HONG KONG — Chinese online retailer JD.com said Tuesday it expects revenues for the fourth quarter to grow between 37 percent and 42 percent year on year.
Its net revenues in the period should register between 75 billion and 77.5 billion renminbi, about $10.9 billion to $11.3 billion, the company said.
The optimistic outlook was revealed as the company reported non-GAAP gross profit that rose 59 percent for the quarter ended Sept. 30 to 9.4 billion renminbi or $1.4 billion. Net revenue for the same period was 60.7 billion renminbi, or $9.1 billion, up 38 percent from a year ago.
Non-GAAP operating margin of JD Mall marketplace, where it has approximately 110,000 merchants, was 1.1 percent, compared to 0.7 percent for the third quarter last year.
Brushing off concerns of a pricing war, JD.com’s chief financial officer Sidney Huang said the low margins were “partially because our scale has not reached number one in all categories,” but the company is confident on reaching a market leader position over time.
“That will be the future source of margin expansion. We are not in any hurry, [we have] no plans to increase prices to consumers,” Huang said.
Although fashion apparel is a small part of the company’s business — JD.com leads in products such as electronics — chief executive officer Richard Liu said he was putting together a team to develop the category, first focusing on men’s wear, which is more simple in assortment.
“We will push ahead next year especially on the more standardized portion of this category. In the earlier years, the contribution could be very small for first party business but we are confident it will be a promising business,” Liu said.
On Nov. 11, on discount-driven shopping holiday Singles Day, JD.com rolled out its drone delivery program to four new rural areas in an effort to cut down delivery times. Although it declined to release GMV numbers for the 24-hour sale, the company said it had broken their record from the year prior about 13 hours into it.
Jon Copestake, chief retail and consumer goods analyst at the Economist Intelligence Unit, said that while rival Alibaba, which founded Singles Day, also saw record revenue numbers, competitors like JD.com were starting to take more share.
“Although Alibaba continued to dominate, with reported sales of $17.8 billion through its various e-commerce portals, this undershot expectations of around $20 billion. The real growth story may have been elsewhere with sales as a whole, reportedly approaching $26 billion, meaning that almost one-third of Singles’ Day transactions are taking place through other providers,” Copestake said.