March 5 (Reuters) – China’s JD.com missed market estimates for quarterly revenue on Thursday, in a sign that stiff competition and waning benefits from government subsidies were eating into demand at the e-commerce giant.
Consumer demand in China has taken a hit in the past several years, with a lingering property sector crisis, concerns over employment and geopolitical tensions hammering growth in the world’s second-largest economy.
That has hurt retailers like JD.com – the largest seller of home appliances in China – as shoppers cut back on discretionary purchases. While JD.com has benefited over a few quarters from government subsidy measures, the incremental benefit is tapering off as year-over-year comparisons become tougher.
But the company has leaned on other product categories and new revenue streams such as its instant retail business and advertising unit to drum up sales.
“Our revenue mix has become increasingly diversified, and as profitability strengthens … and higher-margin businesses such as advertising contribute a larger share, we are confident that our profit streams will become more diversified as well,” JD.com CFO Ian Su Shan said in a statement.
“Despite some short-term fluctuations in the fourth quarter, our financial position remains solid,” he added.
U.S.-listed shares of the company rose marginally in premarket trading.
JD.com is also facing mounting competition, with e-commerce rivals such as Alibaba and PDD Holdings ramping up discounts on their China-focused platforms. All of them have invested heavily in promotions and price cuts, resulting in weaker profit margins.
JD.com’s revenue rose 1.5% to 352.3 billion yuan ($51.12 billion) in the fourth quarter ended December, compared with analysts’ average estimate of 353.86 billion yuan, according to data compiled by LSEG.
Net loss attributable to JD.com’s ordinary shareholders was 2.7 billion yuan for the quarter, compared with a profit of 9.9 billion yuan a year earlier.
($1 = 6.8918 Chinese yuan)
(Reporting by Deborah Sophia in Bengaluru; Editing by Himani Sarkar and Maju Samuel)
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