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JD

JD

China’s online retailer JD.com posts strong second-quarter sales

Higher operating and marketing costs pushes e-commerce services provider back into a net loss for the three months ended June 30

PUBLISHED : Monday, 14 August, 2017, 8:54pm
UPDATED : Monday, 14 August, 2017, 8:54pm

Chinese online retail giant JD.com reported a 44 per cent year-on-year increase in second-quarter revenue, beating analysts’ estimates on the back of a steady rise in active customers.

“As we broaden our range of offerings, including a rapidly growing roster of top international brands, our customer base continues to expand, with female shoppers becoming an increasingly active user base,” said Richard Liu Changdong, the chairman and chief executive of Nasdaq-listed JD.com, in a statement ahead of the US market’s opening on Monday.

JD.com posted total revenue of 93.2 billion yuan (US$13.9 billion) in the second quarter, up from 64.9 billion yuan in the same period last year, as its annual active customer accounts rose 37 per cent year-on-year to 258.3 million in the 12 months ended June 30.

That beat the market consensus revenue of 89.5 billion yuan from a Bloomberg survey of analysts’ estimates.

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JD.com’s gross merchandise volume – the total amount of goods sold on its online direct sales platform and e-commerce marketplace – rose 46 per cent in the second quarter to 234.8 billion yuan from 160.4 billion yuan a year earlier.

The Beijing-based company, however, reported a net loss from its continuing operations of 287 million yuan, compared to a net profit of 127.6 million yuan a year ago, because of higher traffic acquisition costs, fulfilment expenses and marketing expenditure.

It forecast third-quarter revenue to be between 81.8 billion yuan and 84.2 billion yuan, representing a year-on-year growth rate of between 36 per cent and 40 per cent.

Founded in 2004, JD.com initially focused on online direct sales of consumer electronics and home appliances before expanding into general merchandise in 2008.

In 2010, the company launched its own marketplace platform where third-party merchants sell their goods. It had about 130,000 merchants on its online marketplace.

“We are positive on JD.com management’s commitment in delivering consistent top line growth with gradual year-on-year improvement in margins, with key focus this year in strengthening its relationship with global brands,” said Alicia Yap, the head of regional internet research at Citi Research.

We are positive on JD.com management’s commitment in delivering consistent top line growth with gradual year-on-year improvement in margins
Alicia Yap, Citi Research

In May Wal-Mart Stores, the world’s largest retailer, opened its own flagship online store on JD.com, aiming to provide same- and next-day deliveries to more than 600 million mainland consumers.

That launch came nearly a year after Walmart and JD.com formed a strategic alliance.

In June, JD.com bought an undisclosed stake in Farfetch, the London-based luxury fashion e-commerce service provider, in a US$397 million deal that marked the Chinese online retail giant’s biggest international acquisition to date.

The two companies said their strategic partnership was a means to further gain share in the estimated US$80-billion market for domestic and travel-related purchases of luxury goods by mainland Chinese consumers.

Also in the second quarter, JD.com expanded its product offerings through cooperation with multiple international brands, including Swiss luxury watch brand Zenith, Austrian crystal brand Swarovski, Japanese consumer electronics maker Casio and Italian fashion house Armani.