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Alibaba’s corporate overhaul off to a good start as China’s economy sputters

Just months after announcing a six-way breakup, Alibaba’s (9988.HK) corporate overhaul is off to a good start. The Chinese e-commerce group is deftly navigating sputtering growth in the world’s second largest economy. Quarterly sales jumped 14% year-on-year in the three months to June and all its main business units are growing again. It’s a promising sign of what is to come.

The domestic commerce unit saw revenue rise 12% to roughly $16 billion – nearly half of Alibaba’s top line. Efforts to focus on value-for-money offerings helped attract bargain hunters: daily active users on the Taobao shopping app increased in the quarter, boosting advertising dollars. That should ease concern that Alibaba is losing market share to rivals like PDD (PDD.O). It validates the company’s earlier decision to hive off lower-margin bricks-and-mortar supermarkets into a separate business called Freshippo, which is preparing to go public.

Alibaba’s other divisions are also looking nimble. Losses at international e-commerce and local services, which includes food delivery, have narrowed. In logistics and digital media, both reported positive adjusted earnings before interest, tax and amortisation in the recent quarter, versus losses a year ago. That helped lift the group’s overall earnings on the same measure 32% year-on-year. It’s early days but a more focused and less bloated Alibaba is starting to emerge. Reuters

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