Chinese e-commerce operator JD.com Inc. said Aug. 14 that its loss widened in the second quarter due to increased spending, mainly on logistics and marketing.
The Beijing-based operator of direct online sales platforms and marketplaces also said it is launching its own luxury goods platform later this year and that it was open to acquiring other platforms following its earlier investment in U.K.-based luxury goods online retailer Farfetch, as it seeks to latch on to expanding demand for luxury goods in China.
For the three months ended June 30, JD.com booked a net loss attributable to ordinary shareholders of 496.38 million yuan, compared with a loss of 252.31 million yuan a year earlier. Diluted earnings per American depositary shares totaled a loss of 35 cents, compared with a mean consensus estimate of a loss of 12 cents, according to S&P Capital IQ.
The company attributed the wider loss to higher costs for procurement, warehousing, delivery, marketing and technology, among others. Adjusted EPS totaled 67 cents, compared with a mean consensus estimate calling for normalized EPS of 58 cents.
Revenue jumped 43.6% to 93.2 billion yuan from 64.9 billion yuan.
"JD's growing strength as China's largest retailer continues to position us to capture new and expanding market opportunities," JD.com CEO Richard Liu said in a statement. "Looking forward, as JD's smart technologies and big data help us revolutionize the online shopping experience, our 'retail as a service' initiative will further extend the capabilities of our platform to partners throughout China."
For the third quarter, JD.com expects revenue to jump between 36% and 40% year over year to between 81.8 billion yuan and 84.2 billion yuan. This excludes the impact from its deconsolidation of JD Finance, completed as of June 30. The consensus mean estimate for third-quarter revenue is $82.49 billion yuan.
Liu, who spoke to investors and analysts on a conference call after announcing the results, noted that the company's investment in Farfetch was a way to fulfill the demand of luxury products among Chinese consumers and that it was launching its own luxury platform later this year. It added that its own platform would focus on luxury products offered through brands' official channels in China and would not conflict with Farfetch, whose collections of brands are largely not available in China.
Furthermore, Liu said the company was open to investing in other apparel platforms.
"If we see more similar opportunities, high-quality platforms like Farfetch, we clearly don't rule out the possibility of other investments," Liu said.
The comment by the e-commerce operator follows its announcement in June 2017 that it would invest $397 million in London-based Farfetch to become one of its largest shareholders. The partnership is aimed at raising Farfetch's brand awareness, traffic and sales in China in exchange for JD.com's logistics, and internet finance and technology capability, while enhancing JD's focus on high-end luxury and fashion.
As of Aug. 14, US1$ was equivalent to 6.672 Chinese yuan.