E-commerce group JD.com Inc beat quarterly revenue estimates as more people shopped on its platform following the Covid-19 confinements in China, but its CEO was cautious about the outlook due to logistical disruptions and slowing consumer spending.

 

The resurgence of Covid-19 in the world’s second-largest economy in March and the tight closures it has since taken to curb its spread, including in its most populous city, Shanghai, have heavily disrupted normal life and business activity.

JD.com CEO Xu Lei told analysts on a call following Tuesday’s results that the situation was very different from what China has experienced in the past two years, when outbreaks were confined to smaller areas of the country and boosted online shopping.

This time, the spread of infections to major centers such as Beijing, Shanghai, Guangzhou and Shenzhen, and shutdowns, are affecting both online and offline commerce.

«In April, the order cancellation rate was significantly higher than last year due to logistical problems. May saw an improvement, but it is still higher than last year,» he said.

«Consumers are facing a loss of income and confidence, and consumption in general is weak,» Xu added.

Shares of the Chinese company initially rose as much as 9 percent in pre-market trading, but were flat at the market open and after Xu’s comments.

Nomura analysts estimated in mid-April that 45 cities in China, accounting for 40% of its GDP, were undergoing full or partial shutdowns.

Shanghai’s confinement has been especially tight, with residents unable to buy much more than daily necessities due to logistical bottlenecks and a shortage of couriers. The capital, Beijing, has also tightened restrictions in its attempt to prevent an outbreak.

Underscoring the impact of these measures, China’s retail sales fell 11.1% last month, in their biggest contraction since March 2020.

Still, investor sentiment toward JD.com and its peers was buoyed Tuesday by comments from Chinese Vice Premier Liu He at a meeting with tech executives, which stoked hopes that the sector’s long-running regulatory crackdown is easing.

Shares of U.S.-listed Chinese companies rose after Liu said the government supported the sector’s development and the public listing of technology companies.

E-commerce rival Alibaba Group also rose 7% and Pinduoduo was up more than 8% before the market opened.

JD.com posted revenue of 239.66 billion yuan ($35.6 billion or 33.893 billion euros) in the quarter ended March 31, versus Wall Street analysts’ estimates of 236.66 billion yuan, according to IBES data from Refinitiv.

Excluding items, JD.com posted a profit of 2.53 yuan per American depositary share (ADS), versus analysts’ expectations of 1.62 yuan.

Net loss attributable to ordinary shareholders stood at 2.99 billion yuan, compared with a profit of 3.62 billion yuan a year earlier.

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