What happened
Shares of Baozun (BZUN 4.92%) were falling today after the Chinese e-commerce company delivered another disappointing earnings report. Revenue declined again, and it missed the mark on the bottom line.
As of 11:41 a.m. ET, Baozun stock was down 8.1%.
So what
Revenue slipped 7.9% in the quarter to $316.8 million, though that actually beat analyst expectations at $308.8 million. Service revenues, which include handling shipping, marketing, and IT for its clients, rose 7.2% to $213.2 million, while product revenue, or direct e-commerce sales, fell sharply in the quarter, down 29% to $103.6 million.
Total gross merchandise volume jumped 46.8% to $3.38 billion, as a greater share of its business comes from services, which offer a lower take rate than product revenue.
COVID shutdowns across much of China during the quarter hampered its performance, leading to a decline in adjusted operating income from $23.6 million in the quarter to $7.1 million. On the bottom line, it broke even with adjustments, but that was down from an adjusted per-share profit of $0.29 in the quarter a year ago, and it missed estimates at $0.09.
CEO Vincent Qiu said, "In the face of the most challenging quarter due to the strict COVID-19 lockdown in April and May 2022 in many key cities in China, our second-quarter financial results remained solid."
Now what
Much of the Chinese e-commerce sector has underperformed recently due to economic headwinds and concerns about a crackdown from Beijing and even delisting from U.S. exchanges.
Baozun seems to be too small to get scrutiny from the Chinese government, but its consistent revenue declines are at odds with other Chinese e-commerce stocks like Alibaba and JD.com that have continued to grow. Until the company can return to growth, the stock is best avoided.
