420 million in 2025. These results validate that our business is not only growing. It is growing with better structure and healthier economics. In summary, 2025 marks the successful completion of the initial phase of our transformation. As we enter into 2026, our focus shifts decisively from rebuilding to scaling. Our priority now is to amplify the progress to accelerate in the next 3 years. We will do this by expanding BEC's margin, building scale and operating leverage in BBM and deepening the strategic synergies between BEC and BBM. Our ambition is clear, to drive the group's non-GAAP operating profit growth to RMB 550 million by 2028. With a stronger organization, a proven strategy and a highly focused execution culture, we are entering this next phase with confidence and the momentum. Now I will hand over the call to our team for a deeper dive in our financials and the business performance.

Thanks, Vincent, and hello, everyone. Now let me provide a more detailed overview of financial results for the fourth quarter and full year of 2025. Please turn to Slide #3. While Group's total net revenues for the fourth quarter of 2025 increased by 6% year-over-year to RMB 3.2 billion. Of this total, e-commerce revenue grew by 2.5% in to RMB 2.6 billion, while Brand Management revenue rose by 24% to RMB 664 million. Breaking down e-commerce revenue by business model. Services revenue increased 3.1% year-over-year to RMB 2 billion. This increase was driven by revenue growth in digital marketing and IT solutions as well as strong performance in the luxury category within our online store operation services. BEC product sales revenue increased modestly by 0.5% year-over-year to RMB 574.5 million mainly driven by growth in Health and Nutrition category, which was partially offset by lower sales in appliance category as we continue to optimize category mix to prioritize profitability. BBM product sales totaled RMB 663.7 million, representing a 24% year-over-year growth. This growth was mainly driven by the strong performance of the GAAP. Please turn to Slide #4. From a profitability perspective, our blended gross margin for product sales at the group level was 36.5%, an expansion of 640 basis points year-over-year. Gross profit increased by 35.9% year-over-year to RMB 451.5 million for the quarter. Breaking this down by our key business lines. Gross margin for e-commerce product sales expanded to 18.4%, reflecting a 760 basis point improvement compared to 10.8% a year ago. This margin expansion was primarily driven by product mix optimization. Gross margin for BBM improved to 52.1% from 50.4% a year ago, reflecting the adaptiveness of its merchandising and marketing initiatives. Now please turn to Slide #5 for a walk-through of our OpEx. Sales and marketing expenses increased by RMB 181 million to RMB 1.2 billion. This included an increase of RMB 136.9 million for BEC which was mainly due to higher spending on creative content and market initiatives onto, in line with the growth in digital marketing revenue. BBM sales and marketing expenses increased by RMB 49.6 million, which was mainly driven by the expansion of offline stores and marketing activities during the quarter. Fulfillment costs for the quarter was reduced by 11.1% to RMB 683.4 million, reflecting ongoing efforts in cost optimization. Technology and content expenses decreased by 20.2% to RMB 116.9 million as we continue to enhance tech monetization efficiency. G&A expenses decreased slightly by 2% to RMB 187.9 million due to the company's continued efforts to implement cost control and efficiency improvement initiatives. Turning to bottom line items, please refer to Slide #6. During the quarter, our non-GAAP income from operations was RMB 197.7 million, an increase of 91.4% from RMB 103.3 million in the same period of last year. BEC's adjusted non-GAAP income from operations was RMB 195.9 million, representing 43% year-over-year increase compared with a year ago. BBM reported a non-GAAP operating income of RMB 1.8 million, a solid milestone as we achieved a very first breakeven quarter for the segment. Let us turn to a quick full year summary. The group's total revenue was RMB 9.9 billion, an increase of 6% year-over-year, of which e-commerce net revenues were RMB 8.3 billion, an increase of 2% year-over-year. BBM net revenues were RMB 1.8 billion, an increase of 25% year-over-year. Our adjusted operating income totaled RMB 126 million, a significant improvement compared with RMB 11 million in fiscal year 2024. As of December 31, 2025, our cash, cash equivalents, restricted cash and short-term investments totaled RMB 2.8 billion. We continue to improve working capital efficiency through back-end process optimization across inventory management, billing and cash collection. As a result, our adding operating cash flow reached RMB 420 million, representing a 315% year-over-year increase. Let me also briefly address our GAAP item recorded during the quarter. We recognized an investment impairment loss of RMB 230 million primarily related to preinvestments in the e-commerce sector as well as impairment provisions for certain equity investments. While these investments have at the time, today's macroeconomic environment, combined with our sharpened focus on developing our brand management business, make it prudent to recognize this impairment. These adjustments reflect our commitment to maintaining a focus and resilience business portfolio. Importantly, our remaining investment will be healthy, and we are confident in their long-term potential. Let me now pass the call over to Junhua to update you on BEC, our ecommerce business.

