Baozun Inc.

Good morning, ladies and gentlemen, and thank you for standing by for Baozhen's fourth quarter and fiscal year 2022 earnings conference call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be question and answer sessions. As a reminder, today's conference call is being recorded. I'll now turn the meeting over to your host for today's call, Ms. Wendy Sun. Senior Director of Corporate Development and Investor Relations of Baozhen. Please proceed, Wendy.

Thank you, operator. Hello, everyone, and thank you for joining us today. Our fourth quarter and full year 2022 earnings release was distributed earlier and is available on our IR website at ir.baozhen.com, as well as on Globe Newswire services. We have also posted a PowerPoint presentation that accompanies our comments to the same IR website, where they're available for download. On the call today from Baozhen, we have Mr. Winston Chu, Chairman and Chief Executive Officer, Mr. Arthur Yu, Chief Financial Officer, and Ms. Sandrine Zerbib, President of Baozhen Brand Management. Ms. Chu will review the business strategy and company highlights, followed by Ms. Yu, who will discuss financials and share more regarding the business development of Baozhen E-commerce. We will then pass the call to Ms. Sun Zhui to address more about Baozhen brand management. They will all be available to answer your questions during the Q&A session that follows. Before we begin, I would like to remind you that this conference call contains forward-looking statements within the meaning of the U.S. Security Exchange Act of 1934 and the US Private Securities Allegation Reform Act of 1995. These forward-looking statements can be identified by terminations such as will, expect, anticipate, future, intent, plan, believe, estimate, confident, potential, ongoing, target, looking forward, or other similar expressions. These forward-looking statements are based upon management current expectations and current market and operation conditions and relates to events that involve known or unknown risks, uncertainties, and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results to differ materially from those in the forward-looking statements. Further information regarding these and other risks and certainties of factors is included in the company's filings with the U.S. SEC and in announcements, notices, or other documents published on the website of Hong Kong Stock Exchange. All information provided in this presentation is of the date and is based on the assumptions that the company believes to be reasonable as of today. The company does not undertake any obligation to update any forward-looking statement except as required under applicable law. Finally, please note that, unless otherwise stated, all figures mentioned during this conference call are in RMB with appropriate rounding. It is now my pleasure to introduce our Chairman and Chief Executive Officer, Mr. Vincent Chu. Vincent, please go ahead.

Thank you, Wendy. Hello, everyone, and thank you all for your time. The tough environment persisted in the fourth quarter, making the entire 2022 a challenging year, especially ending the COVID zero policy resulted in a significant outbreak of COVID cases in late 2022. That led to a nationwide disruption in supply chain and logistics, along with the worst ever consumption sentiment. We witnessed a general decline in sales across different categories, channels, and cities. Reflecting the lower consumer spending, our revenue declined approximately 20% year-over-year in the fourth quarter. However, we are glad that despite the weaker top line, we achieved a higher operating profit and recorded positive cash flow for the fourth quarter. We were able to achieve this under such a difficult and unpredictable environment by making sure operations were uninterrupted, relying on our battle-tested technology and regional service centers. In addition, our reform of employee compensation and incentive programs also generated higher productivity. As a result, we were able to improve the quality of our earnings Indeed, COVID in the past three years has had a dramatic impact on our people's daily life. Just like long COVID, it also has a long-term impact on consumer confidence. While we observed a modest rise in China's retail industry this February, we believe a full recovery in consumer sentiment will take time. In spite of this difficult environment, It is encouraging to see that many of our brand partners have remained committed to invest in China for the long term, especially with regards to technology, digitalization, and local marketing to serve Chinese consumers in local relevant ways. Looking forward, we see a rapid merging of online and offline commerce, which represents a huge opportunity. We believe it is our expertise in technology for the service of brand operations that fundamentally defines who Baozhun is. As shown on slide number three, adhering to our vision of technology empowers the future success. Our technology and operating platform serves as a unified and solid foundation that empowers or broadens the scope of service and markets. Baozhun now has three major business lines, Baldwin E-commerce, BEC, Baldwin Brand Management, BBM, and Baldwin International, BZI. Baldwin E-commerce or BEC remains our core business. In recent years, in addition to leading the way and helping brand partners accelerate their digital transformation, we continue to improve our value-added services. upgrade BEC's integrated operating platforms and the middle office systems for better accountability, efficiency, and flexibility. We also diversed our category mix, made complimentary business acquisitions, and invested in our people. I would like to highlight one person in particular, Ah-Se-Yu, who was instrumental in every aspect of these advancements to make our e-commerce business more resilient and balanced. Naturally, as we expand our scope and markets, I'm thankful to Arthur for accepting the additional role of President of BEC in addition to his role as Corp CFO. For additional BEC highlights and objectives, I will let Arthur discuss later in the call. Baozhen Brand Management, or BBM, is our focus for growth and profitability over the next three years and beyond. Consumers now prefer brands powered by China for China products and communications, offering China tailor-made updates and iterations. Clearly, in addition to e-commerce and digital business solutions, brands need brand management powered by technology and digitalization. As you may recall, on February the 1st of this year, we completed the acquisition of Gap Shanghai. Gap's operations in mainland Hong Kong and Macau, China, are now a part of Bosun Brand Management, led by Sandrine Zerbib, president of BBM, and Wen Xiao, the newly appointed CEO of Gap Great China. With a core team of functional experts who understand both China consumers and local market dynamics, we have confidence in our China for China strategy and the digitalization initiatives for GAAP Great China. For BBM's highlights and objectives, I will let Sandrine discuss later in the call. Baozhen International or BZI is a longer-term opportunity that we will patiently invest in and explore. We have a natural opportunity to replicate our China e-commerce success. We work with brand partners to co-develop localization. Localization is a term combining global and local, and it refers to our philosophy that while we pursue global opportunities, we will rely on local expertise and resources. Where necessary, we will form local strategic alliances We are initiating some trials in Southeast Asia and Europe. As a sneak peek, in Southeast Asia, we have already established the region's headquarters in Singapore and operations in six markets in the region. With our technology, IT infrastructure, and data advantage, brands that wish to expand into Southeast Asia are excited to engage with us. This February 2023, we made an important minority interest investments along with a board seat in Branded Lifestyle Asia Limited. It is a leading premium fashion retailer with a strong brand portfolio that includes Blue Dog and Roots and a proven track record in South Korea and Taiwan. Phone Group, a global leader in the consumer goods supply chain, is a majority shareholder. We have also entered into a strategic cooperation agreement to become the preferred strategic service provider for the e-commerce operations in Asia outside of the PRC. Baozhen and the phone group are setting up a strategic technology committee to jointly develop a enterprise-wide technology strategy covering proposals for ERP technologies, systems, and platforms suitable for digital transformation. We're excited about overseas opportunities. Although we don't aim to immediately generate meaningful revenue from Baozhen International in the next three years, I'm adopting an entrepreneurial mindset for international expansion. I will personally chair the development of Baozhen International in a technology-rooted approach. As we expand our scope, we now have increased our addressable market, and the revenue sources. Clearly, BEC represents our existing China e-commerce revenue stream, while BBM and BZI are incremental opportunities providing tangible growth path over the next five years. With greater business diversification and expanded leadership, we are confident in our roadmap. Let me now pass the call over to Arthur. Thank you.