JD.com Forecasts 35 to 39% Q4 Revenue Growth, Headwinds in Apparel Category

Management said apparel would be challenged over the next two to three quarters due to brands coerced into leaving the platform.

HONG KONG — JD.com expects net revenue to grow between 35 and 39 percent year-over-year, the company said during its earnings briefing Monday, continuing a similar surge the firm reported in the third quarter when revenues jumped 39 percent to 83.7 billion renminbi, or $12.6 billion.

For the quarter ended Sept. 30, net income from continuing operations attributable to ordinary shareholders was 1 billion renminbi, compared to a loss of 500 million renminbi the year before. Gross profit was 13 billion renminbi, up 50.3 percent.

The company stated it was very pleased with its recently concluded Singles’ Day promotion, which brought in $19.1 billion over an 11-day sale, growing 50 percent year-over-year. JD.com said all the global brands grew their sales by over 200 percent. Outdoor brand Columbia grew 800 percent, Northface and Tumi surged 400 percent. In the beauty category, L’oreal sales tripled while SK-II and Olay doubled.

Founder Richard Liu addressed at length the issue of dozens of apparel brands closing up shop on JD.com, which the company blamed on Alibaba pressuring brands to choose one platform or the other — something Alibaba denies. Recent departures included major domestic apparel brands, although no international labels, JD.com said.

“You may have read from the media that we are experiencing some headwinds,” Liu said. “Over 100 merchants in the general merchandise category withdrawing from our platform due to a certain competitor’s practice in the market, leading to some merchants going to one platform rather than going to both,” he said.

“Throughout our history we have experienced [much] of this competition when our competitor would force the merchants to choose one out of two platforms almost every two to three years,” he continued. “In the earliest days, with our digital IT products, we faced this competition, and then later in the books and the media segment for two years, and then in the home appliance category with major competitors for almost three years. We’ve overcome all those competitive pressure and have become the largest leader in all of these categories.”

While the apparel category is likely to be hindered over the next two to three quarters, Liu said he was confident it would resume growth, “just as we saw in other categories.”

“Today in the apparel brands, we are only maybe one third to one fifth of our major competitor’s size but over time, if you actually check with these brands, the brands’ profitability on JD’s platform may not be any less than their profits on the larger platform,” Liu said.

JD.com has about 160,000 merchants on its online marketplace. It recorded 34 percent growth in annual active customer accounts to 266.3 million for the year ended Sept. 30. Although management declined to give specific figures, it said its base among females and lower-tier cities, where the company has historically not had a strong foothold, was growing quickly. JD.com added that internationally, its focus is on Southeast Asia where it has joint ventures in Indonesia and Thailand.

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