Thank you, Catherine, and hello, everyone. I'm pleased to share we've closed 2025 with significant momentum. In the fourth quarter, we delivered 2% revenue growth and a 43% increase in non-GAAP operating profit, capping a year of progression from stabilization to accelerate performance. Throughout the year, we focus on driving sustainable, profitable growth while making strategic investments in high opportunity areas. Now let me quickly walk through some of our operational highlights in the e-commerce segment for the first quarter of 2025. Please turn to Slide #7, highlighting the continued quality improvement of our distribution model. During the quarter, BEC product sales gross profit increased 70.9% despite a largely flat top line. Notably, BEC's gross margin rose to 18.4%, setting a new record since our inception. This improvement was mainly driven by ongoing optimization of our category mix with strong growth from health and nutrition and beauty and cosmetics categories. In addition, our efforts to expand into nonstandard categories and are beginning to show results. Apparel delivered a strong contribution across sales, gross margin and profitability during the quarter. . Turning to Slide #8. Our services revenue grew 3% year-over-year in the fourth quarter, led primarily by strong performance of BBM and IT solutions, which includes 19%. We gained market share in key categories such as luxury, sports and outdoor. Our omnichannel capability remains one of the Baozun's core advantages and a focus of developing on going forward. During the quarter, we received 41 awards in Tmall ecosystem, including the Prestigious 2025 Tmall Ecosystem in Service Award. Douyin we were once again certified as a Douyin e-commerce diamond service partner, the platform's highest tier of accredition. Together, these recognitions affirm our sustained leadership and execution strength across major platforms. We also continue to focus on strengthening our bottom line. Across the organization, we are implementing a series of lean initiatives designed to streamline processes, reduce costs and enhance efficiency. Furthermore, we are expanding the use of artificial intelligence tools across a wide range of employees and business scenarios to enhance productivity. These efforts have significantly improved our profitability. With BEC's non-GAAP operating income increased 43% year-over-year to RMB 196 million in the fourth quarter of 2025. Overall, we are pleased with our performance in the final quarter of the strategic transformation, a period that certified our shift towards the sustainable and profitable operations. Moving forward, we will continue to deepen client engagement and stickiness, innovate our service models and enhance operational efficiency. For 2026, our priorities are clear. Deliver the numbers, deliver the strategy and deliver the talent. Delivering the numbers means maintaining our focus on profitable growth and ensuring that our operational progress continues to translate into strong financial performance. On strategy, we are advancing 3 key initiatives. First, we will expand our apparel distribution business leveraging the synergy between BEC and BBM to unlock the new growth opportunities and strengthen our brand ecosystem. Second, we will further enhance our digital marketing and the traffic acquisition capabilities. helping brands partners capture demand more efficiently across an increasingly complex omnichannel landscape. Third, we will deepen technology empowerment, accelerating the deployment of AI and digital tools to improve operational efficiency and elevate our service capabilities. Finally, delivering the talent remains essential. We will continue strengthening our leadership bench and reinforcing a strong execution culture with the right people and the capabilities in place. we are well positioned to scale the business and deliver sustainable growth in the years ahead. Now I'll pass to Ken for an update on BBM.

