(Reuters) – Alibaba Group Holding Ltd has warned of a decline in sales of the major e-commerce companies in the quarter, such as the corona virus sweeping China-the hits of a supply chain, and distribution.
FILE PHOTO: The logo of Alibaba Group is seen during Alibaba Group’s 11.11 Singles Day a global shopping festival, at the registered office of the company, in Hangzhou, Zhejiang province, China, on November 10, 2019. (REUTERS photo/Aly Song, File/Photo
The warning from the leaders, came with a transcript, for the quarter ending in December 2019 at the latest, which is the company to beat analyst estimates, and brought the record of the transactions in its annual Singles’ Day ‘ shopping event.
CEO Daniel Zhang said the delay in the return to work after the Lunar New Year, as a result of the outbreak of the virus, which has killed more than 1,350 people in China and infected thousands more, had been causing trouble for the merchants, and the delay in the execution of the order.
He said, food-delivery orders had declined year-on-year, due to the number of restaurants that had been closed as a result of the outbreak. And while the company has seen a surge in the demand for goods from the department stores, supermarkets, it has been held back by the limited delivery capacity.
Head of finance Maggie Wu said many of Alibaba’s businesses, which are dependent on the sale of physical goods, would be likely to see a decline in sales in the current quarter.
“We’re just like any other businesses, are not immune to supply and demand,” she said. On their recovery and long-term success will translate into long-term growth for Alibaba Group.”
Despite the downbeat forecast, Zhang said Monday, Alibaba had noticed that more and more people in the big cities, to go back to work, and the logistics networks to return to normal activities.
He also said DingTalk, which is the company’s chat app, which had seen “exponential growth” during the financial crisis and white collar businesses, and schools to use to work on distance and online courses.
“Alibaba’s earnings for the next couple of quarters, are certainly likely to take a hit from the corona virus outbreak. However, the company is strong enough to withstand the short crisis, there is a cloud computing company leading the charge to a more positive outlook,” said Jesse Cohen, a senior analyst with the financial markets platform Investing.com.
Q3, BEATS FORECASTS
Alibaba is usually reported as the highest in sales in the December quarter due to its mega Singles’ Day shopping bonanza in the month of November. The company said that sales during the 24-hour event hit a record of $38.4 billion in 2019.
The group principally generates revenue through the sale of advertising and promotional services for third-party merchants that list products on e-commerce sites, Taobao and Tmall.
The company said it was in support of the fight against the corona virus disease outbreak by providing the supply of the daily necessities of life, and the adoption of relief measures for the traders.
Alibaba affiliate, Ant Financial’s MYBank has said that it will offer 20 billion yuan ($2.9 billion) in loans to companies in China, in the wake of the outbreak.
The outbreak, which originated in the city of Wuhan, which has resulted in businesses laying off workers, in search of cheaper funding and are struggling to restart production after the extended Lunar New year holiday, when supply chains are disrupted.
Alibaba is often thought of as a window into the health of the chinese consumer economy, which Beijing views as a key to continued economic growth.
The epidemic is expected to pile more pressure on China’s economy, as the government had hoped to have a tentative deal with the United States, should turn it into a long-term war, this trade had an impact on the growth rate.
Revenue in Alibaba’s core commerce business jumped by 38% to 141.48 billion yuan in the third quarter, which ended on dec. 31, while revenue at its cloud-computing unit, has increased from 62 percent to 10.72 billion.
Net income attributable to ordinary shareholders amounted to 52.31 billion yuan, of 33.05 million.
With the exception of the items, the company earned 18.19 yuan per American Depositary Share (“ADSS”). Analysts had expected to 15.75 yuan per ADS, in accordance with the IBES data, on Refinitiv.
The total revenue has increased from about 38% to about 161.46 billion yuan, beating estimates of the 159.28 billion yuan.
U.S.-listed shares of the company were up nearly 1% at $226.30 in premarket trading.
Reporting Akanksha Rana, Bengaluru, and Josh Horwitz) in Shanghai; Editing by Sriraj Kalluvila and Mark Potter