Baozun (NASDAQ: BZUN, 09991.HK) failed to achieve profitability in the first half of this year, with cumulative losses exceeding 1.4 billion yuan over the past four and a half years.

Behind the consecutive annual losses lies the company's persistently high sales expenses. Against the backdrop of structural transformation in the e-commerce industry and traditional models facing disruption, the company's e-commerce segment has shown lackluster growth. E-commerce brand management, positioned as the company's key new business initiative, remains unable to carry the revenue burden despite partnerships with brands like GAP and Hunter.

Further analysis reveals that in China's intensely competitive fast fashion market, GAP has yet to establish a price competitive advantage, while Hunter's limited store count constrains its revenue contribution to the company.

**High Sales Expenses and Sluggish E-commerce Growth**

Baozun was established in 2007, initially starting as an e-commerce service provider. Facing structural changes in the e-commerce industry, the company has actively pursued strategic transformation in recent years, reshaping its traditional e-commerce business while focusing on developing new brand management operations. Currently, the company operates three core business segments: e-commerce, brand management, and international business.

The 2025 interim report shows Baozun achieved operating revenue of 4.617 billion yuan, up 5.63% year-over-year, while net loss attributable to shareholders was 97.04 million yuan, representing a narrowed loss compared to the previous year.

The company has been experiencing consecutive losses since 2021. From 2021 to 2024, net losses totaled 212 million yuan, 653 million yuan, 278 million yuan, and 185 million yuan respectively. Calculations show the company's cumulative losses over four and a half years reached approximately 1.425 billion yuan.

Persistently high sales expenses are the primary driver of consecutive annual losses. From 2021 to 2024, sales and marketing expenses were 2.55 billion yuan, 2.674 billion yuan, 2.829 billion yuan, and 3.381 billion yuan respectively, showing year-over-year increases.

In the first half of 2025, Baozun's sales and marketing expenses reached 1.738 billion yuan, up 13% year-over-year, primarily due to increased spending on brand management business marketing activities and offline store expansion. Calculations show the company's total sales and marketing expenses over four and a half years amounted to 13.172 billion yuan. Administrative and management expenses also increased, rising 12.6% year-over-year to 395 million yuan in the first half.

By business segment, the company's e-commerce division primarily encompasses merchandise distribution, online store operations, warehouse management services, digital marketing, and IT services. As the company's foundation, the e-commerce segment contributed over 80% of revenue in the first half of this year.

In recent years, with the rise of new channels such as social commerce and live-streaming e-commerce, the e-commerce industry has experienced structural changes in channel landscape and operational entities, impacting traditional e-commerce models and pressuring traditional e-commerce service providers like Baozun.

To address industry changes, the company expanded its channel coverage by acquiring Douyin e-commerce service provider Luoke Xun in 2024 to enhance omnichannel service capabilities in live-streaming commerce. However, the sluggish growth trend in the company's e-commerce segment has not been reversed.

In the first half of 2025, the e-commerce segment generated revenue of 3.909 billion yuan, up 2.46% year-over-year. Growth rates for the e-commerce segment in the first half of 2023 and 2024 were 10.47% and 2.66% respectively. Moreover, the e-commerce segment posted operating losses, with adjusted operating profit of negative 4.679 million yuan compared to 71.97 million yuan in the same period last year.

**Expanding Brand Management Focus as GAP Faces Difficult Market Breakthrough**

Brand management represents a key focus of Baozun's strategic transformation, with the approach centered on the apparel industry as an entry point, acquiring operational rights for international brands in China through acquisitions.

Specifically, in early 2023, the company completed acquisition of American fast fashion brand GAP's Greater China business operations. Later that year, it obtained operational rights for British brand Hunter in Greater China and 51% intellectual property rights in Southeast Asia.

As the core of the company's brand management segment, GAP has undergone a series of adjustments and optimizations in recent years. The company has worked to restore the brand's premium pricing power by controlling discount levels while actively promoting GAP's offline channel expansion.

However, analysts note that despite Baozun's adjustments to GAP's discount system, promotional sales remain common practice both in offline stores and online platforms, indicating continued dependence on promotional activities.

Meanwhile, competition in China's fast fashion market continues to intensify. Domestic brands like UR have successfully established footholds and captured market share, while international brands such as Uniqlo, Zara, and H&M continue to deepen their presence in the Chinese market.

Despite this, China's market attractiveness remains strong, with foreign fast fashion brands like Forever 21 still attempting market entry. Facing numerous competitors, GAP has yet to establish clear pricing advantages. While fast fashion's core consumer base is highly price-sensitive, GAP's product pricing lacks competitiveness compared to brands like Uniqlo and H&M.

Regarding offline channels, Baozun planned to open 40 new GAP stores in China this year. Notably, as of June 30, 2025, GAP operated 156 stores in the Chinese market, adding only 4 new locations in the first half, falling significantly short of the full-year target.

Beyond GAP, Baozun is accelerating deployment of another brand, Hunter. In May this year, Hunter simultaneously opened flagship stores in Shanghai's Zhang Garden, Hangzhou's MixC, and Beijing's Sanlitun. However, Hunter's presence in the Chinese market remains limited, with store count in single digits.

From a performance perspective, the brand management segment containing GAP and Hunter achieved revenue of 786 million yuan in the first half, up 29.28% year-over-year. While this segment achieved double-digit growth, it represents less than 20% of total company revenue. Furthermore, the brand management segment's adjusted operating profit was negative 56.064 million yuan in the first half, remaining unprofitable.

Since the second half of 2025, Baozun has further increased investment in its brand management segment. In July this year, multiple media outlets reported the company completed acquisition of operational rights for British yoga wear brand Sweaty Betty's China business, with subsequent Chinese operations to be managed by the team responsible for GAP and Hunter.

Sweaty Betty, established in 1998, focuses on women's activewear with products including yoga wear and athletic leggings, often called the "British lululemon." However, the brand has faced development challenges in recent years, with revenue declining for consecutive years in 2023 and 2024.

Sweaty Betty's expansion in the Chinese market has also encountered difficulties. The brand entered China in 2021 but stopped updating its official Weibo and WeChat accounts after approximately one year of operation. In March 2023, Sweaty Betty closed its only independent store in mainland China. Currently, the brand maintains sales only through online channels such as Tmall and Xiaohongshu.

Given most domestic consumers' limited awareness of Sweaty Betty, whether it can successfully open new opportunities leveraging Baozun's existing team operational experience remains subject to market validation.