What happened

Shares of Baozun (NASDAQ:BZUN) were getting hammered today as the Chinese e-commerce company reported disappointing results in its third-quarter earnings report, showing that growth essentially ground to a halt and it reported its first adjusted quarterly loss as a public company.

As a result, the stock was down 11.5% as of 11:16 a.m. ET.

The word "Baozun" made up of its customers' logos.

Image source: Baozun.

So what

Baozun reported revenue growth of just 3.8% in the quarter to $294.7 million, which was short of estimates at $303.9 million. The company cited a number of headwinds for the slow growth, including a weaker macro environment and softer consumer sentiment. Other Chinese e-commerce companies, like Alibaba, also reported slower top-line growth, but Baozun's results were much weaker than its peers.

The company has been transitioning from first-party product revenue to third-party service revenue, which offers a partial explanation for the sluggish growth. Product revenue in the quarter was down 12.9% to $108.6 million, due in part to declining sales in the personal care products and appliance categories. Services revenue was up 16.9% to $186.1 million, though that was primarily due to two acquisitions. 

An account receivables write-down of roughly $12 million helped push the company to its first quarterly loss with an adjusted per-share loss of $0.19, which was much worse than estimates of a per-share profit of $0.01.

CEO Vincent Qiu said, "We witnessed a number of short-term headwinds for the industry during the quarter that resulted in a weaker macro environment and softer consumption sentiment."

Now what

Baozun didn't offer guidance in the earnings report, but the company did announce a new share repurchase program worth $50 million, or about 5% of its market cap today. That could be interpreted as a sign management thinks the stock is cheap, but the results portray a company in disarray. 

Baozun was once a promising growth stock, but it's hard to call it that after top-line growth has slipped to low single digits and it's not currently profitable. These headwinds could prove temporary, but the results offer little reason to be confident in the company's ability to turn itself around.

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