Baozun’s shares drop after Q4 results miss estimates

Baozun Inc. (BZUN) missed market estimates on both revenue and earnings for the fourth quarter of 2018, causing shares to fall 4.4% in premarket hours on Wednesday.

Net revenues grew 40.7% year-over-year to RMB2,201.9 million, or $320.3 million, but came below the consensus estimate of $328 million.

Reported net income attributable to ordinary shareholders of Baozun Inc. increased 28.4% year-over-year to RMB188.2 million ($27.4 million) while adjusted net income grew 27.8% to RMB205.3 million ($29.9 million).

Reported net income attributable to ordinary shareholders of Baozun Inc. per American Depository Share (ADS) was RMB3.17 ($0.46) compared with RMB2.48 for the same period in 2017. Adjusted net income per ADS was RMB3.46 ($0.50) compared with RMB2.72 last year. The adjusted earnings number fell short of the consensus estimate of $0.60 per share.

Product sales revenue rose 24.6% to RMB975.4 million ($141.9 million), helped by the company’s effective marketing campaigns and higher demand for brand partners’ products. Sales growth from existing brand partners and the addition of new brand partners helped drive a 56.7% growth in services revenue to RMB1,226.6 million ($178.4 million).

For the fourth quarter, total Gross Merchandise Volume (GMV) grew 42.8% year-over-year to RMB12,037.7 million. Distribution GMV grew 23.3% to RMB1,118.7 million while non-distribution GMV rose 45.2% to RMB10,919 million.

As of December 31, 2018, Baozun recorded an increase in the number of brand partners to 185 from 152 last year. The number of GMV brand partners increased to 178 from 146 last year. The company invested RMB21 million in technological innovation and productization during the fourth quarter.

For the first quarter of 2019, Baozun expects total net revenues to be RMB1.25 billion to RMB1.30 billion, with services revenue to increase by over 45% on a year-over-year basis. GMV is expected to grow 55-60% year-over-year in the first quarter.

For the full year of 2019, the company expects GMV to grow 40-50% year-over-year and net revenues to grow to over RMB7.2 billion.

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