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Alibaba reports slowing growth as consumer spending slows

Alibaba reported weak growth in the third quarter. That’s as the e-commerce giant continues to feel the effects of China’s zero-coronavirus lockdown, which has hit China’s economic growth and consumer spending.

The Chinese group on Thursday said its revenue in the three months to the end of September rose 3% from a year earlier to 207 billion yuan ($29 billion), below analyst expectations.

CEO Daniel Zhang said: “Consumer confidence has been weak…the Covid resurgence is affecting one area after another,” he said.

Zhang said sales at the annual shopping event known as Single’s Day were flat year-on-year and warned of delivery disruptions that could hit business this quarter.

Between October and early November, 15% of the delivery area had service disruptions or outages due to the Covid disruption, he said.

“This has had a significant impact on the merchant’s ability to fulfill orders on time,” added Zhang.

Alibaba The company’s share price has fallen to three-quarters of its value since Beijing canceled the planned public offering of its sister company, facing many challenges. ant group Over 2 years ago. Shares fell more than 2% in pre-market trading in New York.

China’s tough regulatory crackdown aimed at curbing the country’s tech giants is boiling over. Alibaba paid his record $2.8 billion antitrust fine last year and pledged to end the practice of forcing some of its sellers to stay away from rival e-commerce platforms.

It also faces increasing competition from rivals JD.com, Pinduoduo, and emerging live-streaming e-commerce platforms like ByteDance’s Douyin, which has taken market share from e-commerce businesses Tmall and Taobao.

Revenue in Alibaba’s customer management segment, which tracks Taobao and Tmall, declined 7% year-on-year in the third quarter, improving slightly from a 10% decline in the second quarter.

Shawn Yang, managing director of Blue Lotus Capital, said the rise of sales on short-video platform Douyin was particularly damaging to Alibaba. “Douyin has become a major branding platform, so many large-scale his FMCG [fast-moving consumer goods] Brands are starting to allocate budgets to platforms,” he said.

Revenues at Alibaba’s cloud division, touted as the key to the future, continue to slow, growing just 4% from a year ago.

Alibaba has vowed to tighten its belt amid the slowdown. On Thursday, net profit rose 19% year-on-year to 33.8 billion yuan, excluding changes in investment value and stock-based compensation.

Headcount reductions continued during this period, cutting nearly 2,000 employees and reducing total headcount by about 6% since the beginning of the year.

Alibaba and rival Tencent have focused on returning capital to shareholders amid plummeting stock prices and a regulatory crackdown.Tencent on Wednesday said it was planned distribute Distribution of majority stake in delivery group Meituan’s $22 billion to shareholders as a dividend.

Alibaba said it spent $2.1 billion on share buybacks in the September quarter and said it would add $15 billion in thermal power to a program that runs through the end of fiscal 2025.

Meanwhile, Ant, Alibaba’s fintech arm, continues to be targeted by the government as it continues to restructure its business under the guidance of the central bank. Profits at the Jack Ma-controlled company fell by more than half in the second quarter, to an estimated 7 billion yuan.

https://www.ft.com/content/74c408e3-fb07-42d6-bd74-3354eb748afb Alibaba reports slowing growth as consumer spending slows

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