Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list beats revenue estimates but CEO cautious over COVID outbreaks

Published 05/17/2022, 07:00 AM
Updated 05/17/2022, 11:41 AM
© Reuters. FILE PHOTO: A man stands outside JD.Com’s headquarters, amid the Singles' Day shopping festival, during an organised tour in Beijing, China, November 9, 2021. REUTERS/Tingshu Wang/

(Reuters) -E-commerce group JD (NASDAQ:JD).com Inc beat estimates for quarterly revenue as more people shopped on its platform following COVID lockdowns in China, but its CEO was cautious on the outlook due to logistical disruptions and sluggish consumption.

The resurgence of COVID-19 in the world's second-largest economy in March and the strict lockdowns it has taken since to curb its spread, including in its most populous city Shanghai, have heavily disrupted normal life and business activity. CEO Xu Lei told analysts on a post-earnings call on Tuesday that the situation was far different to what China experienced in the past two years when outbreaks were limited to smaller areas of the country and boosted online shopping.

This time, the spread of infections to major centres such as Beijing, Shanghai, Guangzhou and Shenzhen, and lockdowns were affecting both online and offline commerce.

"In April, the order cancellation rate was significantly higher than last year due to logistical disruptions. There was an improvement in May, but it was still higher than a year earlier," he said.

"Consumers are facing loss in income and confidence, and overall consumption is sluggish," Xu added.

Shares in the Chinese company initially surged as much as 9% higher in pre-market trading but were flat when the market opened and after Xu's comments.

Analysts at Nomura estimated in mid-April that 45 cities in China, representing 40% of its GDP, were under full or partial lockdowns.

Shanghai's lockdown has been particularly strict with residents unable to shop for much more than daily necessities due to logistics bottlenecks and a shortage of couriers. The capital Beijing has also been tightening restrictions as it tries to stave off an outbreak.

Underlining the impact of such measures, China's retail sales fell 11.1% last month in their biggest contraction since March 2020.

Still, investor sentiment towards and its peers on Tuesday was helped by comments Chinese Vice Premier Liu He at meeting with tech executives, which fanned hopes that a long-running regulatory crackdown on the sector is easing.

U.S.-listed shares of Chinese firms rose after Liu said the government supported the development of the sector and public listings for technology companies.

E-commerce rival Alibaba (NYSE:BABA) Group also surged 7% and Pinduoduo (NASDAQ:PDD) climbed more than 8% before the market opened. reported revenue of 239.66 billion yuan ($35.6 billion) for the quarter ended March 31, compared to Wall Street analysts' estimates of 236.66 billion yuan, according to IBES data from Refinitiv.

Excluding items, posted a profit of 2.53 yuan per American depository share (ADS), compared with analysts' expectations of 1.62 yuan.

© Reuters. FILE PHOTO: A man stands outside JD.Com’s headquarters, amid the Singles' Day shopping festival, during an organised tour in Beijing, China, November 9, 2021. REUTERS/Tingshu Wang/

The net loss attributable to ordinary shareholders stood at 2.99 billion yuan, compared with a profit of 3.62 billion yuan a year earlier.

($1 = 6.7386 Chinese yuan renminbi)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.