JD.com, the Chinese eCommerce company, saw its stock under pressure in trading Monday (Nov. 19) after it reported third-quarter results in which revenue growth was the slowest on a quarterly basis since going public in 2014.
According to a report in Reuters, executives said the slower sales in its main eCommerce unit, particularly seen for big-ticket items, hurt third-quarter earnings growth. Revenue in its third quarter was up 25 percent from the year-ago third quarter, but was below Wall Street’s views and its peak growth rate of more than 60 percent lodged in 2015, noted Reuters. For the fourth quarter, it is forecasting revenue growth of between 18 percent and 23 percent, which is lower than the 23.5 percent Wall Street is seeking.
Reuters noted that Chief Financial Officer Sidney Huang said the “relatively soft” sales forecast was caused by a consumption slowdown on the part of consumers in China.
For its third quarter, JD.com reported revenue of $15.09 billion, which was lower than the consensus of analysts, reported CNBC. JD.com was able to report income of 0.80 yuan per share, which was higher than the 0.72 yuan expected, driven by strong sales in its tech services business. That unit grew close to twice the rate of general products, noted the report.
JD.com is coming off of Singles Day, the annual shopping event in China that just completed its 10th year. Consumers get big deals on all sorts of products during the 24-hour shopping event. For this year’s event, JD.com said it saw a record of about $23 billion in transaction value or 159.8 billion in Chinese renminbi. When reporting results, JD.com said that global brands, including the likes of Apple, Dell and L’Oréal, “saw impressive sales performance,” and that products from Germany, the U.S., Japan, South Korea and the Netherlands “proved especially popular.”
Lei Xu, who holds the positions of both CMO of JD.com and CEO of JD Mall, said in an announcement of this year’s results, “there is a noticeable shift in China toward quality over price, which we see in the growing numbers of consumers who are willing to pay more for branded and imported goods. By establishing trust with consumers and brands, thanks to our zero-tolerance policy toward fakes and our innovations in areas such as blockchain traceability for product safety, JD is in a unique position to meet that demand.”