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InvestmentsAlibaba slashes sales outlook as competition bites, demand slows By Reuters

Alibaba slashes sales outlook as competition bites, demand slows By Reuters

© Reuters. FILE PHOTO: The emblem of Alibaba Group is lit up at its workplace constructing in Beijing, China August 9, 2021. REUTERS/Tingshu Wang/File Photo

By Josh Horwitz and Subrat Patnaik

(Reuters) -Chinese e-commerce big Alibaba (NYSE:) Group Holding Ltd slashed its forecast for annual income development on elevated competition and a regulatory crackdown, sending its inventory tumbling 11%.

Alibaba now expects income for the 12 months ending in March to rise between 20% and 23%, the slowest tempo since its 2014 inventory market debut and down from a May forecast of 29.5% development. The firm additionally undershot expectations for earnings per share within the second quarter.

Chinese consumers have change into extra cautious about spending amid coronavirus outbreaks and that, mixed with provide disruptions, contributed to slower development for China’s economic system within the quarter.

“These economic headwinds, coupled by intensifying market competition also affected our core commerce business in China,” Alibaba CEO Daniel Zhang mentioned on an earnings name, including that demand for attire and basic merchandise had been notably affected.

But analysts additionally famous that whereas Alibaba had been hit by slower-than-expected development in demand for vogue and equipment, its rivals had carried out significantly better in attire sales.

At the identical time, massive e-commerce corporations in China are having to deal with the growth into e-commerce from the likes of brief video apps Kuaishou and ByteDance’s Douyin and which at the moment are benefiting from unprecedented regulatory efforts to make sure there’s extra competition within the market.

“We see intensified competition further eating into Alibaba’s market share and widening the difference in revenue growth of Alibaba vs. peers,” Daiwa Capital Markets analysts mentioned in a analysis notice.

JD (NASDAQ:).com Inc additionally reported quarterly outcomes https://www.reuters.com/world/china/chinas-jdcom-reports-25-jump-quarterly-revenue-2021-11-18 on Thursday however exceeded market expectations, sending its shares up 6%.

For the quarter ended Sept. 30, Alibaba earned 11.20 yuan per share on an adjusted foundation, lacking a median estimate of 12.36 yuan.

Revenue climbed 29%, the smallest rise in six quarters, to 200.7 billion yuan ($31.4 billion), just below a Refintiv consensus estimate.

Alibaba mentioned it had recorded single-digit development for bodily items gross merchandise worth, a key on-line retailing metric for the overall worth of merchandise bought via a market, although it didn’t present extra particulars or a comparability with earlier quarters.

Including Thursday’s losses, Alibaba’s inventory has misplaced an enormous 38% to date this 12 months, valuing the corporate at about $390 billion. Its shares in Hong Kong had been down 10.6% on Friday.

Alibaba’s fintech affiliate Ant Group recorded a quarterly revenue of about 19.7 billion yuan for the quarter ended June, up 39%. Alibaba information its revenue from Ant one quarter in arrears.

($1 = 6.3838 )

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