Thank you, team, and hello, everyone. Please turn to Slide #9 for BBM's performance in the fourth quarter of 2025. . The fourth quarter marks a defining milestone for BBM as we delivered our first breakeven quarter. This result reflects our structural improvements across merchandising, marketing, store productivity and networking expansion. In Q4, BBM revenue grew by 24% year-over-year to RMB 664 million, supported by a double-digit same-store sales growth and the continued contributions from new store openings. Gross margin improved by 170 basis points from a year ago to 52.1%, leading to a 28% increase in gross profit. Moreover, inventory turnover efficiency improved, reducing our inventory turnover days by 16% to 114 days. Merchandising was the core growth driver for the quarter. We entered the winter season with a balanced assortment architecture, reinforcing Gap's iconic categories, sweatshirts, denim and denim wear while sharpening segmentation across channels and consumer groups. Our partnership with the Forbidden City has maintained a strong sell-through in Q4. More recently, we launched a new IP collaboration with packing Oprah, showing case our ability to blend the Chinese culture storytelling with Gap's global DNA in a commercially effective manner. Since introduced our brand ambassador on September 15, we have collaborated closely to create authentic, engaging content that connects with our audience. We also launched the seasonal products and the limited styling collections aligned with the key moments in the retail calendar. This ambassador-driven initiatives have boosted social buzz leading to higher consumer engagement, increased brand visibility and a strong brand voice. Offline expansion continues to be a strategic priority for us. In the fourth quarter, we opened 7 new stores for a total of 29 new Gap stores in 2025, bringing our total store count to 164 by the year-end. Our new stores continue to outperform older locations, driven by better site selection and enhanced visual merchandising. For instance, our new image stores at Dongguan Min International Trade City and Shanghai Century Link Mall have delivered strong results. The improving in-store experience and the outfit-based presentation have driven a double-digit gain in sales productivity. This early performance indicators are highly encouraging and reinforce our confidence in our store expansion strategy. As a result, we are accelerating our store opening efforts to build on this momentum, and currently plan to open 50 stores in 2026 through a hybrid model that combines direct and partnership stores in line with our asset light approach. With these initiatives in place, we are confident in sustaining double-digit year-over-year revenue growth and achieving operating breakeven for GAAP on an annual basis in 2026. Turning to Hunter. The brand continued to strengthen its premium positioning in Q4, elevated store plantation created lifestyle storytelling are resonating with urban consumers seeking both function and fashion. In the fourth quarter, we launched 5 new Hunter locations and entered our national footprint into high potential Tier 2 cities, including Nanjing, Qingdao, Shenyang and Taiwan. We concluded 2025 with a portfolio of 177 stores under the BBM umbrella. This expanded physical network sets a solid foundation to enhance supply chain efficiency in the future. In summary, Q4 2025 represents a structure inflection point for BBM. We achieved our first breakeven quarter. This validates our strategy, strengthens partner trust and sets the stage for long-term double-digit growth. The direction is clear, BBM is well positioned to become an increasingly meaningful growth engine for Baozun Group. That concludes our prepared remarks. Thank you. Operator, we are now ready to begin the Q&A session.

[Operator Instructions] Our first question comes from Chris with Huatai Securities.

I have 3 questions. The first one is about the AI, and with the rapid evolution of AI technology, would the management share that -- what is the current status of our workflow transformation using AI agents? And have we observed any measurable gains in efficiency? The second question is about the AI to our mid- to long-term impact. This is -- what is our perspective on the mid- to long-term impact and opportunities that AI agents present for our e-commerce business and the brand management business? And my third question is about our business outlook to the mid- to long term. And I have noticed that in our report, we stated that in 2028, we will reach RMB 550 million on operating profit. So with the management share, what is the key driver behind this business outlook?

