(Reuters) -Chinese e-commerce company JD.com on Wednesday reported a surge in third-quarter profit as supply chain problems eased but its revenue came in below analysts’ estimates.
JD.com’s U.S.-listed shares rose 5.6% to around $28 in premarket trading. The group is also listed in Hong Kong.
The company has faced challenges in China’s rapidly changing e-commerce landscape, such as the emergence of livestream players and short video social networking service providers such as Douyin, which is China’s TikTok, and Xiaohongshu.
JD.com has fewer influential livestreamers than its competitors, such as Austin Li, who exclusively streams on Alibaba Group’s platform.
Also, consumer sentiment in the China is weak amid a slowing economy and high unemployment.
JD.com said that CEO Xu Ran will take up the role of chief executive of JD Retail, the company’s retail business.
Beijing-based independent industry analyst Liu Xingliang said the firm’s core strategy is to focus on the lower-tier market, third-party merchants, and instant retail business.
“Her new appointment ensures that these strategies can be effectively implemented,” Liu said.
Xu told analysts on a call after the earnings report on Wednesday that the retail strategy of the company would remain unchanged.
Third-party data provider Syntun shows that the cumulative gross merchandise volume (GMV) across major traditional e-commerce platforms — including Alibaba’s Tmall, JD.com and Pinduoduo of PDD Holdings — was 923.5 billion yuan ($127.42 billion), during China’s largest shopping festival, Singles Day, which ended at midnight on Saturday. This represented a 1% decline from the previous year.
“Consumers are more rational when they make purchase decisions,” Xu said. “They attach more importance to price and quality.”
Jeffrey Towson, a partner of TechMoat consulting, said JD.com had a long history of fighting and winning price wars. The current low-price strategy is mainly about going “back to basics”, which means low prices, more products and good service.
“The biggest unknown for JD is the impact of social media and video moving into ecommerce. Think Douyin,” Towson said, referring to the short video social networking service provider.
The company’s shares were trading at about $60 at the beginning of this year but ended at $26.71 on Tuesday. In October, several banks and brokers including Citi, Daiwa and Jefferies cut price targets and revenue growth forecasts for the company.
JD.com reported net revenue of 247.7 billion yuan ($34.19 billion) for the third quarter, missing analysts’ average estimate of 249.26 billion yuan, based on LSEG data.
It reported net income attributable to shareholders of 7.94 billion yuan, up 33% from 5.96 billion yuan a year earlier.
($1 = 7.2446 Chinese yuan renminbi)
(Reporting by Arsheeya Bajwa and Akash Sriram in Bengaluru, Sophie Yu in Beijing; Editing by Varun H K, Kim Coghill and Jane Merriman)