Sandrine Zerbib: Okay. So Hunter, what’s the rationale to add Hunter to the portfolio? So, second brand in the portfolio. The first reason is that it really fits the philosophy of how we want to build this portfolio, because Hunter is a premium lifestyle brands by essence, I would say, or in essence. It has a strong DNA. It has very iconic products, that’s a second reason. On top of this, it’s in a category which is like urban outdoor, which has a lot of momentum, and especially after COVID, we have seen a lot of growth. Then to add to this, we know the brand. We know the brand, because we’ve been its e-commerce partner for a couple of years. We therefore saw it growing very fast in the last two years, and also being in China, at least a profitable brand.
And all these are actually positive reasons to go this direction. On top of this, also among the criteria which are important for us, it’s a brand that sells strongly online, actually, for the time being in China, it’s only online. So online potential is very strong. And it’s a brand that we believe that we can do China-for-China to expand the product portfolio in an efficient way. So, all this combined together made us think that it’s actually a good brand for our portfolio. And in addition to this, this time, we can have some ownership over the brand, which makes a big difference versus a pure license. And then in terms of financial impact, at the beginning, it’s relatively marginal. We plan to grow this brand significantly in Greater China, but also in Southeast Asia, because we have the IP in Southeast Asia as well.
And the good thing is that, as we said, it’s a brand which is operationally positive from the very beginning. So of course, at the beginning, we will have to add some royalties. But overall, it’s the brand which is operationally positive from day one, which is not a turnaround like we have experienced previously.
Sophie Huang: Okay. Thank you. Very clear.
Operator: Thank you. [Operator Instructions] And the next question comes from [Janet Young] (ph) with Bank of America.
Unidentified Analyst: Hi. Thank you, Vincent, Arthur, Sandrine, Wendy [indiscernible]. My question is regarding the product sales, since you have mentioned that the optimizing — optimization of product distribution model and time portfolio has put some pressure — downward pressure on our product sales. It has been going on for a while. Can you give us an update on the progress? And looking into the future, do you — how long do you think you will last? And what product categories still have much room to improve? And can you give a sense of how much further impact it could potentially have on the product sales and margins? Thank you.
Arthur Yu: Okay. Thank you, Jenny. And I think, as I mentioned in the earlier call, our focus of the BEC business is on quality and on the operating cash flow. And the rationalization has made a good contribution to our portfolio and the quality of the portfolio has enhanced. Therefore, you see the results in quarter two, we have a fairly healthy positive cash inflow of RMB450 million, which is a very good result, and a lot of this come down to rationalization of product sales portfolio. As you may remember, we started this journey about a year ago and now is coming to the point that our product sales portfolio has significantly improved. So, we will continue our journey in terms of improving the quality, and we will add on new good quality product sales like the sole distributor model I talked about earlier to our product sales portfolio. We think from quarter four this year, you will see a positive trend in terms of the growth from this area.
Unidentified Analyst: Thank you very much.
Arthur Yu: Okay. Thank you.
Operator: Thank you. And the next question comes from Andre Chang with JPMorgan.
Andre Chang: Thank you, management, for taking my question. I have a follow-up question on Hunter, the deal and the company’s strategy on BBM going forward. So, it’s a relatively short interval from us doing the deal of Gap and now the deal with Hunter. And we also talk about like potential more cooperation with the Authentic Brands Group. So, can management help us understand how we consider — how far we can go based on our current financial resources and how do we think about the opportunity cost? Say, we are doing several deals in a short period of time, what about the potential going forward? And what’s the reason for us to have the confidence to accelerate progress on the BBM front? Thank you.
Arthur Yu: Okay. Go ahead, Sandrine.
Sandrine Zerbib: Do you want to start off — no. Okay. Well, I’ll go ahead and I’ll let you complement if you feel, especially on the resource question. Actually, we started working on BBM even before the Gap deal. So, we’ve been looking and selecting brands very carefully and we continue to be extremely selective. So, for one, Hunter, we have looked at dozens and dozens of brands. So, we’re not rushing. In any manner, we’re not rushing. However, going forward, what we want is indeed to build a portfolio that brings significant revenue and profit and value to Baozun Group. So, we will continue to be extremely selective, but we will continue to look at the best opportunities, especially when they fit the portfolio philosophy so well.
When they are positive operationally from the beginning, have a marginal impact financially and enable us to also create value by acquiring ownership and not only being in the license mode. So that’s the way I would summarize, but I’m sure that Arthur wants to complement on this.