Okay. This is Junhua. So let me address your first 2 questions regarding AI implementation in Baozun. So the first one is about the AI agent. So we have already leveraged a lot of AI agent technology from the beginning of last year. So most focused on our bottom line. In terms of the digital assets creating and uploading products, digital assets on to different platforms, saving a lot of operating people in terms of doing repeatable kind of works. We have already leveraged a lot of AI agents. . So AI agent technology is more focused on driving our efficiency internally more focus on the bottom line. In terms of the top line, we haven't having any very clear definition about the scenario in business case about how do we leveraging AI technology, increasing our top line. About the AI agent, the agentic platform and technology is very new in this industry. So we realize that in terms of the agentic kind of the technology right now is more focused on the GEO generic search engine optimization. So there is amount -- your DAU among the shopper APP is close to approximately about 850 million. And among them, the DAU of 300 million is on AI and all those apps in terms of the large-scale mode and AI agent APPs. So this is transforming the consumer behavior and reallocate the traffic structure. So we are closely focused on the trend of different big platforms and attracting all those changes of the traffic allocation, and we can share you more in the future quarters. The third one is regarding the business outlook.

Yes. The -- we just talked about the 2028 operating profit goal. That will go to RMB 550 million is our planned target. The main driver for this is that we are -- firstly, is our strategy. We're turning the e-commerce business into a BEC plus BBM plus synergy model. And you can see, firstly, BBM is improving its profitability, especially GAAP, is getting more and more profitable in the coming years. And in the meantime, because we leverage the experience in this kind of apparel industry from BBM, we then add more brands into BEC with a franchise model. So this also expand our margin greatly. So combined by both BBM's growth and also margin expansion of BEC, we can see this result in 2028, but it's not the end of our acceleration. I think in the coming years, even beyond 2028, we can see a more clear sign of this improvement of our profitability.

Next question comes from Alicia Yap with Citi. .

My first question is about the latest macro sentiment and would management share some color about latest macro Chinese New Year demand and the March promotional performance. And what is your expectation for 2026?. And my second question is about AI. How do you see generative AI and other advanced AI technology, changing consumer behavior and the e-commerce landscape? Would you elaborate on Baozun's strategy for integrating AI into your operations and service offerings? Are you developing -- are you developing your AI tools or partnering with leading AI firms? My last question is about Gap China. What is the growth expectation for Gap China this year? What is your long-term vision for the Gap business in China? And what do you see as the key growth drivers for the brand over the next 3 to 5 years?

Okay. This is Junhua. Let me address the first 2 questions. And the first one, I will elaborate from the BEC perspective and Ken can just feedback some new sentiment kind of the forecast, aligned with the third question from the BBM perspective. So yes, we did have a very strong finish on the Chinese New Year campaign and the Queens day campaign on the March 3. So this is definitely very strong. And we had a late Chinese New Year this year. So from the online digital e-commerce growing, that was very promising. And we see the momentum of each category growing a lot, and the platforms are still compensating a lot of kind of coupons to the end consumers to increase the overall GMV growth. And the efficiency of the traffic quality is increasing. So yes, we believe that we had a very good, strong start. And the future quarters will be very promising from the BEC perspective. And the second one is also related to the AI in terms of the GEO and how does GEO really changing the consumer behaviors. Just like I mentioned that GEO is changing the consumer behavior, is changing from the DAU of 850 DAU shoppers from different APPs to 300 million from different kind of apps like, and Changan, those kind of the generating kind of AI large-scale mode. So consumers started to asking questions for their daily lives -- during their daily life and those kind of GEO can smoothly push a lot of information along with some kind of the reference with the brand-oriented right information such as a shopping link or such as a very emotion linkage from the brand's perspective, with the content, with short video clips or with a very comprehensive information. So we can foresee that the change of consumer behavior is slightly changed from the instant shopping category to different categories. So in terms of the instant shopping category, so the AI agent is becoming very promising. You can easily order a bubble tea from, for example, from the AI GEO systems. And -- but from different categories, it's still not in the business scenario. So we are closely tracking all those technology operation and make sure that we can share more in the future quarters. And in terms of the bottom line, so we definitely input a lot of efforts in the AI agent to increase our efficiency, especially those repeatable kind of systems. So those proprietary AI tools, so we're not a partner with any other leading AI firms for now. We still use some kind of the public services with our in-house engineering team to do a lot of Baozun customization for our leading brand partners. .

