SHANGHAI: Alibaba Group Holding missed analysts’ estimates for second-quarter sales on Friday, as persistent economic uncertainty sapped consumer spending in China and weighed on the e-commerce group’s domestic business.
The company reported an adjusted profit of 15.06 yuan per American Depository Share, beating estimates of 14.88 yuan.
Its US-listed shares were down 0.3% at the opening.
Chinese consumers have cut back on spending, especially on discretionary items, as the world’s second largest economy struggles to pick up pace amid a property sector crisis and heightened youth job insecurity.
That has knocked retail sales, which are under pressure even as major vendors like Alibaba and JD.com dole out promotions and discounts. JD.com on Thursday also missed estimates for quarterly revenue.
“Traditionally Alibaba is very dominant in apparel sportswear and cosmetics and skincare, all of these are highly discretionary in nature I do think that these categories are impacted,” said M Science analyst Vinci Zhang.
Alibaba is facing stiff competition from discount-based retailers such as PDD Holdings’ Pinduoduo and ByteDance-owned Douyin, which have wooed cost-conscious shoppers with rock-bottom prices on everything from headphones to sweaters.
Alibaba reported revenue of 236.50 billion yuan ($32.72 billion) for the second quarter ended Sept. 30, compared with analysts’ average estimate of 240.17 billion yuan, according to data compiled by LSEG.
Revenue from Alibaba’s Cloud Intelligence division jumped 7% to 29.61 billion yuan, with revenues from public cloud products growing in double digits and AI-related product revenue delivering triple-digit growth.
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