JD.com posts surprise quarterly profit
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JD.com posts surprise quarterly profit

JD.com, China’s second-largest online retailer, posted quarterly figures for the three months ending September 30 that showed a surprise profit which beat analysts’ expectations. The company said that net income was 1 billion yuan ($151 million) against expectations of a 213 million yuan loss. The disparity comes from higher than expected sales, which were up 39% against the year-ago quarter, and reduced marketing costs.

JD.com’s share price has appreciated by 57% year to date

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SOURCE: Yahoo Finance

The company’s fourth quarter will see a boost from Singles’ Day, which took place a few days ago. JD said that it racked up $19 billion in sales over the holiday, but that it lost around 100 merchants to “competition” (read: Alibaba) during the run up to the event. JD’s chief financial officer, Sidney Huang, didn’t mince words when it came to why these merchants – mostly apparel-makers – left JD’s platform. On a call with analysts, he said: “based on the feedback we received from these merchants, the move was mainly due to the coercive tactics from our competitor.”

For its part, Alibaba responded to the allegations by saying that they held no water, and merchants were free to partner with any platform they choose. A spokeswoman told Reuters: “Merchants make their own choices. Alibaba’s scale and technological advantages make it the preferred partner for the world’s top brands.”

Despite the loss of merchants – and the somewhat heated competition between JD and its main rival – the company’s third quarter was a highly positive one. The company expects a year on year revenue rise of between 35% and 39% in its fourth quarter, and has promised to buy $2 billion in U.S. goods over the next three years. JD’s share price rose by 5% on the back of the news.

Disclosure

Dominion holds JD.com in its Global Trends Ecommerce Fund. 


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