Alibaba Logs 2 Percent Growth, Unveils Spin-off IPO Plans

SHANGHAI — Alibaba released its first earnings report since revealing in March that the company would be split into six business units.

The Hangzhou-based e-commerce giant revealed on Thursday that revenue for the fourth quarter ended March 31 had increased by 2 percent year-over-year to 208.2 billion renminbi, or $30.3 billion, falling short of analysts’ expectations.

More from WWD

During the quarter, net income reached 23.5 billion renminbi, or $3.4 billion, with adjusted profits rising by 38 percent year-over-year to 27.4 billion renminbi, or $3.98 billion.

For the fiscal year ending March 31, revenue gained 2 percent year-over-year, reaching 868.68 billion renminbi, or $126.49 billion. Operating income amounted to 100.35 billion renminbi, or $14.61 billion, marking a 44 percent year-over-year increase.

As an indicator of China’s post-COVID-19 consumption recovery, revenue in its core China e-commerce business declined by 3 percent year-over-year to 136.07 billion renminbi, or $19.81 billion, falling short of analysts’ expectations.

Although gross merchandise value on Taobao and Tmall continued to decline in the midsingle digits for the quarter, it started to resume growth in the month of March, driven by strong performance in the fashion and accessories and health care categories.

According to data released by the National Bureau of Statistics, retail sales grew 10.6 percent year-over-year in March.

“The key question for Alibaba in 2023 is how much Chinese households will dip into the record savings they accumulated during the pandemic,” said Jacob Cooke, chief executive officer and founder of WPIC, a Beijing-based e-commerce consulting agency.

Alibaba’s international commerce business demonstrated strong 15 percent year-over-year growth for the quarter, fueled by its steady market expansion strategies.

Revenue from its key cloud service, which includes a ChatGPT-like generative AI research arm, dropped by 3 percent year-over-year to 24.5 billion renminbi, or $3.57 billion. The public listing is expected to be completed within the next 12 months.

IPOs for other spin-off units, including Cainiao Smart Logistics, its supply chain and delivery service arm, and Freshippo, its grocery delivery branch, are also in the works.

Cainiao aims to be listed within 12 to 18 months, while Freshippo’s public listing will be completed within the next six to 12 months.

“In an increasingly complex world, we have proactively transformed our organization to strengthen the competitiveness of our businesses through greater independence to address the evolving needs of different customers and capture new opportunities,” said Daniel Zhang, chairman and CEO of Alibaba.

“Alibaba is committed to improving shareholders’ return through the implementation of a robust capital allocation framework,” added Toby Xu, chief financial officer of Alibaba.

Best of WWD

Click here to read the full article.