dpa
Beijing
Chinese online marketplace company Alibaba Group Holding Limited said on Tuesday that the sale of a department store chain will result in losses equivalent to $1.3 billion.
Alibaba announced its agreement to sell the Intime chain in China to a textile and apparel company Youngor Group-led consortium in a deal worth approximately 7.4 billion yuan, or $1 billion.
Alibaba, which currently holds a 99% stake in Intime, expects to record losses of around 9.3 billion yuan, or $1.3 billion, as a result of the planned sale.
The move is said to be in line with Alibaba’s plan to shift away from offline retailing and focus on its core e-commerce and cloud computing businesses.
Alibaba purchased the Chinese department store operator in 2017 in a deal worth approximately $2.6 billion as part of its plan to expand into the bricks-and-mortar retail segment.
Meanwhile, in 2023, the company undertook major restructuring, splitting its businesses into six groups and shifting focus to its e-commerce and cloud units.
While announcing the second-quarter results in mid-November, Eddie Wu, chief executive of Alibaba Group, stated: “We are more confident in our core businesses than ever and will continue to invest in supporting long-term growth.
“Our other businesses continued to improve their operating efficiency, with most of them continuing to increase their profitability or reduce losses.” In a statement, Alibaba said it has joined with the 1% minority shareholder to sell 100% of the equity interest in Intime to a consortium comprising Youngor Group and members of Intime’s management team.
The deal closure is subject to merger control clearance in China and other customary closing conditions.
The anticipated loss will reflect in its next earnings result.
In its latest second quarter, Alibaba recorded a 63% year-over-year increase in net income to 43.6 billion yuan, or $6.21 billion, while adjusted net income fell 9% to 36.5 billion yuan, or $5.2 billion.
Second-quarter revenue was 236.5 billion yuan, or $33.7 billion, an increase of 5% year-over-year.
In Hong Kong, Alibaba shares closed Tuesday’s regular trading at HK$83.40 ($10.74), down 1.13%. In pre-market activity on the NYSE, the shares were losing around 0.2% to trade at $85.87.
