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. They 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 Wu, Director and Chief Strategy Officer of Baozun Group; and Mr.

Ken Huang, Chief Financial Officer of Baozun Brand Management. Mr.

Qiu will share a 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 risks, 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, and the company does not undertake any obligation to update any forward-looking statement, 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 2 for the executive highlights for the quarter.

It is now 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 turnover efficiency.

For the quarter, group revenue grew 15% year-over-year to 2.4 billion. Non-GAAP operating income turned profitable at 8 million, a significant improvement compared to a loss of 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 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 the integration of this brand management mindset, we aim to engage more deeply with our clients, understand their businesses at a granular 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.

Gap reached operating breakeven 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 3 years. Our two engines are each playing distinct yet reinforcing roles.

BEC is not simply resuming growth; it is becoming a higher-quality and value-driven business. Meanwhile, BBM is accelerating, with Gap on a clear path towards 2026 annual operating breakeven.

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 deeper dive in our financials and business performance.

Thanks, Vincent, and hello, everyone. Now let me provide a more detailed overview of financial results for the first quarter of 2026.

Please turn to slide number 3. Baozun Group's total net revenues for the first quarter of 2026 increased by 15% year-over-year to 2.4 billion.

Of this total, e-commerce revenue grew by 10% to 1.9 billion, while brand management revenue grew by 39% to 538 million. Breaking down e-commerce revenue by business model: services revenue increased 7% year-over-year to 1.4 billion, while BEC product sales revenue increased by 21% year-over-year to 510 million.

Please turn to slide number 4. From a profitability perspective, gross profits for product sales increased by 33.6% year-over-year to 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 5 for a walkthrough of our opex.

Sales and marketing expenses increased by 93 million to 893 million. This included an increase of 43 million for BEC, which was mainly due to higher spending on creative content and marketing initiatives on Douyin and RED note, consistent with growth in digital marketing revenue.

BBM sales and marketing expenses increased by 56 million, mainly driven by expansion of offline stores and marketing activities in the quarter. Fulfillment costs for the quarter decreased slightly by 1% to 590 million, reflecting our ongoing efforts in cost optimization.

Technology and content expenses increased by 7% to 125 million, primarily due to more revenue contribution from technology monetization. G&A expenses decreased by 4% to 164 million, reflecting our continued focus on cost control and operational efficiency.

Turning to bottom-line items, please refer to slide number 6. During the quarter, our non-GAAP income from operations was 8 million, compared to a non-GAAP loss from operations of 67 million in the same period of last year.

BEC's adjusted non-GAAP income from operations was 30 million, significantly improved from loss of 46 million a year ago. BBM reported a non-GAAP operating loss of 4.9 million, compared with a loss of 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, further 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 BBM segments.

As of March 31st, 2026, our cash, cash equivalents, restricted cash, and short-term investments totaled 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 30 million, a meaningful turnaround from a non-GAAP operating loss of 46 million in the same period last year.

This performance reflects both a return to sustainable growth and a meaningful progress on our broader priority of improving revenue quality and expanding margins. Please turn to slide number 7.

Our product sales revenue grew 21% year-over-year, with broad-based growth across all key categories, benefiting from both deeper and relationships that improved execution on major platforms. It is encouraging to see apparel product sales deliver high double-digit growth as our efforts to expand into non-standard categories began 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 in product sales, but also improvements in gross margin and inventory efficiency.

Now please turn to slide number 8. 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 Six-Star Service Provider, JD Jing Excellence Partner, Douyin Diamond Service Provider, Tencent Qianyu Certified Excellent Partner, and RED note E-commerce Operation Partner, reflecting our expanding ability to activate brands across an increasingly complex omnichannel 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 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. Lastly, we continue to focus on strengthening our bottom line.

To support this, we are rolling out the 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 quarterly non-GAAP operating income from a loss of 46 million to a profit of 30 million is an early and a tangible signal of this progress.

Multiple AI-powered tools have already been deployed across daily operations, and 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 margin quality within this business.

Now I'll pass to Ken for an update on Baozun Brand Management.

Thank you, Junhua, and hello, everyone. Please turn to slide number 9 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 Gap delivering its second consecutive breakeven 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 omnichannel capabilities and 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 channel for Gap during the quarter. Merchandising: our ability to blend 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 tailor-made assortment, an increasingly important driver of online growth. Underpinning both is improved internal alignment.

Our merchandising, design, and product development teams have operated in close coordination for several quarters, translating into tighter supply chain execution, stronger vendor relationships, and more consistent cost management. Marketing: our Q1 campaign strategy reflected a disciplined seasonal sequence.

During Chinese New Year, we activated our Peking Opera collaboration, a new edition of classical [unclear], 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, Flowing 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 a standout performer during the quarter. Channels: following the successful launch of new stores featuring enhanced visual merchandising and an upgraded store image in the fourth quarter, we remodeled and upgraded two additional stores in Beijing Flora Village and Sun Hills in Q1.

