China's JD.com says worst is over for consumer demand

E-commerce firm JD.com Inc, posted an 11.4% rise in third-quarter revenue on Friday, beating analysts' estimates as Covid-19 lockdowns in China led more consumers to shop online.

U.S.-listed shares in JD.com rose more than 3% in trading before the bell.

Chinese retail spending has sagged this year, with consumers frustrated by the government's strict "zero-Covid" policy that has led to frequent snap lockdowns and hurt economic activity.

The country earlier this month relaxed Covid-19 prevention rules, reducing the quarantine period for incoming travelers to 8 from 10 days, while the circuit breaker for inbound flights was canceled.

JD.com chief executive Xu Lei said on a call with analysts on Friday that the company has seen signs of consumption recovery, helped by the new rules.

"The worst moment is basically over," he said.

Some product categories affected by the pandemic, including cosmetics and smartphones, have seen an improvement in sales recently, he said.

Research house TH Data Capital noted in a report that sales growth at JD.com in September was better than that in July and August, driven mainly by consumer electronics, home appliance and FMCG.

Lockdowns have seriously disrupted transport, but JD.com's focus on building its logistics network has helped it deal with bottlenecks, it said.

Revenue grew to 243.5 billion yuan ($34.21 billion) in the three months ended Sept. 30, compared with a Refinitiv consensus estimate from 22 analysts of 242.81 billion yuan.

Rival Alibaba reported 3% revenue growth in the three months ended Sept. 30.

US Tiger Securities analyst Bo Pei said JD.com's more reliable logistics network amid the COVID-19 outbreak, less exposure to discretionary items like apparel, and Apple's launch of its iPhone 14 boosted sales, helped it post better revenue growth that rival Alibaba.

JD.com's quarterly net income attributable to ordinary shareholders was 6 billion yuan, compared with a net loss of 2.8 billion yuan a year earlier.

Excluding one-off items, JD.com earned 6.27 yuan per American Depository Share, beating expectations of a 4.44 yuan profit per ADS.