Alibaba Group Holding Ltd – ADR BABA announced on Tuesday its decision to sell its Chinese department store chain, “Intime,” resulting in a $1.3 billion loss. This move is part of Alibaba’s strategy to streamline its operations and concentrate on its primary e-commerce business.
What Happened: The sale is a continuation of Alibaba’s restructuring efforts, which began last year when the company was divided into six business units. The retail giant is also integrating its domestic and international e-commerce platforms into a single unit to better compete with rivals like PDD Holdings PDD and ByteDance, according to Reuters.
Alibaba will sell Intime to a consortium led by Youngor Fashion and Intime’s management for 7.4 billion yuan ($1.02 billion), pending regulatory approvals. The company acquired Intime in 2017 for $2.6 billion to expand its brick-and-mortar presence.
Reuters reported in February that Alibaba is looking to divest several consumer sector assets, including Intime, to refocus on its core e-commerce operations. The challenging consumer environment in China has pressured retailers and e-commerce platforms, prompting Alibaba’s strategic shift.
Why It Matters: The decision to sell Intime comes amid a broader restructuring within Alibaba. In November, the company announced plans to consolidate its domestic and international e-commerce operations into a single unit, the Alibaba E-commerce Business Group. This new division will be led by Jiang Fan, who has been the CEO of Alibaba International Digital Commerce. This strategic move is aimed at enhancing competitiveness against formidable rivals.
In October, Alibaba became a significant holding in the portfolio of Chinese fund manager Zhang Kun, as economic measures increased interest in leading tech stocks. Zhang’s fund acquired 40.4 million Hong Kong-listed Alibaba shares, making it the second-largest holding in his portfolio. This indicates a renewed confidence in Alibaba’s future prospects.
Additionally, in September, Alibaba joined China’s Stock Connect program, allowing mainland investors to access its Hong Kong-listed shares. This is expected to significantly boost capital inflows and enhance investor access to the company.
Price Action: Alibaba stock closed 2.02% lower on Monday at $86.06, as per Benzinga Pro. Meanwhile in Robinhood, Alibaba was trading around 86.24 in the after-hours market at 2:45 AM ET.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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