Chinese e-commerce company Baozun (Nasdaq: BZUN) will be reporting its first quarter fiscal 2019 results on May 29, Wednesday, before the US market opens. On average, analysts estimate Baozun to earn $0.12 per share on revenue of $185 million for the quarter ended March 31, 2019. The company’s revenues are expected to grow annually with a year-over-year increase in product sales and service revenue, benefitted by the growth in the brand partners.

Baozun (BZUN) Q1 2019 earnings preview - Gross merchandise value and brand partners trend

Looking back:

For the fourth quarter ended 2018, Baozun reported earnings per ADS of $0.50 on revenue of $320.3 million. Earnings and revenues missed consensus estimates despite registering a year-over-year growth. Gross Merchandise Volume (GMV) grew 42.8% to RMB12,037.7 million. Brand partners increased to 185 from 152 at the end of December 2017.

Outlook:

For the first quarter of 2019, the Shanghai, China-based retailer had projected revenue to be between RMB1.25 billion and RMB1.30 billion, with services revenue to increase by over 45% annully. GMV is projected to grow by 55% to 60% year-over-year.

For fiscal year 2019, the company expects revenues to increase to over RMB7.2 billion and GMV is touted to grow between 40% to 50% year-over-year.

Strategies:

During first quarter of 2019, Baozun reorganized its business structure to add focus on e-commerce, supply chain logistics, and technology innovation. In e-commerce, the company started focusing more on apparel, cosmetics, FMCG, and mother and baby categories.

Baozun expanded its warehouse capacities in 2018 and also expanded the cooperation with third parties to broaden its logistics network. The company plans to further strengthen its value-added services to brand partners.

On the technology and innovation side, Baozun expects to harvest some of the innovations in 2019 while continuing to optimize product offerings, pipeline, and monetization strategies.

Retail sales:

According to National Bureau of Statistics of China, the national online retail sales of goods and services increased 15.3% year-on-year during the first quarter of 2019. The online retail sales of physical goods increased 21%, accounting for 18.2% of the total retail sales of consumer goods. Of the online retail sales of physical goods, food, clothing and using goods went up by 24.6%, 19.1% and 21.3%, respectively.

Also read: Baozun (BZUN) Q4 2018 earnings call transcript

Already the largest e-commerce market in the world by far, China is poised to become the largest retail market in the world in 2019, edging out the United States.

Baozun generally experiences a lower level of sales activity in the first quarter due to the Chinese New Year holiday, during which consumers generally spend less both online and offline.

Stock price:

Shares of Baozun, which plunged to a 52-week low ($27.81) in early January, stayed flat at $36.63 on Friday. The stock had advanced 25% since the beginning of 2019, while it dropped 37% in the past 52 weeks.

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