This is Ken. For the first question about the C&I consumer segment. For GAAP, we also see high increase in February and January in both months. The increased rate year-to-year is over 30% for Gap. So we can forgive actually, we continued our 20 to 30 increased rate in the last quarter and this quarter. . For the third question, the gross expectation for Gap, First, I think for 2026, we will still continue to keep the growth rates. In 2025 our growth rate is more than 20%. So we will keep this around 20% increase in 2026 by both same-store increase and new openings. We plan to open more than 50 stores, and we will also expand our e-commerce sales scale. For the long-term vision of Gap business, in 2027 and 2028, we plan to accelerate our growth rate from 20% to 30% so we'll be 25% to 30% in the next 2 years in the top line. And we were also trying to improve our operating profit from breakeven to 150 basis points increase per year. And the main growth driver for Gap in the next 3 years, I think we're coming from 3 areas. One is the same-store sales increase. driven by our product improvements, our vision merchandising, our store new images, which will, in the end, to improve our in-store traffic and commercial rates. And the second is the scale expansion, both offline and online. For example, offline also plan to open reenter some markets such as Hong Kong and Macau. And the third one is the supply chain efficiency. With the scale increase, we expect to gain our efficiency in our cost management and also in the expenses. That's all.

Here is Vincent. We have some more things to say about the AI because AI application right now is one of the core strategy of the Baozun Corporate. So our goal is quite clear. We want to make the AI utilization and also application as the best practices for both e-commerce and also apparent industry. So we will be the best practiced AI for these two areas. So not only for the sales side, but also the supply side for BBM and also, of course, for the efficiency improvement. So it's quite important for us. And we are confident we'll be in a leading position in utilizing AI capabilities, yes.

Our next question comes from Jiawei Yin with CITIC Securities.

I have 2 questions. The first is that we have seen many industry changes such as the compliance of e-commerce tax, the levy of traffic tax and the restriction of competition in the industry, which are generally beneficial to the sales of branded goods and are also accommodated by a narrowing growth gap between platforms. How does Baozun impact of such evolution on operational preference and strategies? And what's the brand's response to this change? And my second question is, has there been any change to Baozun's development strategy for the BBM business in 2026? And how view Baozun balance scale and profit what are your expectation for the growth pace and the long-term vision of each brand?

Okay. So this is Junhua. Let me address the first question. So those policies really don't really affect our detailed operations and day-to-day because the government has signed up the direction about setting up a different sliding scale in terms of different kind of policies, and none of the term has really changed the allocation of the marketing fee of our existing brand partner, because after the pandemic, so all our brand partners are being very careful and very cautious about spending money, especially into the marketing spending, allocation and the others. So we want to help the brand partner to leverage all those money wisely and to drive a higher ROI as before. So in terms of that, so we are really within the range of all those policies. And in terms of the cutthroat competition in the industry, so Baozun is taking the lead of providing logistics and courier services. So we have already leveraged a lot of kind of the pricing efficiency and the cost efficiency for so many years. So that doesn't really just affect our day-to-day operations. So in terms of the brand repositioning between different platforms, so indeed, the brands are either diversifying view different kind of the strategy for different brands because for some kind of the leading live stream brand, to focus on GMV growth or treat those platform as a content creation platform and let those traffic exceeded to all those traditional transaction platforms is different strategies from different kind of categories. So most -- some kind of the categories of the brands, they choose to drive GMV from both categories, both Baozun platforms and some of the brands that treat the livestream platform as a content creation center and let them exceed all those content building the leakage to the traditional kind of via transactional platforms. So we are helping all those different brands in different categories to diversify their strategy across in different platforms. So there is no unified strategy in general in terms of that question.

Here's Vincent. I will talk about the BBM strategy. I think the strategy is quite consistent with the past years. The only change is about the level of our confidence. We think we are much more confident right now than before that the transformation is already there, we can see the results. So we build a 3-year model. And we believe in the coming 3 years, BBM will grow -- we'll enter into acceleration phase. So we were quite excited about that. . And talking about -- especially for Gap, the biggest brands, we will see a very good trend and also the improvements or the capabilities also promising. For the premium brand like Hunter and others, I think we -- the most important thing for us is to build capability on merchandising and also marketing. So they will be also growing quite fast, but building capability is more important. And talking about the BD of the new brands, yes, I think we are -- now a lot of more brands come to us trying to work with us. It's a good sign. And right now, not only BBM can work with the brands in a very deep relationship and also BEC also have the capability to do more franchise business with brands, so in this case, we -- that's why we think the coming 3 years will be an acceleration phase. Thank you for that.

