Alibaba Group Holding Limited is selling the Chinese department store chain Intime to a consortium led by the textile and clothing company Youngor Group for around 7.4 billion renminbi (1 billion euros).
The online marketplace company, which currently holds 99 percent of the shares in Intime, expects losses of around 9.3 billion renminbi (1.2 billion euros) due to the planned sale.
The move is in line with the Chinese tech giant’s plan to exit offline retail and focus on its core e-commerce and cloud computing businesses.
Alibaba acquired the Chinese department store operator for around 2.5 billion euros in 2017 as part of its expansion plans in stationary retail.
Focus on e-commerce and cloud
Meanwhile, the company undertook a major restructuring in 2023, splitting its businesses into six groups and shifting focus to its e-commerce and cloud units.
Announcing second-quarter results in mid-November, Alibaba Group Chief Executive Officer Eddie Wu said: “We are more confident than ever about our core businesses and will continue to invest to support long-term growth. Our other businesses continued to improve their operational efficiency, with most further increasing their profitability or reducing their losses.”
Bloomberg reported earlier this year that Alibaba had contacted several potential buyers for Intime, which is listed under “other” on its balance sheet.
Effect in Q3
In a statement, Alibaba said it has joined forces with the minority shareholder (1 percent) to sell 100 percent of the shares in Intime to a consortium consisting of Youngor Group and members of Intime’s management team.
Completion of the transaction is subject to merger control clearance in China and other customary closing conditions.
The expected loss would be reflected in the next result. In the second quarter, Alibaba reported a 63 percent year-on-year increase in net profit to 43.6 billion renminbi, while adjusted net profit fell 9 percent to 36.5 billion renminbi. Second-quarter revenue was 236 billion renminbi, up 5 percent year-on-year.
In Hong Kong, Alibaba shares closed regular trading on Tuesday at 83,400 Hong Kong dollars (euro), down 1.13 percent. In pre-market trading on the NYSE, the shares lost around 0.2 percent and were quoted at 85.87 US dollars (euro).
Tense domestic demand
The prospects for further growth in the domestic market are made more difficult by tougher competition from local rivals such as Temu owner PDD Holdings, JD.com and TikTok inventor ByteDance.
Retail sales growth in China slowed to three percent in November from a year earlier. China’s retail sales growth fell to 3 percent year-on-year in November, missing forecasts, as domestic demand in the world’s second-largest economy remains subdued, according to official data released on Monday. (dpa/AFP)
This article previously appeared on Fashionunited.uk and was created using digital tools translated.
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