(Bloomberg) -- Alibaba Group Holding Ltd. has agreed to sell its Intime department store business to Youngor Fashion Co. for around $1 billion in a move to offload non-core assets.
The 7.4 billion yuan deal announced on Tuesday, which confirmed an earlier Bloomberg News report, will see the Chinese ecommerce giant record a loss of 9.3 billion yuan ($1.3 billion) on its initial investment in Intime. That acquisition had been a bet on integrating online and offline retailing into a unified business back in 2017. Alibaba had reached out to several potential buyers for Intime as it sought to streamline its operations, people familiar with the matter said earlier this year.
Alibaba shares in Hong Kong dropped as much as 2.1% Tuesday before paring the loss to trade down 0.8% as of 3:50 p.m.
Once a dominant player in China’s ecommerce field, Alibaba is struggling to grow amid competition from rising rivals like PDD Holdings Inc. and ByteDance Ltd. That’s forced a hard pivot under the leadership of co-founder Eddie Wu, who took on the chief executive officer role more than a year ago, toward consolidating its core businesses and focusing investment into the most promising growth areas. Alibaba is now integrating its domestic and international ecommerce operations, under the leadership of Jiang Fan, and has been steadily selling off holdings it doesn’t consider essential.
What Bloomberg Intelligence Says
Alibaba’s loss-making sale of its Intime department-store chain reflects its determination to focus on technology-driven internet platforms, AI and global e-commerce in 2025. The $1 billion of sale proceeds, which will result in a $1.3 billion loss to the tech firm, can fund share buybacks and dividends next year. As of Dec. 16, Alibaba remained in negotiations to sell its 78.7% stake in Sun Art grocer.
— Catherine Lim and Trini Tam, BI analysts
Combining online and offline commerce was a centerpiece strategy under previous CEO Daniel Zhang, and the company invested billions of dollars into modernizing physical retailers like Sun Art Retail Group Ltd. and Suning.com Co. The company has talked about the concept less in recent years and considered selling the Intime department store arm as early as February.
Data released Monday showed China’s total retail sales rose the slowest in three months in November, missing even the most bearish forecasts and indicating that domestic demand remains sluggish. Chinese policymakers have made boosting consumption a top priority for next year.
--With assistance from Will Davies.
(Updates with share price and analyst reaction)
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