China’s $89 billion e-commerce giant JD.com posts slowest quarterly growth on record

Chinese technology companies including JD.com are facing headwinds from China’s Covid lockdowns and subsequent economic impact as well as the country’s tighter regulatory environment for technology businesses.

The company beat top and bottom line expectations in the second quarter, but saw its slowest year-on-year revenue growth on record as a result of the economic downturn in China.

A shopping festival in China in June helped boost the company's profitability in its main retail and logistics division.

In the second quarter, JD.com did better than expected.

• Revenue: 267.6 billion Chinese yuan ($40 billion) vs 262.3 billion yuan expected, a 5.4% year-on-year rise.
• Net profit attributable to ordinary shareholders: 4.4 billion Chinese yuan vs. 1.36 billion yuan profit expected.

In the U.S., the shares were up 4%.

During the April to June quarter, China saw a resurgence of Covid-19 that led to lock downs of major cities across the country as authorities tried to contain the worst outbreak of the virus since the initial spread in 2020.

As revenue slows in order to grow earnings in the coming quarters, Tencent and other companies have been cutting spending and reducing staff.

Marketing and general and administrative expenses were reduced for the quarter. The firm narrowed its losses in its new business segment and swung to an operating profit in the quarter.

Sandy Xu said in a press release that they were pleased to post topline growth that outpaced the industry during a challenging period.

Our focus on financial discipline and operational efficiency has allowed us to return to shareholders in the form of share repurchases. We will focus on generating shareholder returns while maintaining our investment commitment.

The most of its revenue comes from the retail segment. In the second quarter of the year, the division brought in a near 4% increase in revenue. The retail business' operating profit increased by 36%.

There was a shopping festival in China. In June, China's e-commerce giants offer huge discounts on a number of goods. The total transaction volume across the platform was reported in June.

It does bring users to the shopping app.

The difference between the two companies is that the latter has more of its own inventory. The ability to get products to users on the same day or next day is one of the things it focuses on.

In the second quarter, the division saw a 20% increase in revenue.