Alibaba Group Holding, a Chinese company, missed analysts' forecasts for third-quarter sales on Wednesday due to weakness in the retail sector and a sluggish economic rebound in the second-biggest economy in the world.
Premarket trade saw a 3.5% increase in the company's U.S.-listed shares, which recently announced a $25 billion expansion to their share repurchase programme through the end of March 2027. Alibaba, a company that was co-founded by Joe Tsai and Eddie Wu, announced in March of last year that it was splitting into six separate business segments.
As the company battles slower earnings growth, Wu, the group CEO since September, has been strengthening his hold on Alibaba's core businesses and announcing to staff that "user first" and "AI-driven" will be the company's strategic emphases. However, China's online shopping market has been gradually recovering after the country's internet regulations were loosened a little over a year ago, which has put pressure on the e-commerce giant.
In response to a sluggish post-COVID recovery, consumers in the second-biggest economy in the world have been cutting costs. This has boosted low-cost domestic e-commerce players like PDD Holdings, which owns Pinduoduo and the overseas-focused platform Temu, and prompted Alibaba to intensify its focus on discounting and lower-priced goods.
Alibaba abandoned its intentions to separate its cloud division last year, citing concerns about US export restrictions on processors used in AI applications to China. Alibaba's logistics subsidiary, Cainiao, has submitted an application to list in Hong Kong. Additionally, sources informed Reuters last week that Alibaba was considering selling several businesses related to the consumer sector, including as its grocery store Freshippo, retailer RT-Mart, and operator of shopping centers Intime.
For the three months ending December 31, the business recorded sales of 260.35 billion yuan ($36.19 billion), less than the 262.28 billion yuan that 19 analysts surveyed by LSEG had predicted.
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