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May 17 (Reuters) – E-commerce group JD.com Inc (9618.HK) beat quarterly revenue estimates as more people shopped on its platform following COVID lockdowns in China, but its CEO was cautious about the outlook due to logistical disruptions and sluggish consumption.
The resurgence of COVID-19 in the world’s second-largest economy in March and the strict containment measures it has taken since to curb its spread, including in its most populous city of Shanghai, have severely disrupted normal life and commercial activity.
JD.com CEO Xu Lei told analysts on a post-earnings call on Tuesday that the situation was much different from what China has seen in the past two years, when outbreaks were limited to smaller parts of the country and boosted online shopping.
This time, the spread of infections in major centers such as Beijing, Shanghai, Guangzhou and Shenzhen, and lockdowns affected both online and offline commerce.
“In April, the order cancellation rate was significantly higher than a year ago due to logistical disruptions. There was an improvement in May, but it was still higher than a year earlier,” said he declared.
“Consumers are facing a loss of income and confidence, and overall consumption is slow,” Xu added.
Shares of the Chinese company initially jumped 9% in premarket trading, but were flat as the market opened and after Xu’s comments.
Nomura analysts estimated in mid-April that 45 cities in China, representing 40% of its GDP, were under full or partial lockdown.
Shanghai’s lockdown has been particularly strict, with residents unable to buy much more than daily necessities due to logistical bottlenecks and a shortage of couriers. The capital Beijing has also tightened restrictions as it tries to avoid an outbreak. Read more
Underlining the impact of these measures, retail sales in China fell 11.1% last month, their biggest contraction since March 2020.
Still, investor sentiment toward JD.com and its peers on Tuesday was helped by comments by Chinese Vice Premier Liu He during a meeting with tech executives, which raised hopes that a crackdown long-standing regulatory burden on the sector is easing. Read more
U.S.-listed shares of Chinese companies rose after Liu said the government supports industry development and public listings of tech companies.
E-commerce rival Alibaba Group (9988.HK) also jumped 7% and Pinduoduo (PDD.O) soared more than 8% ahead of the market open.
JD.com posted revenue of 239.66 billion yuan ($35.6 billion) for the quarter ended March 31, compared to Wall Street analysts’ estimate of 236.66 billion yuan, according to IBES data from Refinitiv.
Excluding one-time items, JD.com posted earnings of 2.53 yuan per American Depository Share (ADS), versus 1.62 yuan expected by analysts.
Net loss attributable to common shareholders was 2.99 billion yuan, compared with a profit of 3.62 billion yuan a year earlier.
($1 = 6.7386 Chinese yuan renminbi)
Reporting by Tiyashi Datta in Bengaluru, Sophie Yu in Beijing and Brenda Goh in Shanghai; Editing by Krishna Chandra Eluri, Jan Harvey and Emelia Sithole-Matarise
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