On December 17th, Alibaba Group Holdings Limited (hereinafter referred to as "Alibaba") announced on the Hong Kong Stock Exchange that the company and another minority shareholder agreed to sell 100% of the equity of Intime Department Store to a consortium of buyers consisting of Yagor Group Co., Ltd. (hereinafter referred to as "Yagor") and members of Intime's management team.
The announcement states that Intime Department Store is one of the leading department store companies in China, and Alibaba currently holds approximately 99% of the equity in Intime Department Store. Alibaba's total proceeds from the sale of Intime Department Store are approximately RMB 7.4 billion (USD 1 billion), and it is expected to record a loss of approximately RMB 9.3 billion (USD 1.3 billion) due to the sale of Intime Department Store.
In 2014, Alibaba and Intime Commercial jointly announced that Alibaba would make a strategic investment of HKD 5.37 billion in Intime Department Store and attempt to connect online and offline commercial resources to achieve integration of membership, payment, and product systems. In 2017, Alibaba acquired a majority of the business of Intime Department Store with a 74% stake, holding absolute control.
In the past decade, Alibaba has introduced the concept of efficiency and service experience to traditional retail, promoting the industry to better return to the essence of retail. These online and offline explorations also help Alibaba e-commerce better understand and meet the diverse needs of consumers, enhance the full chain capability of the supply chain, expand the scenarios of offline services for consumers, and meet the needs of consumers in this era.
With the investment and support of Alibaba, Intime Department Store's digital transformation and instant retail model have been successfully implemented, resulting in significant improvements in operational efficiency and service experience, providing a reference for the transformation of traditional retail. As of now, Intime Commercial has 60 department stores and multiple pending projects across the country.
An e-commerce industry analyst stated that Intime Department Store has a relatively complete business system and brand influence. Alibaba sold Intime Department Store to the Intime management team and Yagor, ensuring the continuity and stability of Intime Department Store's business leadership and vision, and also inspiring the management team's enthusiasm for secondary innovation.
Liu Junbin, a special researcher at the NetEase E-commerce Research Center, told Securities Daily reporters that Intime Department Store was the first pilot of Alibaba's new retail in the Wulin commercial district of Hangzhou. Combined with online promotion festivals and other activities, it opened the prelude to China's new retail. Yintai Department Store has also expanded its presence in this process. New retail is a new business model that demands higher standards and precedents from operators. In addition, the competition among competitors is homogeneous, and currently large-scale offline retail is facing bottlenecks. Alibaba may be shifting profits or doing subtraction to better fulfill its main business.
Starting from September 2023, Alibaba will strategically prioritize its existing businesses, maintain long-term focus and high-intensity investment in core businesses, continuously improve user experience, and ensure that products always keep up with user needs for iterative evolution; For non core businesses, asset value can be realized through quick profitability or other capitalization methods in order to return value to shareholders.
Under the group strategy of "user first, AI driven", e-commerce and cloud computing are the two core business areas of the group. Alibaba has increased its investment in improving the core user experience of domestic e-commerce, maintaining strong growth momentum in overseas e-commerce markets, and improving AI infrastructure. Recently, Alibaba has fully integrated its e-commerce businesses such as Taobao, Tmall Group, International Digital Business Group, 1688, and Xianyu, and established an e-commerce business group to better support merchants in capturing global market opportunities and achieving greater growth through significant synergies.
In the past year, with strategic focus and firm investment, various business sectors have maintained healthy growth. The latest financial report released by Alibaba on November 15th shows that in 2024, the GMV of Taobao and Tmall during the "Double 11" shopping festival saw strong growth, with a record high number of buyers and a total of 46 million 88VIP members; Alibaba Cloud's revenue growth continues to accelerate, with AI related revenue experiencing double-digit growth for five consecutive quarters; Strong revenue growth of 29% for international digital business groups; Local lifestyle groups and large cultural and entertainment groups have significantly narrowed their losses.
In fact, Alibaba is returning value to shareholders by withdrawing non core assets. Previously, Alibaba Group Chairman Joseph Tsai stated that in the first nine months of the 2024 fiscal year (April 1 to December 31, 2023), Alibaba had completed $1.7 billion in non core asset sales. We still have some traditional physical retail businesses on our balance sheet, which are not our core focus, so it is very reasonable to exit, "said Tsai Chung hsin.
Cao Lei, Director of the New Retail Professional Committee of Hangzhou E-commerce Association, told Securities Daily reporters that Alibaba's sale of Intime Department Store may be due to considerations of optimizing resource allocation and focusing on core business. As competition in the e-commerce industry intensifies, Alibaba may need to focus more on its core businesses and emerging areas such as cloud computing and artificial intelligence to maintain its competitive advantage.