We also combined the charm of traditional Chinese aesthetics with contemporary culture in our newly launched flagship store at Taiyuan Zhonglou Street, 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 breakeven 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.

Thank you. Hi, management.

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

Thank you.

The major driver for BBM growth in first quarter is from Gap, and 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 first quarter, we achieved 39%, and in the coming quarters, we are confident to deliver the 20s increase continuously.

Thank you.

Thanks, management, for taking my question. My question is mostly related to consumption sentiment and the June 18th.

Would management share your observation on the current consumption sentiment and the June 18th 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.

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 our first quarter, and we foreseeing 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 618 campaign. We are looking forward to also foreseeing a strong finish of 618 this time.

Thank you.

For Gap's margin, our objective is still to keep a relatively stable gross margin during the year, but try to increase a scale effect through both our 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 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, also some more words 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, and also contributing more growth to the total business. We can expect the margin trend will be improve in the coming quarters.

That is what we are expected. Also along with synergy in between BEC and BBM, this give us more opportunities working with our existing brands in BEC portfolio, which can give us more potentials to generate more margin.

That is also a good thing for general margin trend. Thank you.

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 rate across different e-commerce platforms converge, what new trends are emerging in brand marketing budget allocation across different channels, and what impact does this have on the company's service pricing and 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.

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, they are maintaining a relatively the same CM/RTR rate. We don't have to see any significant kind of shiftment or movement about the budget allocation.

In terms of the spending, the most of brands are switching a little bit from the traditional performance marketing to the content-driven platform, like RED note, like seeding platform, like creating a lot of creative content 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 a emotional 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 impact does our company as a service provider which has the bargaining power is we can provide a end-to-end solutions for all those brands in terms of content creating and the performance marketing, and 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 RED note, to RED cat, and then to back to the CPS, etc. We can leverage from the omnichannel perspective to use their money wisely.

Thank you. Hi,

Vincent here. Let me talk about the brand acquisition thought processes.

The letter is written by me, not AI, I can clearly remember this sentence, yeah. In the past 3 years, I think we have already forged a new model of the development of Baozun.

Right now, in the model, we are going to a next phase, which is the acceleration phase. Talking about the standards when we talk about the new brands to work with, actually the scale is quite important, because we want to accelerate, we want to harvest what we have built in the past.

Talking about the scale, we want a bigger scale opportunities. Category-wise, we of course focus on fashion apparel, which we can utilize the experiences we got from the Gap operation process.

That is a category. Also we want the new opportunities to bring us profit immediately, because we think right now a lot of opportunities emerges in the market.

We are in a very good position in talking with this kind of potential opportunities. Because 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. Because in the past, 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 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, we will be very unique and valuable to all the potential brands within the BEC portfolio and outside brands. Our position is so good, we can have good opportunities.

Our standard will be very high, yeah. That is what we say, we will be very cautious.

Thank you.

Thank you.

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 sales.

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 brand management business respectively leverage our strength to sustain our alpha growth momentum that outperforms the whole market?

Thank you.

Let me answer your first question and first half of the second question. In terms of the AI, basically we are leveraging AI mostly focused on our bottom-line efficiency.

We know that we have a lot of AI agents which can do automatically to a lot of job in terms of the saving human powers. Right now we have a dedicated team in Baozun e-commerce service segment to really just leverage a lot of AI technology like large-scale mode and AI agents to increasingly our efficiency like digital assets 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 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 GEO-kind 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 at the end of next year.

Thank you. The second half of the second question is, in terms of the first 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're 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 the beginning of the May, we really just see a big growth compared to the last year in the beginning of a 618 campaign. Today is also the first wave of the 618 campaign.

We're forward to see that 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 our alpha growth momentum with a very high growth rate. 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 merchandising plan.

For BBM, because first we have Gap, target mass market with attractive price range, and we also have Hunter, Sweaty Betty, which target different market segments. I think 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.

After 3 years, we have already deep understanding of online, offline channels, our faster reaction to the market changes. We also built up strong supply chain of knitwear, woven, and denim.

We also have a proved ability in MMC model. All of this 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.

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 month's 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 sports and outdoor still maintain the leadership in terms of the growth of online categories, and the premium and luxury is follow-up with sports outdoor. FMCG they maintain the similar kind of the growth rate compared to last year.

Consider about we just after the Queen's Day, FMCG, especially the cosmetics category, they already just digested too much of the campaign, they need to just wait a little bit for several months, maybe one or two quarters until the Double 11 coming this year. The consumer electronics, yes, especially for home appliance and the electrical 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 fashion apparel category still taking the lead, followed up with FMCG and consumer electronics.

Thank you. For recently months sales performance, Catherine, do you want to share some kind of?

Thank you for your question. I think, as you see, that we have done quite good for the first quarter of 2026, and we are now quite optimistic [unclear] several recent months' 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, 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.