Chinese e-commerce giant Alibaba Group Holding posted a low single-digit rise in quarterly revenue on Thursday, slightly below expectations, as Covid-19 curbs and a worsening economic outlook stifled consumer spending.
Retail spending in China has sagged this year alongside the government’s strict zero-Covid policies that have led to frequent snap lockdowns and hurt economic activity.
Revenue grew 3 per cent to US$28.96 billion in the three months ended September 30, compared with a Refinitiv consensus estimate of $29.2 billion drawn from 25 analysts.
Customer management revenue, which tracks how much money merchants spend on Alibaba, fell 7 per cent annually, marking the steepest-ever decline for the segment that typically accounts for 30 per cent of the company’s total revenue.
CEO Daniel Zhang said on an earnings call that consumption demand was weak, and the resurgence of Covid-19 “affected one area after another, resulting in abnormal or suspended logistics service in different places”.
It reported net loss attributable to shareholders of $2.9 billion in the quarter.
Excluding one-off items, Alibaba earned $1.8 per American Depository Share, beating estimates of $1.63 yuan per share profit.
US-listed shares in Alibaba were trading 2 per cent lower before the bell.
The current quarter has also been gloomy. Last week, the firm did not disclose its “Singles Day” shopping festival sales tally for the first time, saying only that the results were in line with last year, which was its lowest ever growth.
Speaking to investors on the call, Zhang said that roughly 15 per cent of places in China experienced abnormal logistics and delivery services due to Covid-19 protocols, which affected performance over the shopping festival. The unusually warm weather for the season also affected apparel purchases.
Alibaba’s financial affiliate, Ant Group, is still undergoing a government-mandated revamp and has yet to revive plans for its public market debut after its $37 billion attempt at a dual listing was derailed at the last minute in late 2020.
Ant, which is 33 per cent owned by Alibaba, logged a profit of $1.08 billion for the quarter ending in June, down 63.2 per cent year-on-year. Alibaba reports its profit from Ant group one quarter in arrears.
Alibaba said it will not complete its primary conversion of shares to the Hong Kong Stock Exchange by the end of 2022 as originally announced in August.
- Reporting by Eva Mathews in Bengaluru and Josh Horwitz in Shanghai; Editing by Edwina Gibbs, Elaine Hardcastle and Emelia Sithole-Matarise, of Reuters.
