Shares of Baozun (BZUN 2.28%) were surging today after the Chinese e-commerce services provider delivered better-than-expected results in its first-quarter earnings report.
As of 1:22 p.m. ET, the stock was up 24.1%.
Baozun reported another decline in revenue in the quarter with sales down 1.8% to $313 million, though services revenue jumped 24.3% to $205.6 million as the company continues to pivot away from first-party sales to higher-margin services. The top-line result was still well ahead of estimates at $283.8 million.
Total gross merchandise volume in the quarter grew 28.4% to $25.6 million, but revenue still declined in its non-distribution business, which has a lower take rate from its distribution business.
On the bottom line, Baozun posted flat adjusted income per share, compared with a per-share profit of $0.13 in the quarter a year ago and estimates for a $0.02-per-share profit.
A strong quarterly report from Chinese e-commerce giant Alibaba Group Holding also may have given Baozun a boost as most of its sales take place on Alibaba's Tmall.
"To date, 2022 has been quite unique, as we are witnessing increasing macro weakness and uncertainties impacting consumer spending sentiment," Baozun CEO Vincent Qiu said in a press release. "In spite of the external challenges, our strategic business development efforts continued to bear fruits with faster brand acquisition, and we further expanded service scope with higher revenue contributions from value-added services and accelerated progress in emerging channels."
Shanghai has been under strict COVID-19 lockdowns since March, impacting shipping speeds, and investors have also been fearful of crackdown on tech stocks by the Chinese government. Against that backdrop, it may not be too disappointing to see the company post break-even bottom-line results on a slight revenue decline. Qiu also said the company had minimized the impact of the COVID lockdowns.
Alibaba's better-than-expected performance could signal that the worst of the crackdown has passed. If Baozun's numbers can start moving in the right direction the stock could have a long way to rebound. It's still down more than 80% from its peak in 2021.