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By
Reuters
Published
Aug 15, 2017
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China's JD.com net loss widens on higher marketing costs

By
Reuters
Published
Aug 15, 2017

JD.com Inc, China's second-largest e-commerce firm, posted a wider net loss in the second quarter as marketing costs offset higher-than-forecast revenue growth, sending its shares sharply lower on Monday.


JD.com



China's main rival to Alibaba Group Holding Ltd said its net loss attributable to shareholders grew to 496.4 million yuan ($74 million) from 252.3 million a year earlier.

JD.com stock was down 5.1 percent in morning trading in New York, despite revenue expanding 43.6 percent to 93.2 billion yuan, well above its forecast range of between 88 billion and 90.5 billion.

Marketing expenses rose 63 percent to 4.1 billion yuan, mostly due to the company's June sale event, "618", which is China's second-largest online shopping event after Singles' Day.

"It is becoming the new normal for sure ... marketing dollars mostly are spent on incentive to our customers", said CFO Sidney Huang on a call with investors, noting the group would have netted a profit in the past quarter if it had kept marketing budgets in line with last year.

JD is looking to expand via investments in southeast Asia as competition intensifies at home while customer growth slows. It is also seeking to boost per-customer spend in China by bringing more overseas brands on to its local platforms.

In June JD said it intends to begin direct sales in Thailand before year end and has plans to tap other markets in the region. It expanded a partnership with Wal-Mart Stores Inc during the second quarter and invested $397 million in fashion retailer Farfetch UK Ltd.

Huang also said the firm has plans to launch a luxury platform later this year, following the launch of JD.com's "white glove" delivery service earlier this year.

The firm expects third-quarter revenue of between 81.8 billion yuan and 84.2 billion, up 36 to 40 percent from the same quarter in 2016.

JD also said it had completed the spin-off of JD Finance, which analysts expect will have long-term benefits for its operating margin. JD Finance is now a fully Chinese-owned entity, giving it greater regulatory freedom.

JD.com also completed the internal separation of its logistics unit, which will look to serve more third-party clients.
The total value of merchandise transactions on JD's platforms was 234.8 billion yuan during the quarter, up 46 percent.
JD booked a net loss of 0.35 yuan per American depository share, compared with a loss of 0.18 yuan a year earlier.

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