china’s-jd.com-warns-consumer-confidence-will-take-time-to-rebuild

Chinese e-commerce firm JD.com Inc said on Thursday rebuilding consumer confidence would take time after the lifting of strict pandemic-related curbs late last year, as it missed fourth-quarter revenue forecasts.

“The core is the recovery in consumer’s income,” said CEO Xu Lei, adding a recovery in consumption could take a while.

 ​After a brief rise, the company’s U.S.-listed shares turned lower before the market open. Online direct sales revenue in the quarter grew 1% year on year, missing analysts consensus forecast of 4%, according to a research report by Atlantic Equities after the results.

“The softness was primarily due to weakness in electronics and home appliances as a result of Covid disruption as well as softer property market,” the report said.

JD.com’s net income attributable to ordinary shareholders was 3 billion yuan ($431 million) in the three months ended December, versus a net loss of 5.2 billion yuan a year earlier. Revenue rose 7.1% to 295.4 billion yuan, missing the consensus estimate of 296.2 billion yuan, according to Refinitiv data.

The battle in China’s e-commerce market has been fierce in the past few years, and in 2019 PDD Holdings launched a discounting campaign called the “10 billion yuan subsidy”, which was quickly copied by Alibaba Group’s e-commerce platform.

JD.com followed suit this week, as competition grew even more intense with newcomers Douyin, owned by ByteDance, and Tencent-backed Kuaishou.

Jacob Cooke, co-founder and CEO of WPIC Marketing + Technologies, an e-commerce consulting firm based in Beijing, said the subsidy programme was an aggressive investment aimed at increasing users.

“JD.com’s subsidy campaign will attract more users to the platform and boost sales in the short-term,” he said. “However, it will hurt JD.com’s margins and possibly weaken the platform’s image. While PDD markets itself as a budget shopping platform, JD.com has built a strong reputation among first-tier city consumers as a marketplace for higher-end goods.”

China Merchants Securities also said in a recent report that the subsidy programme was likely to lead to margin erosion.

Parts of China remained under strict lockdown for most of the December quarter, with shoppers holding back on spending amid continued economic uncertainty.

On an adjusted basis, JD.com earned 4.81 yuan per American depositary share in the quarter, compared with 2.21 yuan per share a year earlier.

The Beijing-based company said in January it was winding down its e-commerce business in Indonesia and Thailand, where it faced stiff competition from Sea Ltd-owned Shopee.

Last month, peer Alibaba Group Holding Ltd reported higher-than-expected revenue in the December quarter.

4 caviale royal 2 300x300 1

IL PRIMO ECOMMERCE SPECIALIZZATO IN DELIZIE AL TARTUFO E CAVIALE – CAVIAREAT.COM

Leave a Reply