(Bloomberg) -- JD.com Inc. posted a blowout loss on higher spending and forecast sales below estimates, as rising competition in China’s e-commerce market slow efforts to attract new revenue.
The net loss from continuing operations surged to 2.2 billion yuan ($319 million) in the June quarter, about 8 times larger than analysts expected. The Beijing-based company expects sales in the September quarter of between 104.5 billion yuan and 109 billion yuan, with the top of the range slightly below estimates. The stock slumped more than 6 percent in pre-market trade.
JD’s disappointing showing comes a day after top shareholder Tencent Holdings Ltd. reported its first profit drop in 13 years, souring sentiment on Chinese tech companies. The online retailer is facing challenging times as it pushes ahead with an ambitious expansion in foreign and domestic markets. The e-commerce giant is squaring off against Amazon.com Inc (NASDAQ:AMZN). in Southeast Asia and the West, while facing rising pressure from rivals including Alibaba (NYSE:BABA) Group Holding Ltd. and Pinduoduo Inc. at home. Its stock has fallen by about a third since reaching a record in January.
The traditional e-commerce model “may be close to saturation following the stellar growth in the past years,” Nomura analysts led by Jialong Shi wrote in a report to clients before the earning release. “That explains why e-commerce operators are turning to new marketing or business models – such as new retail, group-buy and social commerce – for new growth drivers.”
Sales for the June quarter rose 31 percent to 122.3 billion yuan. One factor that likely weighed on growth was a slowdown during JD’s June sales event. Ostensibly started to celebrate the company’s founding, it has become a smaller rival to Alibaba’s Singles’ Day promotion in November, with total transactions for this year’s event rising by 33 percent to hit 159.2 billion yuan.
But this was down compared with the 50 percent growth of last year, in part because the attention of shoppers was diverted by a public holiday and the 2018 FIFA World Cup.
To contact Bloomberg News staff for this story: David Ramli in Beijing at dramli1@bloomberg.net
To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net, Edwin Chan
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