Alibaba Group Holding continued to grow fast in the first fiscal quarter ended June 30, but its gross margin fell to 11.0 percent from 29.2 percent in the year-ago period, the lowest level since the leading Chinese e-commerce operator went public in 2014.
Due also to extraordinary charges and high investments in physical stores, logistics, cloud computing and other initiatives, net earnings declined by 45 percent to 7,650 million yuan renmimbi (€965.3m-$1,117.8m). Among many other items, the initiatives included investments in India on sports contents, facial recognition technology and mobile payments.
The group's total revenues went up by 61 percent to RMB 80.9 billion (€10.2bn-$11.8bn). Revenues from the core e-commerce business rose by 61 percent as well to RMB 69.2 billion (€8.7bn-$10.1bn), with a 64 percent increase to RMB 4.3 billion (€0.5bn-$0.6bn) outside China, but they generated a reduced adjusted Ebitda margin of 44 percent.
Excluding a shift in the mix toward self-operated New Retail businesses and other extraordinary factors, the Ebitda margin remained stable, said Alibaba. As previously reported, Intersport is working with Alibaba's New Retail operations in China.
Meanwhile, Alibaba is set to acquire a 48 percent stake in a joint venture in Russia with Mail.ru, a company that controls some popular Russian social networks, and a Russian telecom company, Mega Fon. The project, which is backed by the Russian Direct Investment Fund (RDIF) with a 13 percent stake, is in line with Alibaba's plan to build up a “digital silk road” across Eurasia.
The new joint venture will combine e-commerce with social media and online gaming. Alibaba already has a presence in Russia through Aliexpress, an international e-commerce operation that sells products from China in other countries.
The latest new is that Jack Ma, the former teacher who co-founded Alibaba in 1999 to make shopping easier, is planning to retire as its chairman in 12 months' time, coinciding with his 54th birthday, to devote more time to philanthropy and education. His place will be taken by Alibaba's current chief executive, the 46-year-old Daniel Zhang, but the retirement of Ma, who has become China's richest man with a personal fortune of $29.7 billion, is viewed as being mainly a formality.
