JD.com Approves $3 Billion Buyback After Revenue Beat Estimates
(Bloomberg) -- JD.com Inc. initiated a $3 billion stock repurchase program and reported a better-than-expected 3.6% rise in revenue, helped by a broader product lineup and price cuts to target cost-conscious Chinese consumers.
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The online retailer reported sales of 306.1 billion yuan ($42.6 billion) from October to December, versus the average analyst projection for about 300 billion yuan. It green-lit a new three-year buyback program, aiming to assuage investors concerned about the Chinese e-commerce player’s growth potential. The amount matched the Beijing-based company’s previous program. Its shares rose 11% in pre-market trading in New York.
JD.com’s results come after calls from billionaire founder Richard Liu in December to fix deep-seated issues from poor merchant support to an overly pricey item list. The company, which traditionally focused on big-ticket items such as electronics, has since last year wielded discounts and added cheaper products to tap bargain-hunting during China’s economic downturn.
The Beijing-based company had adopted discounts to try and revive topline growth, which has remained mired in single-digits for about a year as China struggles with an uncertain post-Covid recovery. It’s offering consumers a wider choice of prices and product categories, aiming to reclaim ground lost to traditional rivals Alibaba Group Holding Ltd. and PDD Holdings Inc. as well as newer entrants like ByteDance Ltd.’s Douyin.
JD.com 4Q Net Revenue Beats Estimates: Snapshot
Read More: Billionaire JD Founder Channels Jack Ma in Call for Change
What Bloomberg Intelligence Says
The fall in JD.com’s 4Q retail operating margin from a year earlier, excluding Dada’s contribution, may have been smaller than consensus’ estimate of a 50-basis-point drop, we calculate. This probably was a result of JD.com’s enlarged selection of value-for-money merchandise and services, which attracted more orders and reduced processing costs per unit, fueling stronger-than-expected gains in operating efficiency. A persistent rise in the number of paying JD Plus members and their contribution via fees to the company likely also helped narrow the year-over-year fall in 4Q retail operating profit.