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Alibaba-listed shares in the US fell more than 10% after the ecommerce group cut its best-selling forecasts, citing the slow growth of Chinese retail spending.
As a result of the quarter on Thursday, Alibaba said it now expects sales growth of 20-23% in 2022 compared to predicted growth of 30% in the face of a “soft market”.
Recent Chinese financial data has provided a grim picture of the country’s growth prospects. Retail sales rose 2.5 percent a year in August, down sharply from what economists predict a 7 percent rise and a gradual rise in 12 months.
Alibaba also struggles with greater competition from established rivals such as Pinduoduo and JD.com as well as new startups, all trying to rob the market.
Maggie Wu, chief financial officer at Alibaba, said rivals were “increasing revenue to get users and show more revenue”. Competitors have been luring traders away from Alibaba’s Taobao ecommerce business with lower prices, sales and marketing.
Alibaba said it had increased funding to help its retailers to block access to competitors.
“China’s economic competition is reflected in the declining profits of Alibaba and JD.com – demonstrations of a hard-fought war on consumer wallets,” said Michael Norris, a technical expert at researchChina.
Prices rose 29 percent to Rmb200.7bn ($ 31.4bn) in the three months to the end of September compared to the same period last year. The figures were impressive with the integration of the supermarket chain Sun Art, which was acquired last year.
Total revenue is down 87 per cent to Rmb3.4bn, which is missing. Alibaba cited a number of highs and lows due to the economic downturn.
The company’s disappointing report comes after its share price began to rise since October, with experts saying Beijing’s worst online attacks are over.
Alibaba also spoke of a number of positive developments, with revenue coming from the cloud rising by 33% to Rmb20bn, part of its “multi-engine growth strategy”, the company said.
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