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Alibaba’s Apparel, Accessories Sales Show Signs of Recovery

Alibaba’s new fiscal year is off to a strong start as it bounces back from a volatile 2020.

Active consumers across the the Chinese e-tail titan’s ecosystem reached 1.18 billion in Q1 of fiscal 2021, including 912 million in China—a 45-percent increase from the prior quarter ending in March.

During the quarter ending in June, the company saw “solid” growth in physical goods GMV, with particularly strong performance across categories like apparel and accessories, as well as home furnishing and electronics. The development represents an about-face from the previous quarter, when Alibaba saw negative online growth in fashion goods, homewares and auto parts, which ultimately offset the robust consumption of household goods and electronics that took place during the beginning of the year.

Alibaba delivered a 34-percent increase in revenue year over year, said chief financial officer Maggie Wu. The Chinese tech and retail giant plans to invest its excess profits and additional capital to support merchants and penetrate new markets. Alibaba will also continue to buy back shares, upping its repurchasing program from $10 billion to $15 billion, citing confidence in its long-term growth prospects.

In a nutshell: Alibaba credits a number of engaging user experiences with piquing shopper interest in new categories. Taobao Deals, an app launched in 2020 offering Chinese shoppers daily discounts on a multitude of products, has grown to see 190 million active consumers over the course of the past 12 months. Meanwhile, secondhand shopping has grown across the country thanks to Alibaba’s Idle Fish platform, which carries a variety of recycled, refurbished and vintage products for sale or for rent. Monthly active users exceeded 100 million throughout the quarter, Alibaba said.

Alibaba closed out the quarter shortly after its 6.18 Mid-Year Shopping Festival, which saw participation from about 250,000 merchants and brands—more than double the number that joined in 2020. With roughly 1 million products for sale, participating vendors saw active consumer memberships grow to the tens of millions, giving them the opportunity to engage with shoppers by offering them exclusive offers and brand privileges.

The company has also upped its game when it comes to fulfillment, expanding services to include one-hour, half-day and next-day delivery. Alibaba’s Community Marketplaces, which offer next-day pickup services for a variety of products in less developed, rural regions has helped expand the company’s reach. That business continues to expand rapidly, with GMV growing by 200 percent over the quarter ending in June.

Revenue: Revenue reached $31.8 billion in the first quarter of fiscal 2021, representing a 34-percent increase from the same period a year prior. Income from operations totaled $4.7 billion, a decrease of 11 percent year over year.

Earnings: The company’s adjusted EBITDA decreased 5 percent from the same period in 2020 to $7.5 billion, while adjusted EBITA fell 8 percent to $6.4 billion. According to Alibaba, the year-over-year decreases were due to investments in strategic areas like Community Marketplaces, Taobao Deals, local consumer services and merchant support, as well as the building out of marketplaces like Idle Fish.

Net income attributable to ordinary shareholders was $6.9 billion, and net income was $6.7 billion—an increase of 10 percent year over year.

CEO’s take: “Alibaba started the new fiscal year by delivering a healthy quarter,” chairman and CEO Daniel Zhang said. “Over more than twenty years of growth, we have developed a company that spans across both consumer and industrial Internet, with multiple engines driving our long-term growth. We believe in the growth of the Chinese economy and long-term value creation of Alibaba, and we will continue to strengthen our technology advantage in improving the consumer experience and helping our enterprise customers to accomplish successful digital transformations.”

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