JD.com reports better-than-expected Q2 results despite soft consumer demand
Chinese e-commerce giant JD.com reported second-quarter earnings on Tuesday, with revenue and profit both topping Wall Street expectations. While Shanghai’s COVID-19 lockdown took a toll on supply chains and consumer confidence this quarter, the company’s annual promotion “6.18 Shopping Festival” boosted online spending.
Revenue in the second quarter reached 267.6 billion yuan ($39.14 billion), up 5.4% from a year earlier, beating analysts’ average estimate of 262.31 billion yuan, according to IBES data from Refinitiv. Revenue in the first half rose 11% to 507.3 billion yuan.
JD.com’s retail segment accounts for most of its revenue. The business unit achieved revenue of 241.5 billion yuan in the second quarter, a year-on-year rise of nearly 4%. That was helped by JD.com’s approximately two-week-long shopping festival “6.18” in June. Total transaction volume across its platform during the promotional period totaled 379.3 billion yuan, according to JD.com’s report in June.
In the second quarter, the giant accelerated its cooperation with first-tier fashion and color cosmetics brands, bringing Celine, Maison Margiela, Maison Kitsuné, Moose Knuckles, LA MER, ARMANI, etc. to its platform.
JD’s logistics division saw a 20% year-on-year revenue rise in the second quarter to 31.2 billion yuan.
As of June 30, 2022, JD Logistics operates more than 1,400 warehouses and employs over 200,000 in-house delivery personnel. It also expanded its overseas operations by launching its first automated warehouse in the U.S., “Los Angeles 2,” in June.
The company reduced marketing and general and administrative expenses for the quarter versus the same time last year.
Net income attributable to ordinary shareholders rose to 4.38 billion yuan, or 1.37 yuan per American Depository Share (ADS) for the three months ended June 30, from 794 million yuan, or 0.25 yuan per ADS, a year earlier.
Excluding one-off items, the company posted a profit of 4.06 yuan per ADS, compared with analysts’ expectations of 2.71 yuan.
“The second quarter was the most challenging quarter since we went public,” JD.com Chief Executive Xu Lei said on a conference call with analysts before the US market opened. The challenges are largely due to the pandemic, he said.
When the COVID-19 resurgence hit Shanghai in late March, the city went into lockdown, which lasted until early June. This has had a major impact on the country’s economy as Shanghai is an industrial hub, an export center, and a consumer powerhouse. China’s second-quarter GDP rose 0.4% year-on-year, below analysts’ forecast for a 1% increase.