Mar 2, 2020
JD.com sales forecast boosted by home deliveries in coronavirus-hit China
Mar 2, 2020
China’s JD.com Inc on Monday forecast an at least 10% rise in revenue for the coronavirus-hit first quarter, benefiting from partnerships with supermarkets for delivering fresh produce and groceries to shoppers choosing to stay indoors due to fears of infection.
The forecast, although lower than expectations, is in sharp contrast to that of bigger rival Alibaba Group Holding Ltd , which warned last month that e-commerce revenue would fall in the current quarter as the virus disrupts economic activity in China.
JD’s shares were up 6% even as broader markets were headed for another volatile day of trading on fears that the fast-spreading virus could lead to a global recession.
The company said it had partnered with over 50 supermarket chains as well as nearly 30 community grocery chains in China for home delivery in coronavirus-hit areas.
“While large ticket durable goods and discretionary products have been negatively affected by the outbreak, the consumer staple categories, such as groceries, fresh produce, health care and household products, are in greater online demand during the past 5 weeks,” Chief Financial Officer Sidney Huang said.
Huang will retire in September and be replaced by JD Retail’s finance chief, Sandy Xu, the company said.
JD’s estimated revenue of at least 133 billion yuan ($19.09 billion), according to Reuters calculations, fell short of analysts’ average expectation of 137.32 billion yuan.
The forecast reflects the company’s current expectations, which could change in light of uncertainties related to how the virus outbreak develops, JD said in a statement.
JD was able to resume full operations very quickly after the Chinese New Year due to investments in its supply chain and logistics network, the company said.
“JD has invested heavily into controlling its distribution, whereas Alibaba has largely subcontracted,” said Brock Silvers, managing director at Hong Kong-based Adamas Asset Management.
“That may or may not have been the best call during normal times, but during this coronavirus outbreak it has been a significant benefit.”
JD’s total net revenue rose 27% to 170.68 billion yuan in the fourth quarter ended Dec. 31. Analysts were expecting revenue of 166.72 billion yuan.
Sales from JD’s product unit, which includes online retail sales, surged about 25% to 149.71 billion yuan.
Excluding items, the company earned 0.54 yuan per American depositary share, above analysts’ average estimate of 0.44 yuan.
© Thomson Reuters 2021 All rights reserved.