Alibaba warns of drop in revenues as coronavirus spreads worldwide
Alibaba Group Holding Ltd. warned of a drop in revenues at its key e-commerce businesses this quarter as the coronavirus sweeping China hits supply chains and deliveries.
The warning from executives came during an earnings call for the quarter ending in December 2019, during which the company beat analyst estimates and brought in record transactions for its annual Singles’ Day shopping event.
CEO Daniel Zhang said the delayed return to work following the Lunar New Year, due to the virus outbreak which has killed more than 1,350 people in China and infected thousands more, had caused problems for merchants and delays in fulfilling orders.
He said food delivery orders had dropped year-on-year due to the number of restaurants that had closed as a result of the outbreak. And while the company has seen a surge in demand for goods from its Hema supermarkets, it has been held back by limited delivery capacity.
Finance chief Maggie Wu said most of Alibaba’s businesses that rely on the sale of physical goods would likely see a decline in revenues this quarter.
“We like other businesses are not immune to supply and demand,” she said. “Their recovery and long term success will translate to long term growth for Alibaba Group.”
Despite the downbeat forecast, Zhang said that as of Monday Alibaba
had observed more people in large cities going back to work and logistics networks returning to normal operations.
He also said DingTalk, the company’s enterprise chat app, had seen “explosive growth” during the crisis as white collar businesses and schools use it for remote working and online lessons.
“Alibaba’s earnings for the next couple of quarters are certainly likely to take a hit from the coronavirus outbreak. However, the company’s business is strong enough to withstand the brief downturn, with its cloud computing business set to lead the charge for a more positive outlook,” said Jesse Cohen, senior analyst at financial markets platform Investing.com.