JD.com beat first-quarter revenue and profit expectations on Tuesday, and investors will be watching to see if Beijing’s subsidy programme will help it sustain this momentum as tariff and consumer-demand pressures mount.
US-listed shares of the Chinese e-commerce giant rose about 1%, after earlier surging as much as 3.4% in premarket trading.
China, the world’s second-largest economy, has long struggled with weak consumer confidence, weighed by a prolonged property slump and higher tariffs imposed by the United States on many Chinese goods.
The US-Iran war, as well, has raised fuel prices and the cost of living, curbing consumers’ spending power.
Still, subsidies from local governments that encourage consumers to trade in old appliances and electronics may have helped limit declines in revenue for JD.com, the biggest retailer of such goods.
JD.com said revenue for the quarter ended March was 315.7 billion yuan ($46.47 billion), which beat an LSEG consensus estimate of 311.8 billion yuan drawn from 15 analysts.
Net income attributable to JD.com‘s ordinary shareholders was 5.1 billion yuan, exceeding expectations for 3.37 billion yuan, but down 53% from a year earlier, because of massive increases in expenses, including fulfilment costs, research and development as well as marketing.
In the previous quarter, there was a net loss of 2.71 billion yuan, partly due to heavy investments in food delivery.
The company has sought to develop new revenue streams due to stiff rivalry in e-commerce. It entered the food delivery market last year, going head-to-head with incumbents Meituan and Alibaba, even as the high costs of doing so pressured profits.
“Our user base and shopping frequency continued to expand robustly, with annual active customers hitting a new record,” JD.com CEO Sandy Xu said.
The company also said investment in “JD Food Delivery further narrowed significantly on a sequential basis.”
Reuters
