JD quarterly report leaves some concern

Chinese e-commerce company JD boosted second-quarter revenue by 31.2 per cent, but losses ballooned nine-fold.

JD quarterly sales reached RMB122.3 billion (US$218.5 billion) for the three months to June 30, with net service revenues of RMB11.8 billion (US$1.8 billion), up 51 per cent year on year.

On a rolling 12 month basis, annual active customer accounts increased by 21.5 per cent to 313.8 million in the year to June 30.

The operating margin of JD Mall was just 1.1 per cent, although that was an improvement on the 0.8 per cent of the same period a year earlier.

JD chairman and CEO Richard Liu said the e-commerce business was continuing to win over new personal customers. “We are also seeing more corporate clients, both Chinese and international, leveraging JD’s superior technology and retail infrastructure to help take their businesses to the next level. We will continue to prioritise technology innovation to empower our partners with enhanced capabilities and improved efficiency, helping us to realise our ‘Retail as a Service’ strategy, and driving our next phase of growth.”

The net loss from continuing operations attributable to shareholders was RMB2.213 billion (US$334.4 million), compared to RMB287 million for the same period last year.

Despite continuing losses in what is  along-game business, JD is attracting investment. In June, Google invested $500 million as part of a new strategic partnership.

“We are pleased to see continued healthy performance in the second quarter, with solid revenue growth and improved margins in our core JD Mall business,” said Sidney Huang, CFO, in a statement “Our new business initiatives continue to gain impressive traction across the industry. We will maintain a balanced, long-term approach to investing in the technologies that will define the future of retail.”

During the second quarter, JD expanded its leadership position in fulfillment capabilities among China’s e-commerce companies. As of June 30, JD operated 521 warehouses covering an aggregate gross floor area of 11.6 million sqm in China.

The company had more than 170,000 merchants on its online marketplace, and 173,904 full-time employees at the end of the quarter.