JD.com revenue rises on Singles’ Day bargains

Bloomberg

JD.com Inc. posted fourth-quarter revenue ahead of estimates, as Singles’ Day promotions helped the Google-backed online retailer fend off competition despite a decelerating Chinese economy.
Sales for the three months ending December hit 134.8 billion yuan ($20.2 billion), surpassing the average projection of analysts. The Beijing-based company expects revenue this quarter of 118 billion yuan to 122 billion yuan, versus the 118.9 billion yuan anticipated. JD’s shares climbed as much as 10 percent in New York.
The result comes at a critical point for the e-commerce giant, which has invested heavily in warehouses and distribution networks but now faces a slowdown in Chinese consumer spending. Its business model relies on a rising middle class willing to pay more for faster del- ivery and other services, but trade tensions and a slowing domestic economy have driven users to cut-price rivals like Pinduoduo. Annual active buyers reached 305.3 million in the year ending in December, rising just 100,000 from the figure disclosed during previous quarter.
JD’s outperformance on the topline, however, underscored the resilience of overall online sales versus physical retail, and the company’s ability to drive business through promotions.
“We are cautiously optimistic for the second half of this year when the government’s various incentive policies begin to take effect,” said JD.com Chief Financial Officer Sidney Huang, adding that the slowing economy had impacted the sale of goods like electronic appliances. “We should see better cashflow this year.”
In the fourth quarter JD recorded its slowest ever increase in gross merchandise value, which refers to the total value of goods sold on its platform. It will stop giving this figure on a quarterly basis and instead release it once a year. But Huang said that rising costs in research and development and the expansion of the company’s 7Fresh supermarkets would be more carefully managed in 2019.
“What most people care about is the top-line growth and direct sales,” said Eric Wen, founder and CEO of Blue Lotus Capital Advisors.