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JD.com posts first annual loss since 2018 as new businesses bleed cash

Written by Nikkei Asia Published on   3 mins read

Shares drop as much as 18% after latest results from Alibaba rival.

Slowing economic growth and higher costs knocked Alibaba rival JD.com to its first annual loss in three years, sending its Nasdaq-listed shares down more than 18% at one point amid heavy selling in Chinese tech stocks.

Net loss attributable to ordinary shareholders for the full year of 2021 was RMB 3.6 billion (USD 569 million), compared to a net income of RMB 49.4 billion for 2020, JD.com reported Thursday.

The Chinese e-commerce company recorded a second consecutive quarterly loss of RMB 5.2 billion for the December quarter, compared to a net income of RMB 24.3 billion for the same period of 2020.

The latest results from China’s e-commerce sector came after market leader Alibaba Group Holding last month posted its slowest-ever quarterly revenue growth, a year-over-year gain of 10% to RMB 242.6 billion.

Net revenues for the fourth quarter stood at 275.9 billion yuan, a year-over-year increase of 23%—slightly higher than analysts’ expectations surveyed by Refinitiv, but the weakest in six quarters.

“In the fourth quarter, consumer demand was indeed weaker, with an overall slowdown in both physical and online retail, we still achieved healthy user growth in the fourth quarter and met our full-year growth targets,” said Lei Xu, president of JD.com, in an earnings call.

“We see that the overall consumption for the first quarter and even first half of this year to be relatively conservative, but we are confident that we will deliver higher growth than the industry average,” said Sandy Xu, chief financial officer of JD.com.

Quarterly revenue from retail—JD.com’s core business which contributes about 90% to its total revenue—reached RMB 249.9 billion, a 21% increase from the same period in 2020. The logistics business, a competitive edge over its rivals that has helped the company win a lot of users, saw revenue jump 27.7% year-over-year.

Yet these gains failed to offset the losses by JD.com’s so-called “new businesses” segment, which includes JD Property, a subsidiary focusing on infrastructure asset management; Jingxi, a platform launched in 2019 targeting lower-tier cities to fend off rival Pinduoduo; as well as overseas businesses and technology initiatives. Operating loss of the “new businesses” segment swelled to RMB 3.2 billion for the fourth quarter from RMB 967 million during the same period one year prior.

The operational loss of these new businesses more than doubled to RMB 10.6 billion for the full year of 2021 compared with 2020.

Besides Pinduoduo and Alibaba’s Taobao, JD.com also faces pressure from short video platforms like Douyin and Kuaishou, which have been taking market share from e-commerce sites through livestreaming sales as well as increasing advertising.

In the conference call, Xu said he believes livestreaming platforms will have a long-term impact on e-commerce companies, but he also sees the opportunities to collaborate with these new players.

“But for JD.com, we see most people come to our platform with plans to shop for themselves or their families. So we are less affected by the emergence of the short video platforms,” Xu said.

Xu added that the company would have an “open attitude” toward these new business models and some of the livestreaming platforms have actually started to cooperate with JD Logistics.

This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.


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