Alibaba says 15% of China’s delivery areas were disrupted during Singles’ Day shopping festival

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Alibaba broke tradition by not publishing total sales for its Singles’ Day shopping festival this year. Advertisements for the festival are shown here at a Shanghai subway station on November 10, 2022.

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BEIJING — China’s covid checks are discontinued alibabaThe ability to deliver packages, the company said, dragged down the e-commerce giant’s sales in a competitive market.

“The resurgence of Covid has affected one area after another, resulting in abnormal or suspended logistics service in different places,” Alibaba CEO Daniel Zhang said during a quarterly earnings call on Thursday, according to FactSet. “This hurt business operations and the logistics experience for the consumer.”

The outages affected nearly 15% of delivery areas in China starting in October and during the shopping festival campaign period on Nov. 11, it said.

This year, Alibaba for the first time refused to share the total gross value of merchandise, an industry measure of sales over time, for its flagship Singles’ Day shopping festival that ended on November 11.

The company only said that sales were “in line” with those of last year, which registered the equivalent of $84.54 billion of GMV at the time.

Rival jd.com did not share GMV for this year’s Singles’ Day promotional period, which ran from the afternoon of October 31 to the end of November 11. The company will publish its earnings on Friday.

Douyin, the Chinese version of TikTok, has become a major platform for online shopping, powered by live streaming. The video app claimed that from October 31 to November 11, average daily e-commerce sales increased 156% over the previous year to an undisclosed figure.

China’s ongoing Covid controls have weighed on the broader economy. Domestic retail sales fell in October for the first time since May, official data showed this week. However, the share of physical goods sold online increased to more than a quarter.

In the quarter ended September 30, Alibaba’s online shopping platforms Taobao and Tmall saw GMV fall by low single digits from a year ago, CEO Zhang said.

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While he noted logistical disruptions through Nov. 11, he said the company was “seeing improvements.”

China last week cut quarantine times and signaled a broader relaxation in its strict covid controls despite a surge in infections across the country, including in the capital city of Beijing.

As of Monday, 15.6% of China’s GDP was negatively affected by covid measures, up from 12.2% the week before, according to a model by Nomura’s chief China economist Ting Lu.

‘Responsible’ use of cash

Alibaba reported earnings in the latest quarter of 12.92 yuan ($1.85) per American Depository Share, excluding items. It beat expectations of 11.62 yuan, according to Reuters estimates. Revenue grew 3% from a year earlier but missed expectations, Reuters said.

The company also increased its share buyback program by $15 billion and said it would not complete a primary listing in Hong Kong by the end of the year, as originally planned.

“The relief in Alibaba today is that it’s not getting worse,” Gil Luria, technology strategist at DA Davidson, said on CNBC’s “Squawk Box Asia” on Friday.

“As long as the consumer isn’t growing, investors want to know that their capital is protected and preserved, and Alibaba did a couple of things in that regard,” he said, noting how the latest results showed “responsible” spending and use of cash. flow.

Alibaba shares traded more than 4% higher on Friday morning in Hong Kong, after the stocks listed in New York closed 7.8% higher overnight.

The stock is about 30% lower year-to-date in both markets.

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