Chinese e-commerce giant Alibaba Group Holding Ltd, slashed its forecast for annual revenue growth on increased competition and a regulatory crackdown, sending its stock tumbling 11%.
Alibaba now expects revenue for the year ending in March to rise between 20% and 23%, the slowest pace since its 2014 stock market debut and down from a May forecast of 29.5% growth. The company also undershot expectations for earnings per share in the second quarter.
Chinese shoppers have become more cautious about spending amid coronavirus outbreaks and that, combined with supply disruptions, contributed to slower growth for China’s economy in the quarter.
“These economic headwinds, coupled by intensifying market competition also affected our core commerce business in China,” Alibaba CEO Daniel Zhang said on an earnings call, adding that demand for apparel and general merchandise had been particularly affected.
But analysts also noted that while Alibaba had been hit by slower-than-expected growth in demand for fashion and accessories, its rivals had done much better in apparel sales.