Discount strategy works, JD.com’s Q1 revenue and profit are better than expected

Chinese e-commerce company JD.com (JD.com) announced its first-quarter financial report for the 2024 fiscal year before the U.S. stock market opened on Thursday (16th). As price cuts and discount coupons boosted the sluggish consumer environment and responded to fierce competition from other peers, the quarter Revenue and profit were better than Wall Street analysts expected.

Chinese e-commerce company JD.com (JD.com) announced its first-quarter financial results for the 2024 fiscal year before the U.S. stock market opened on Thursday (16th). Revenue for the quarter was due to price cuts and discount coupon measures to boost the sluggish consumer environment and to cope with fierce competition from other peers. , profits were better than Wall Street analysts expected.
At the time of writing, JD.com (JD-US) shares rose 0.42% in early trading on Thursday to trade at $33.76 per share.
According to the financial report, JD.com’s first quarter (as of March 30) revenue increased by 7% year-on-year to RMB 260.05 billion (the following units are the same), beating analysts’ expectations of RMB 258.35 billion; net profit increased by 18.8% year-on-year to RMB 7.37 billion; attributable to the company Net profit for ordinary shareholders increased by 13.9% year-on-year to 7.1 billion yuan, which was better than market expectations.
Chart: JD.com’s financial report In addition, the company’s earnings before interest, taxes, depreciation and amortization (EBITDA) in the last quarter increased by 14% year-on-year to 10.79 billion yuan, higher than analysts’ forecast of 9.5 billion yuan; the adjusted operating profit margin was 3.4% higher than The 3.2% in the same period last year also exceeded the 3% expected by analysts; the adjusted EBITDA profit margin was 4.1%, an increase of two percentage points from 3.9% in the same period last year; the adjusted EBITDA profit margin was 5.65 yuan per American depositary receipt (ADS). Not only was it higher than the 4.76 yuan in the same period last year, it was also better than analysts\’ forecast of 4.67 yuan.
In the first quarter, JD Logistics\’ revenue by business increased 14.7% year-on-year to 42.14 billion yuan, which was better than market expectations of 40.42 billion yuan. Revenue from external customers reached 29.25 billion yuan, accounting for about 70%; net profit was 238 million yuan, adjusted Net profit reported at 660 million yuan, and core profit indicators reached the best level in the first quarter since listing.
JD.com\’s retail revenue, the backbone of JD.com\’s business, grew 6.8% to 226.84 billion yuan in the first quarter, with operating profit reporting 9.33 billion yuan, a slight decline from 9.84 billion yuan in the same period last year.
In addition, the company\’s first-quarter new business revenue (including JD.com, Jingxi and overseas businesses) decreased by 19.2% year-on-year to 490 million yuan, and its operating loss was reported at 670 million yuan, a loss rate of 13.8%.
Chart: Market analysis of JD.com’s financial report points out that JD.com’s retail profit fell less than expected. Market advertising revenue growth rebounded by 1%, but this may not be enough to alleviate competition from Alibaba (BABA-US) (9988-HK) and Kuaishou (1024-HK). Concerns that rivals will enter China\’s 618 Shopping Festival.
Sharp losses in new businesses including on-demand delivery amid competition from Meituan and TikTok confirm the higher cost of getting orders.
JD.com\’s performance is seen as one of the key indicators of consumption in China, which has struggled to recover since China lifted nearly three years of anti-epidemic measures.
The company has turned to discounts and other promotions to try to boost sales especially in the consumer electronics segment, where it has traditionally been a strength.
The move puts JD.com ahead of larger rival Alibaba, which this week reported a drop in quarterly profit, triggering a stock sell-off.
Citigroup (C-US) analysts wrote after the release of JD.com’s results: “The re-acceleration of growth in the department store category and the elastic growth of the electronics category indicate that JD.com’s dominance in core categories has been effectively reversed.
\”Long term, the company will continue to struggle with China\’s tepid economy and newer competitors such as Pinduoduo (PDD-US) and Zijie Dictionary.
Although Chief Executive Xu Ran predicted that Beijing\’s policies would boost consumer confidence, retail sales growth fell sharply in March and industrial production fell short of expectations, a warning sign of this year\’s economic recovery.
In addition to crazy discounts, the company has been focusing on expanding its live streaming business in recent months – a growth area.
As domestic consumer confidence in China remains sluggish, JD.com has also stepped up its efforts to expand into the international market, including weighing up its proposal to acquire British electronics retailer Currys Plc and following Alibaba\’s lead in slashing the price of its cloud computing services.

Like (0)
Previous May 16, 2024 4:50 pm
Next May 16, 2024 4:50 pm

Related posts