revenue exceeds expectations in Q4 with strong sales of low-cost products

Chinese conglomerate Alibaba Holding reported a 7% increase in fourth-quarter revenue, surpassing expectations, driven by the growth in low-cost product sales.

The revenue amounted to 221.87 billion yuan (28.41 billion euros) for the three months ending March 31, compared to an estimate of 219.66 billion yuan, according to an LSEG consensus.

Alibaba focused on low-cost products to address consumer caution, which helped boost domestic e-commerce sales during the period.

Alibaba’s domestic commerce operations, including Taobao and Tmall Group, experienced a 4% year-over-year growth, with a double-digit increase in order volume.

The company also reported robust growth in its international division, up 45%, exceeding analysts’ forecasts of 39%. This growth was expected due to the company’s investments in the international market and consumer demand for low-cost Chinese products.

However, the group recorded an 86% drop in shareholder-attributable profit in the fourth quarter, to 3.27 billion yuan, down from 23.52 billion yuan a year earlier.

Additionally, it saw its losses nearly double to 4.1 billion yuan, compared to 2.2 billion yuan a year earlier, due to massive investments to remain price competitive and shorten delivery times.

Alibaba’s U.S.-listed shares fell about 3% in pre-market trading.

The company has experienced a tumultuous year since announcing in March 2023 the largest restructuring in its 25-year history, splitting into six units and refocusing on its core businesses, including domestic e-commerce.

Furthermore, since the pandemic, Chinese consumers have been spending cautiously due to the economic slowdown and the collapse of the real estate market.