Alibaba Group Holding, a bellwether stock for consumer sentiment in China, has reported first quarter results that beat revenue expectations, but still show the slowest growth rate since its 2014 IPO on the New York Stock Exchange (NYSE). Alibaba, which is also listed in Hong Kong, said its revenue rose by a better-than-expected 9% for the quarter ended March. Its adjusted net income, however, fell 24% year-on-year. Both indicators were slightly higher than analysts’ estimates in S&P's Global Market Intelligence. But the revenue growth was a far cry from the usual 40% to 50% quarterly reading just two years ago. “Despite macro challenges that impacted supply chains and consumer sentiment, we continued to focus on customer value and building the capabilities to deliver value,” Chief Executive Daniel Zhang said in a prepared statement. “We saw tangible progress across our businesses, especially in operational improvements in key strategic areas.”
Revenue from its core e-commerce business, Taobao and Tmall, leveled off last quarter as the total value of goods sold fell by low single digits from a year earlier. It also attributed a drop in gross merchandise sales in March to the impact of Covid-19. Some experts said the results appear to be “raising the likelihood of a speedy recovery” of the company's retail and consumer units by the September quarter, assuming Covid disruptions in China fade. “The company can stop the slide if virus cases drop and cause restrictions to be lifted, spurring a rise in buying sentiment by fiscal Q2,” said Catherine Lim, Analyst at Bloomberg Intelligence. Yet the company did not offer its usual revenue forecast for the coming fiscal year, citing “risks and uncertainties” arising from Covid-19 that make precise predictions difficult.
A key to reviving business is to encourage consumers to spend. The company is busy prepping for the upcoming June 18 or “618” shopping festival, with easier customer access to discounts and preferential loans for merchants to boost transactions. Shoppers are entitled to a CNY50 discount on purchases of CNY300 or more starting on May 31. Vendors can enjoy up to 20% off on credit loans, with Taobao and Tmall providing merchants with a free early payment service worth CNY100 billion, the China Daily reports.
