Alibaba misses first-quarter revenue estimates as shoppers remain wary
China’s faltering economic recovery saps consumer confidence and spending power
15 August 2024 - 15:54
byDeborah Mary Sophia and Casey Hall
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A man walks past a logo of Alibaba Group at its office building in Beijing on August 9 2021. File Picture: REUTERS/Tingshu Wang
Shanghai — Alibaba Group Holding missed market expectations for first-quarter revenue on Thursday as the company’s domestic e-commerce sales came under pressure from cautious spending by Chinese consumers in a faltering economy.
US-listed shares of the company fell about 4% in pre-market trading.
A halting economic recovery in China coupled with a persistently weak property market and high job insecurity levels have sapped consumer confidence and spending power in the world’s second-biggest, hitting global firms across the board.
Alibaba is also grappling with stiff competition from rivals including JD.com and discount-focused retail platforms such as PDD Holdings’ Pinduoduo and ByteDance-owned Douyin.
Alibaba reported revenue of ¥243.24bn (about $33.98bn) for the quarter ended June 30, compared with analysts’ average estimate of ¥249.05bn, according to LSEG data.
Revenue at the firm’s domestic e-commerce arm fell 1% even as the number of buyers and their purchase frequency increased order growth by more than 10%.
Chinese e-commerce giants have had to resort to heavy discounting and promotions to attract shoppers, a move that is pressuring margins across the retail sector.
In June, sales at China’s midyear e-commerce sales festival fell for the first time ever according to third-party estimates, despite major platforms’ efforts to dole out offers for an extended period to woo consumers.
Alibaba executives have maintained in recent quarters that increased purchasing and the introduction of new tools for merchants will increase advertising and customer management revenue to the platform.
Alibaba in March 2023 announced the biggest shake-up in the company’s history, splitting into six units and sharpening its focus on its core businesses, including domestic e-commerce.
Helped by the company’s investments to expand its global presence and growing demand around the world for lower-priced goods from China, Alibaba’s international e-commerce unit saw a 32% rise in revenue to ¥29.3bn.
Revenue from Alibaba’s cloud segment grew 6% to ¥26.55bn, accelerating from the 3% growth seen in the prior quarter, thanks to an uptick in public cloud adoption and strong demand for AI-related products.
The company has moved to reduce low-margin project-based contracts and has said a scale-up in its cloud infrastructure has been helping it cut prices across its cloud products.
Net income attributable to ordinary shareholders in the quarter was ¥24.27bn, down from ¥34.33bn a year earlier.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Alibaba misses first-quarter revenue estimates as shoppers remain wary
China’s faltering economic recovery saps consumer confidence and spending power
Shanghai — Alibaba Group Holding missed market expectations for first-quarter revenue on Thursday as the company’s domestic e-commerce sales came under pressure from cautious spending by Chinese consumers in a faltering economy.
US-listed shares of the company fell about 4% in pre-market trading.
A halting economic recovery in China coupled with a persistently weak property market and high job insecurity levels have sapped consumer confidence and spending power in the world’s second-biggest, hitting global firms across the board.
Alibaba is also grappling with stiff competition from rivals including JD.com and discount-focused retail platforms such as PDD Holdings’ Pinduoduo and ByteDance-owned Douyin.
Alibaba reported revenue of ¥243.24bn (about $33.98bn) for the quarter ended June 30, compared with analysts’ average estimate of ¥249.05bn, according to LSEG data.
Revenue at the firm’s domestic e-commerce arm fell 1% even as the number of buyers and their purchase frequency increased order growth by more than 10%.
Chinese e-commerce giants have had to resort to heavy discounting and promotions to attract shoppers, a move that is pressuring margins across the retail sector.
In June, sales at China’s midyear e-commerce sales festival fell for the first time ever according to third-party estimates, despite major platforms’ efforts to dole out offers for an extended period to woo consumers.
Alibaba executives have maintained in recent quarters that increased purchasing and the introduction of new tools for merchants will increase advertising and customer management revenue to the platform.
Alibaba in March 2023 announced the biggest shake-up in the company’s history, splitting into six units and sharpening its focus on its core businesses, including domestic e-commerce.
Helped by the company’s investments to expand its global presence and growing demand around the world for lower-priced goods from China, Alibaba’s international e-commerce unit saw a 32% rise in revenue to ¥29.3bn.
Revenue from Alibaba’s cloud segment grew 6% to ¥26.55bn, accelerating from the 3% growth seen in the prior quarter, thanks to an uptick in public cloud adoption and strong demand for AI-related products.
The company has moved to reduce low-margin project-based contracts and has said a scale-up in its cloud infrastructure has been helping it cut prices across its cloud products.
Net income attributable to ordinary shareholders in the quarter was ¥24.27bn, down from ¥34.33bn a year earlier.
Reuters
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