Beijing: Chinese e-commerce giant Alibaba Group Holding has seen some early success in its effort to cut costs, according to its most recent financial results and analyst assessments.
The Hangzhou-based company that owns the South China Morning Post was able to grow its adjusted earnings by 19% despite only 3% growth in revenue, according to its financial report released on Thursday.
In the three months ended September 30, Alibaba cut 1,797 jobs as part of its cost-cutting initiatives. It has cut losses across the board. For example, the adjusted loss from its digital media and entertainment business declined to 117 million yuan (US$16.4 million) from 931 million yuan.
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The company's logistics division, Cainiao, reported earnings of 125 million yuan, turning in a loss of 315 million yuan from the previous year.
While earnings in Alibaba's primary e-commerce business rose 6%, losses on Taobao Deals, an online grocery service built to compete against Pinduoduo and Taocaicai a discount-focused shopping app, were 2.48 billion from a year ago. yuan to 960 million yuan.
According to Tsz Wang Tam, an equity analyst at DBS Bank, which is based in Hong Kong, "adjusted net income was much better than expected." Although not particularly strong, revenue growth met expectations.
The increased scrutiny by Alibaba of its spending is taking place against a backdrop of Chinese economic headwinds.
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The world's second-largest economy grew just 3% from January to September, short of an annual target of "about 5.5%" due to Beijing's strict zero-tolerance Covid-19 policy, which includes border checks and sudden lockdowns.
Social retail sales rose 0.6% in the first 10 months of the year from the same period last year, according to data from the National Bureau of Statistics, while retail sales, a gauge of consumer spending, declined 0.5% from a year in October. Earlier
The third quarter saw a 1% year-over-year decline in Alibaba's China commerce sales, which include revenue from its two biggest shopping platforms, Taobao and Tmall.
In a conference call on Thursday, Alibaba President and CEO Daniel Zhang Yong said the macro environment will be the key determining factor for all players in the consumption sector, both online and offline.
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Extensive efforts in efficiency improvement and cost reduction measures are beginning to pay off, he continued.