JD.com has posted its first quarterly revenue decline since its 2014 stock market debut, sending shares in the Chinese ecommerce company tumbling.
The owner of fledgling UK marketplace Joybuy saw second-quarter revenue fall 2.9 per cent year on year to £38bn, although sales still came in ahead of analyst expectations.
JD.com’s Hong Kong-listed shares dropped more than 10 per cent on Friday following the update, after its Nasdaq-listed stock fell seven per cent on Thursday.
The slowdown comes after the Chinese government subsidy scheme that had encouraged shoppers to upgrade electronics and household appliances boosted JD.com’s sales a year earlier, creating a tough comparison for the company.
Chief executive Sandy Xu said the retailer had begun to see an improvement in sales momentum in June and expects growth in its core electronics and home appliance division to strengthen “meaningfully” during the second half of the year as those tougher comparisons ease.
Despite the sales decline, profitability improved. Net income climbed around 15 per cent to £780m, up from £680m a year earlier, while adjusted net profit jumped more than 20 per cent to £976m.
The improvement came as JD.com pulled back on some of the heavy marketing spending associated with its aggressive move into food delivery, where it has been battling rivals including Alibaba and Meituan.
Management said losses from the division narrowed during the quarter.
JD.com steps up UK push
JD.com is making an increasingly ambitious play for shoppers outside China.
It launched its Joybuy marketplace in the UK and Europe this year as it looks to challenge the likes of Amazon, backed by investment in its European logistics network and warehouse infrastructure.
JD.com said Joybuy had seen “surging sales” during its recent Summer Black Friday promotion, which focused heavily on discounted electronics and appliances alongside services including delivery and installation.
Its European ambitions have extended far beyond organic expansion.
The group previously made an unsuccessful attempt to buy Currys and last year held talks over a potential acquisition of Argos from Sainsbury’s before walking away.
It has also tabled a €2.2bn offer for German electronics group Ceconomy, the owner of MediaMarkt and Saturn and more than 1,000 stores across Europe. The proposed transaction has attracted scrutiny from EU regulators over whether JD.com may have benefited from foreign state subsidies.
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