Alibaba Takes US$1.3 Billion Loss in Retreat from Offline Retail
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Alibaba is exiting offline retail, taking a substantial loss on its sale of Intime, one of China's leading department store operators, reports the South China Morning Post. The e-commerce giant is selling its entire stake in the retail chain to a consortium comprising Youngor Group and Intime's management team for approximately 7.4 billion yuan (US$1 billion), less than half of Alibaba's initial investment.
The deal, announced in a Hong Kong stock exchange filing on Tuesday, marks a significant retreat for Alibaba from its "new retailing" strategy, a vision initiated by founder Jack Ma in 2016 to integrate online and offline shopping resources. Alibaba's initial investment in Intime in 2014, amounting to US$692 million, made it the retailer's second-largest shareholder at the time. Alibaba gradually increased its stake to 99 percent over the past decade.
The sale is expected to result in a 9.3 billion yuan (US$1.3 billion) loss for Alibaba. Despite this, the company's decision is driven by strategic considerations for its future business model, according to Kenny Ng, a strategist at Everbright Securities International.
Alibaba's Hong Kong-listed shares fell 1.1 percent on Tuesday, while Youngor's Shanghai-listed shares rose 3.7 percent. Alibaba owns the South China Morning Post.
This move further underscores Alibaba's strategic shift away from direct involvement in offline retail. The company has previously divested from other offline ventures, including its Freshippo grocery business and its Hema supermarket chain. This latest move reinforces Alibaba's commitment to focusing on its core online commerce and cloud computing businesses.