SHANGHAI — JD.com saw its net revenue for the third quarter ended Sep. 30 grow to 174.2 billion renminbi or $25.7 billion, an increase of 29.2 percent from this time a year ago.
The strong upward trend adds to the positive beat seen also from its rival Alibaba, which clocked 30 percent surge in revenue also for the same quarter, and overall picture given by national retail sales data.
On Monday, China’s National Bureau of Statistics reported that countrywide retail sales climbed 4.3 percent year-on-year to 3.86 trillion renminbi, or $584.5 billion, in October. That marked an acceleration from September, when sales gained by 3.3 percent. The trend began in August, when China’s retail sales turned positive for the first time this year, rising 0.5 percent — although sales still came in below analyst consensus expectations of 5 percent.
JD’s third-quarter net income totaled 7.6 billion renminbi, or $1.1 billion, compared to 0.6 billion renminbi for the same period last year. Adjusted earnings increased by 80.1 percent to 5.6 billion renminbi, or $0.8 billion, from 3.1 billion renminbi for the same period last year.
JD.com’s annual active customer accounts increased by 32.1 percent to 441.6 million for the year ended Sept. 30 from 334.4 million the same time a year ago.
“We continue to generate traction in the lower-tier cities, which contributed about 80 percent of our new users this quarter,” Sandy Xu, JD.com’s chief financial officer said. “We are also inspired by the further enhanced consumer loyalty and engagement of our core users, who appreciate the consistency of products and service quality we deliver every day. Our core users are buying products for more categories from us and more frequently. We have become a part of many users’ daily lives. It’s worth highlighting that our JD Plus members exceeded 20 million in October, an important milestone for our paid membership program.”
Management touted record operating margin which reached 3.9 percent in the quarter.
“What’s notable is that our operating efficiency continues to improve even as our product mix shift from the large-ticket size, but low-frequency categories, such as 3C [computers, telecommunication and consumer electronics] and home appliance to the small-ticket size but high-frequency consumer staple categories,” Xu said. “Order volume for the supermarket categories grew by over 48 percent year-over-year in Q3.
“Another key metric illustrating our operating efficiency improvement is our inventory turnover days which further reduced to 34.3 days in the last 12 months. This is one of the lowest among the top global retailers and our own historical record despite the total number of sku’s managed by us continue to increase with our category expansion.”
Jon Liao, chief strategy officer, also addressed the potential impact of new anti-trust regulation in China, saying if implemented, the policy would stand to help JD.com, which plays underdog to the substantially larger Alibaba. The company has stated many times in the past that Alibaba pressures brands to choose between the platforms.
“As JD continues to expand into all categories beyond 3C like fashion, JD has been minimized by anti-combative behaviors, while merchants are being asked to [pick one out of two],” said Liao. “JD fully supports the antitrust regulation, which we believe is very important for healthy growth and innovation of the business ecosystem, in particular, in the country’s economy in general.”
JD had been looking to make further inroads in fashion with Farfetch, but the platform shifted it focus to Alibaba this month with a new mega partnership that includes Compagnie Financière Richemont and has the backing of François-Henri Pinault’s Artemis, which controls another luxury giant, Kering.
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