JD.com rebounds from loss with hefty third-quarter profit
The Beijing-based online retail services giant beat market estimates with higher direct sales, more customers in the quarter ended September 30
JD.com, one of the world’s largest online retail providers, smashed market expectations as it reported strong profit and revenue during a seasonally slow third quarter ahead of China’s annual Singles’ Day shopping event in November.
The Nasdaq-listed e-tailer posted on Monday a net profit of 1 billion yuan (US$150 million) in the quarter to September, rebounding from the 467.4 million yuan loss in the same period last year, on the back of a 38.5 per cent year on year increase in online direct sales.
That beat the market consensus of 846.2 million yuan from a Bloomberg survey of analysts’ estimates.
Total third-quarter revenue for JD.com rose 39.2 per cent to 83.7 billion yuan, up from 60.2 billion yuan a year earlier, despite recording higher sales, marketing, fulfilment and technology expenses during the period. This topped the analysts’ consensus estimate of 83.6 billion yuan.
“We are achieving our mission of bringing China’s consumers the widest selection of top brands and, by far, the highest quality e-commerce experience,” said Richard Liu Qiangdong, the chairman and chief executive of JD.com, in a statement on Monday.
The Beijing-based company, in which internet giant Tencent Holdings holds a 21 per cent stake, directly sells products from its own inventory, like Amazon, as well as operates an online marketplace where major brands and retailers sell their merchandise.
It had about 160,000 merchants on its online marketplace as of September 30. Annual active customer accounts increased 34 per cent year on year to 266.3 million in the 12 months to September.
Sidney Huang Xuande, the chief financial officer of JD.com, attributed the gains made last quarter to the economies of scale achieved by the company, which runs the largest fulfilment infrastructure of any e-commerce company in mainland China.
The firm operated seven fulfilment centres and 405 warehouses covering 2,830 counties and districts across mainland China as of September 30. Its JD Logistics unit also provides scheduled delivery service in 250 mainland cities.
The healthy financial results last quarter also showed that JD.com was not seriously affected when a number of domestic brands left its online marketplace to join its e-commerce rival on the mainland.
Reports from the mainland two weeks ago said more than 40 Chinese apparel brands had exited JD.com’s marketplace since August, and that they had urged customers to buy from their respective stores on Alibaba Group Holding’s Tmall.com.
Nomura analyst Shi Jialong recently said those incidents “reflect the ongoing fierce competition between Tmall and JD.com”.
New York-listed e-commerce giant Alibaba owns the South China Morning Post.
JD.com on Sunday said the total transaction volume for its 11-day promotion on the back of Singles’ Day grew 50 per cent year on year to US$19.1 billion.