What happened

Shares of Baozun (NASDAQ:BZUN) were pulling back today after the Chinese e-commerce services provider offered disappointing guidance in its second-quarter earnings report. Despite strong results, the outlook for the current quarter was dim enough to drive investors away, and the stock was down 7.5% as of 10:28 a.m. EDT on Friday.

So what

For the second quarter, Baozun's revenue rose 26.3% to $304.6 million, ahead of analyst estimates at $299.1 million. Higher-margin services revenue increased 43.2% to $173.3 million and now makes up a majority of the company's revenue. Gross merchandise volume rose 31.2% to $1.8 billion.

The word Baozun made up of its customers' logos

Image source: Baozun.

Its number of brand partners, which include multinational companies like Philips, Nike (NYSE: NKE), and Microsoft (NASDAQ: MSFT), rose from 212 a year ago to 250.

The strong performance in the services segment led to a surge in profits as adjusted operating income jumped 81.4% to $26.5 million, and adjusted earnings per share rose 72% to $0.34, easily beating expectations at $0.23.

CEO Vincent Qiu summed up the quarter, saying, "Strong recovery in e-commerce, our unique value proposition to brand partners and the tenacity of our team underpinned a solid set of results in the second quarter of 2020, with strong top line growth and remarkably improved profitability."

Now what

Despite the strong second-quarter results, management anticipated a slowdown in the third quarter, calling for revenue growth of 16% to 20%. CFO Robin Lu cited "stronger seasonality and continued macro uncertainties," which was causing the company to be cautious, but Lu also forecast strong adjusted operating-profit growth.

Nonetheless, the revenue forecast seemed to be enough to scare away investors since the expected slowdown comes as e-commerce is booming in China and much of the world during the pandemic.



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