(Reuters) – Chinese e-commerce giant Alibaba Group Holding Ltd (9988.HK) posted a low single-digit rise in quarterly revenue on Thursday, slightly below expectations, as COVID-19 curbs and a worsening economic outlook stifled consumer spending.
Retail spending in China has sagged this year alongside the government’s strict zero-COVID policies that have led to frequent snap lockdowns and hurt economic activity.
Revenue grew 3% to 207.18 billion yuan ($28.96 billion) in the three months ended Sept. 30, compared with a Refinitiv consensus estimate of 208.62 billion yuan drawn from 25 analysts.
Customer management revenue, which tracks how much money merchants spend on Alibaba, fell 7% annually, marking the steepest-ever decline for the segment that typically accounts for 30% of the company’s total revenue.
CEO Daniel Zhang said on an earnings call that consumption demand was weak, and the resurgence of COVID-19 “affected one area after another, resulting in abnormal or suspended logistics service in different places”.
It reported net loss attributable to shareholders of 20.56 billion yuan in the quarter.
Excluding one-off items, Alibaba earned 12.92 yuan per American Depository Share, beating estimates of 11.62 yuan per share profit.
U.S-listed shares in Alibaba were trading 2% lower before the bell.
The current quarter has also been gloomy. Last week, the firm did not disclose its “Singles Day” shopping festival sales tally for the first time, saying only that the results were in line with last year, which was its lowest ever growth.
Speaking to investors on the call, Zhang said that roughly 50% of places in China experienced abnormal logistics and delivery services due to COVID-19 protocols, which affected performance over the shopping festival. The unusually warm weather for the season also affected apparel purchases.
Alibaba’s financial affiliate, Ant Group, is still undergoing a government-mandated revamp and has yet to revive plans for its public market debut after its $37 billion attempt at a dual listing was derailed at the last minute in late 2020.
Ant, which is 33% owned by Alibaba, logged a profit of 7.72 billion yuan for the quarter ending in June, down 63.2% year-on-year. Alibaba reports its profit from Ant group one quarter in arrears.
Alibaba said it will not complete its primary conversion of shares to the Hong Kong Stock Exchange by the end of 2022 as originally announced in August.
($1 = 7.1540 Chinese yuan renminbi)