JD.com makes two different automated warehouse inspection drones, shown here at CES International, in Las VegasGadget Show, Las Vegas, USA - 08 Jan 2019

First-quarter sales growth slowed at JD.com, but the Chinese web giant saw a big jump in earnings and plans to keep reinvesting its profits — to both build on its e-commerce base and expand in new directions.

Net income jumped sharply, rising nearly fivefold to $1.08 billion as the adjusted operating margins of the JD Retail business increased 0.6 percentage points. JD has been lately looking to grow in fashion by teaming up, merging its Toplife luxury business with Farfetch and cutting a three-year strategic partnership with the British Fashion Council.

Revenues for the quarter ended March 31 rose 20.9 percent to $18.04 billion — the slowest quarterly growth rate on record for the e-commerce giant. (JD hasn’t posted quarterly revenue growth since the second-quarter of 2017, when sales growth tallied 42.9 percent).

The company’s annual active customer count rose to 310.5 million, up from 305.3 million recorded three months earlier.

Investors liked what they saw and pushed shares of JD up 2.2 percent to $28.12 on the New York Stock Exchange in trading Friday.

“The first quarter saw solid top-line growth with record-breaking profitability, further demonstrating the superiority of JD.com’s business model as compared to traditional retail formats,” said Sidney Huang, JD’s chief financial officer, in a statement. “JD’s commitment to providing the best value to consumers while increasing economies of scale over time was again reflected in the improving margins in our core JD Retail business. We will remain focused on customer experience and technology innovation to support our long-term profitable growth.”

On a conference call with analysts, he added that he saw “the record earnings as a natural result of ongoing JD Retail margin expansion and JD Logistics margin recovery driven by technology innovation, economies of scale and a better capacity utilization.

“It is driven by JD Retail’s significantly lower operating expense ratio as compared to off-line retail format which in turn will enable us to provide everyday low prices and superior services to our consumers and drive sustained growth above the market,” he said.

While JD is gaining from the brick-and-mortar crowd, it is also squaring off with Alibaba, its larger rival in the digital world and seeking to provide more retail services to third parties.

To help maintain its digital edge, JD renewed its partnership with social media and Internet company Tencent for three more years on Thursday. The deal will deepen the relationship between the companies and see Weixin platform continue to drive traffic to JD.

Huang sees plenty of runway left in retail.

“If you just think about, take Walmart of [the] U.S. as an example,” the cfo said. “By 2018 revenues, even with just U.S. revenue…we are still only about one-sixth of its size. So the growth potential is tremendous. And that is why we’re willing to reinvest a part of the profitability back to the business to drive growth, because as you continue to grow, your scale economies will naturally kick in.”

Even so, JD is also aggressively branching out.

Richard Liu, founder, chairman and chief executive officer, told analysts: “We will never ever stop for investing for our new business. As you know, we have our JD digital business, JD Logistics, media, health and we will invest more for a new business model.”

Liu came under the microscope last summer when he was arrested on suspicion of sexual assault after an event at the University of Minnesota. The ceo denied wrongdoing and prosecutors said in December that they would not charge him. However, a student at the university, Jingyao Liu, accused Liu of rape in a lawsuit last month that also included JD as a co-defendant.

While the incident thrust Liu and JD into the spotlight last year and the recent lawsuit brought the issue back up, the conference call was squarely focused on the company’s results.

Jill Brisbois, an attorney for Liu, said: “We believe in our client’s innocence, which is firmly supported by the evidence and the prosecutor’s decision not to bring charges. We will vigorously defend our client’s reputation in court.” And JD’s attorney Peter Walsh, of Hogan Lovells, said, “We will vigorously defend these meritless claims against the company.”

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