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Alibaba revenue sees the slowest growth in three years as Trade War bites

By Sasha Fedorenko January 30, 2019 - 5:18 pm

Alibaba revenue saw the slowest growth since the third quarter of fiscal 2016 as the result of the US-China trade war keeping shoppers away during the peak trading season.

The marketplace announced their quarterly results today in which they took a positive stance on their financial performance.

In what Alibaba points to a “strong quarter,” the marketplace unveiled a revenue $17.5bn (£13.39bn) in the last three months ending 30 January 2019. That’s up by 41% from the same time the previous year but not up to the same speed with their 2016 results.

Alibaba’s worsening performance in the entertainment sector also adds to the equation, with $890m (£680m) losses and more than $400m (£306m) write-off over failed entertainment projects.

Alibaba sales growth dropped to 8.1% on the year-on-year (YoY) basis in November 2018, marking the slowest growth since 2013. While factors such as tariffs already impacting the biggest player in the Chinese market, the marketplace already set out plans to cut some spending because of the country’s economic issues brought as a result of the US-China trade war.

The marketplace’s New Retail scheme, which aims to “blend the best practices of online and offline retailing” saw a $867m (£663m) investment in China-based home improvement retailer Easyhome for 15% of the company to enrich the initiative’s offering. But the marketplace has decided to pull back from physical retailing by reducing the share to 5% as part of the deal that will see another company taking a controlling share of Easyhome.

As it appears Alibaba is taking a step back on their non-marketplace investments as they face economic turmoil. Their physical store investment have nearly reached a $5bn (£3.8bn) spend on Easyhome, a brick-and-mortar big data company, a cinema operator and a hypermarket operator.

 

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