Alibaba reports 29% decline in quarterly profit

Alibaba runs some of China’s most popular e-commerce apps and its performance is widely considered an indicator of wider economic trends

Chinese e-commerce giant Alibaba reported a 29% decline in quarterly profit on Thursday as it battles sluggish consumption during an economic slowdown.

Net income attributable to shareholders came in at 24.3 billion yuan ($3.3 billion) in the quarter ending June 30, Alibaba said in a corporate filing, down from 34.3 billion yuan in the same period last year.

Alibaba runs some of China’s most popular e-commerce apps and its performance is widely considered an indicator of wider economic trends.

China released another series of disappointing indicators on Thursday, despite recent government measures to boost growth.

Alibaba’s revenue for the first quarter was 243.2 billion yuan, up 4% from the previous year.

But revenue from core shopping platforms Taobao and Tmall was down 1%, which Alibaba said was “primarily due to the increase in investments in user experience”.

In this quarter, we continue to invest for growth in our core businesses while reducing losses in other business units through operating efficiency, CFO Toby Xu said in the filing.

Alibaba made $5.8 billion of share repurchases in the first quarter, part of an effort to reassure investors amid narrowing profits.

Its results contrasted starkly with rival shopping app operator JD.com, which announced a massive 92.1% rise in profit for the last quarter.

Thursday’s results come at a time when Alibaba is increasingly being challenged by Pinduoduo, another shopping app whose parent company owns globally popular budget shopping app Temu.

As sluggish growth hits consumers’ wallets, more shoppers are turning to generally lower-priced items on the Pinduoduo app instead of Alibaba’s Taobao and Tmall platforms.

The change in shopping habits briefly caused Pinduoduo’s parent company to overtake Alibaba in market cap in November.

Alibaba’s founder Jack Ma, who has retired from his role at the group, has urged his successors to adapt to new consumer preferences.