Chinese eCommerce giant Alibaba is still suffering the effects of COVID-19.
The company released earnings results Thursday (Feb. 23) showing growth of 2%, a slower pace than its last quarter, as the retailer dealt with the continued impact of the pandemic in China.
“We delivered a solid quarter despite softer demand, supply chain and logistics disruptions due to impact of changes in COVID-19 measures,” said Alibaba Chairman and CEO Daniel Zhang in a statement, adding that Alibaba expects consumer sentiment and economy activity to recover.
Among the setbacks cited in the earnings report was a decline in the gross market value (GMV) on products from Alibaba’s Tao Bao and Tmall businesses due to soft demand, continued competition and a supply chain disruption after a surge in COVID-19 cases.
The company’s stock — at $97 Thursday morning — is down sharply from its late 2020 peak of over $300.
As PYMNTS wrote last month, the company enjoyed a wave that boosted the price of many tech stocks during the onset of the pandemic. However, it has since been hurt by a decline in consumer sentiment, China’s ongoing tech company crackdown, and pandemic measures.
Last July, Alibaba slowed its global expansion plans as it fell short of reaching its target of adding 1 million companies to its B2B eCommerce platform.
More recently, PYMNTS noted that activist investor Ryan Cohen had purchased a stake in Alibaba worth hundreds of millions of dollars.
Cohen reportedly contacted Alibaba last August, telling the company’s board he believed it can increase its sales by a double-digit percentage and its free cash flow by almost 20% in five years.
A number of retail companies, primarily in the luxury sector, have looked to the lifting of China’s COVID restrictions as a way to boost sales, while others have blamed the pandemic lockdown for a drop in revenue.
Last week, Kering — whose brands include Gucci and Yves St. Laurent — reported a 7% drop in sales for its most recent quarter. It was a trend the company attributed in part to the COVID restrictions in China, whose citizens account for about a third of the world’s luxury goods customer base.
And in January, luxury brands Burberry and Richemont said they were counting on China to help them recover after reporting a drop in sales.
“We’ve seen early green shoots with the Chinese consumers traveling more to Asian countries,” said Burberry Chief Financial Officer Julie Brown at the time. “Still very small, but we’ve certainly seen elements of it.”
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