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China’s major hypermarket operator Sun Art Retail Group Ltd, set up by Auchan and Ruentex and backed up by Alibaba, reported a 7.3% fall in 2018 profit.

Missing market expectations

The retailer reported its net profit fell to RMB2.59bn (US$386m) from RMB2.79bn (US$386m). This was below the expected RMB2.70bn. Turnover fell by 2.9% to RMB99.36 bn and same-store sales fell 1.72% year-on-year. The group’s gross profit margin increased by 1.2 percentage point from last year to 25.3%.

2019 plan

The company, operating under the “RT-Mart” and “Auchan” banners, says that the competition is fierce including online. "2018 was a year where the digitalization of our retail business began, and also a year to plan future development," the company said in a statement. "Through digital management, supply will be closely tied with demand to provide customers with the right product offering, good prices..."

Just one day after publishing its 2018 results, Sun Art announced plan to open 25 more stores in China this year, aiming to return to positive growth in 2019.

 

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Ant Financial, an Alibaba subsidiary and the operator of AliPay, is acquiring a UK based money transfer company WorldFirst for more than £500m (US$640m).

Global expansion

This deal marks Ant's biggest Western expansion, boosting its global presence significantly. It would help Ant and AliPay to increase its  customer base globally to enhance cross-border money transfer capabilities of Alipay. According to Ant, the two companies are 'highly complementary'. Alipay has also been made available in Walgreens in the US earlier this month.

Ant Financial and WorldFirst

Ant, created by Alibaba Group in 2014 has a valuation of $150 billion, with more than 1bn active users globally.

WorldFirst, founded in 2004, specialises in helping ecommerce customers collect funds from sites such as Amazon.com and eBay as well as process payments in various currencies. The company said it would continue to be a U.K.-based business with global operations, and will become a wholly owned subsidiary of Ant. 

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Alibaba Group Holding Limited announced its financial results for the quarter ended 31st December 2018.

Growth driven by technology

The company had another strong quarter. In the press release, Daniel Zhang, CEO of Alibaba, commented that “Our resilient operating and financial performance is a direct reflection of our persistent focus on better serving our growing base of nearly 700 million consumers across retail, digital entertainment and local consumer services. Our growth is also driven by the power of Alibaba’s cloud and data technology that helps expedite the digital transformation of millions of enterprises.

Highlights of the group’s third-quarter performance are summarised below.

Strong top line figures

  • Turnover for the three months reached RMB117.3bn (US$17.1bn), up by +41YoY
  • Core commerce (Taobao & Tmall) revenue grew +40% YoY to RMB102.8bn (US$15.0bn), with 28% YoY growth for customer management revenue
  • Digital media and entertainment revenue up by +20%YoY, reaching RMB6.5bn (US$944mn)
  • Cloud computing revenue up by +84%YoY to RMB6.6bn (US$962mn), driven by increased spending from enterprise customers

Growing consumer engagement

  • Annual active consumers reached 636 million, up 35 million over the prior quarter, driven by successful user acquisition program such as referrals through the Alipay app. Notably over 70% of annual active consumer growth was from third and lower tier cities
  • Mobile monthly active users (MAUs) increased by 33 million from the previous quarter, reaching 699 million

Other business highlights

  • Consumption growth remains strong:
    • Tmall physical goods paid gross merchandise value (GMV) up by + 29%YoY, exceeding forecast by China’s National Bureau of Statistics
    • The growth was driven by fast-moving consumer goods (FMCG), apparel and home furnishing categories
  • New retail redefines the future of physical stores:
    • Freshippo (formerly Hema) now has 109 stores, with strong same-store growth
    • Around 470 Sun Art stores enabled with New Retail technology
  • Logistics keep driving engagement:
    • Ele.me (on-demand food delivery platform) and Koubei (online restaurant and local service guide) are combined to provide better service and better value for local customers
    • Cainiao processed over 1 billion delivery orders during 11.11
  • Encouraging Lazada performance
    • Alibaba’s Southeast Asia ecommerce platform Lazada also showed good growth in GMV. The upgraded Lazada’s technology resulted in increased number of active users and better engagement of Lazada’s mobile app

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