JD beats revenue estimates but CEO cautious over Covid outbreaks

 E-commerce group JD.com, beat estimates for quarterly revenue as more people shopped on its platform following COVID lockdowns in China, but its CEO was cautious on the outlook due to logistical disruptions and sluggish consumption.

The resurgence of COVID-19 in the world’s second-largest economy in March and the strict lockdowns it has taken since to curb its spread, including in its most populous city Shanghai, have heavily disrupted normal life and business activity.

JD.com CEO Xu Lei told analysts on a post-earnings call on Tuesday that the situation was far different to what China experienced in the past two years when outbreaks were limited to smaller areas of the country and boosted online shopping.

This time, the spread of infections to major centres such as Beijing, Shanghai, Guangzhou and Shenzhen, and lockdowns were affecting both online and offline commerce.

“In April, the order cancellation rate was significantly higher than last year due to logistical disruptions. There was an improvement in May, but it was still higher than a year earlier,” he said.

“Consumers are facing loss in income and confidence, and overall consumption is sluggish,” Xu added.

Shares in the Chinese company initially surged as much as 9% higher in pre-market trading but were flat when the market opened and after Xu’s comments.

Analysts at Nomura estimated in mid-April that 45 cities in China, representing 40% of its GDP, were under full or partial lockdowns.

Shanghai’s lockdown has been particularly strict with residents unable to shop for much more than daily necessities due to logistics bottlenecks and a shortage of couriers. The capital Beijing has also been tightening restrictions as it tries to stave off an outbreak.