Biz / Tech

Firms cautiously optimistic after Q1 results

Ding Yining
Major online retailers benefited from the change in shopping habits caused by the COVID-19 pandemic with revenue and profits increasing in the first quarter compared to last year.
Ding Yining

Two major Chinese online retailers who reported strong quarterly results after quarantine measures boosted digital spending say they remain cautiously optimistic about their business outlook.

Alibaba said its first-quarter revenue rose 22 percent to 114.3 billion yuan (US$16.1billion) with an 11 percent rise in profits to 22.3 billion yuan.

"The pandemic has fundamentally altered consumer behavior and enterprise operations, making digital adoption and transformation a necessity and we are well positioned and prepared to help large and small businesses achieve the digital transformation," said Daniel Zhang, the company’s chairman and CEO. 

Sales from its core commerce business rose 19 percent to 93.87 billion yuan and revenue from cloud computing business surged 58 percent.

Its domestic online retail sites, local consumer services and digital media and entertainment platform attracted 780 million consumers in the fiscal year ended March 31. It also recorded a total annual active global consumer base of 960 million.

Gross merchandizing volume of its physical goods sold on its Tmall site went up 10 percent driven by a 25 percent increase in demand for daily necessities and household goods, while spending on clothes and accessories fell.

Other units such as local consumer services, the international retail marketplace, travel and offline entertainment have all suffered a negative impact. 

The company said it has seen signs of recovery in online retailing and on-demand local services, but for international commerce businesses, which represent around 7 percent of total revenue, the timing and pace of recovery are still uncertain as demand in countries outside China remains soft.

It expects a revenue of 650 billion yuan in the fiscal year to March 31 next year, a 27.6 percent increase from the year-earlier period.

"In particular, it is not possible to determine the ultimate impact of the COVID-19 pandemic on business operations and financial results amid many uncertain factors," it added.

Shanghai-headquartered Pinduoduo said its gross merchandising volume in the first quarter increased 108 percent to 1.12 trillion yuan.

Revenue was up 44 percent to 6.5 billion yuan and net losses also widened to 3.17 billion yuan from 1.38 billion yuan a year earlier.

Average monthly active users climbed 68 percent to 487.4 million and the average annual spending per active buyer rose 47 percent to 1,842 yuan.

"As the economy worldwide regains its foothold, we are seeing opportunities for investments and partnerships such as our recent investment in GOME Retail Holdings," said David Liu, its vice president of strategy. last week reported revenue growth of 21 percent to 146.2 billion yuan in the first quarter.

According to the National Bureau of Statistics, e-commerce sales of physical goods increased 16 percent in April from the same period last year, picking up from the 11 percent gain in March.

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