Our next question comes from Wang with HSBC.

I have 2 questions. The first one is on the growth outlook for 2026. And what are the key upside and downside risks you see based on your expectations? And the second question is how should we think about the capital allocation plan given the AI investment and other investment priorities this year? And can management share our stores how you think about shareholder return going forward?

Sorry, the first 1 is about the overlook of the business growth in the future 3 years or 2026?

2026 for the group outlook.

The group outlook. Okay.

Yes. Maybe I try to say something, maybe Catherine, you can say more about that because it's expectation. Yes. I'd say, firstly, we are trying to make a positive year in terms of net income to ordinary shareholders, and -- so yes, it is quite exciting goal to achieve because that means we have more to contribute to our shareholders and investors. To achieve that, of course, we need to make all the aspects of our operation better than before. Our margin expansion needs to be improved as well. So in this case, we're not only to treat our customer or employee better and also give more return to our investment -- investors. Yes. In terms of numbers, can we share anything or...

Yes. Okay. Thank you for your question. I think the management are quite confident and -- for the coming 2026. We think it's quite promising. Of course, we are doing a lot of initiatives, including like the easy part and also brand management segment. So regarding the revenue, we are expecting a certain number of increase and like BEC segment. If we split into 2 segments, BEC, we expect a single-digit increase. And for BBM part, we are expecting like a very good number to come. And regarding the non-GAP operating profit, we are also expecting like double the number compared with the 2025. And so we are expecting this -- we are doing all kinds of initiatives like I mentioned in the call, so I think the management are quite confident about that.

And also Vincent here again. Talking about the AI right now, although it is still an initial phase for the industry to adopt the results, the development of the AI, but we are seeing this change very fast. So first we need to keep us very active and agile to keep our pace up to this development. So for us, along with the investment into IT and the internal process improvement every year, we put resources there. And this year, starting from this year, we have more initiatives from the corporate level. We have several very interesting and important initiatives. But doesn't require a lot of investments. So I think talent will be more important than investments. So that's why we are so confident that we will be the best practice for not only e-commerce but also apparel industry in China will be the -- we're quite committed to be the most advanced utilization of AI capabilities.

The next question is from with CMBI.

My question is regarding your development strategy for overseas business. And can management share with us the update regarding your overseas strategies? And can management share with that your development plan regarding both International business?

Yes. Let me first address some about the international business. Right now, for the priority, of course, BBM and BEC are contributing the major share of our business and also growth. So these 2 are very important. So that's why we talk more about these 2 sections. For BCI, I think recently, we have a very solid progress, but still, it's a minor contribution to the whole company and the growth. We are consolidated in outside the business outside of China. Hunter is already in Southeast Asia making progress. We have several major e-commerce projects improving and to be profitable in the region as well. We have opportunities in Korea and also South Korea and also several very big projects is going on in Hong Kong, in Taiwan. We are seeing this improving which is a promising future, and we are confident that the growth of the international business will be solid but we are not expecting a big contribution from international business yet in the coming 2 years.

BBM new brands.

Yes. I think you just talked about the new brands of BBM as well. Right now, I think we are in a very good situation because we are having quite big base of our brands from BEC. So when there's opportunity emerges in the market we'll be the first one to have the opportunity to work with them. Recently, we see a lot, yes. They trust us, and we have such a solid track record for BBM in the coming -- in the past 2 years. So people just want to work with us. But for us, I think we know what we need to have. So at least we will not have a lot more brands in the future. But definitely, during -- in the coming 3 years, I think we will have new brands, carefully selected, better profitable brands to add to our portfolio.

Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to Wendy Sun for closing comments. Over to you.

Thank you, operator. On behalf of the Baozun management team, I would like to thank you again for your participation in today's call. If you require any further information, feel free to reach out to us. Thank you for joining us again. This concludes the call. Thank you. .

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.