Alibaba suffers a net loss of 1,741 million euros

Chinese e-commerce giant Alibaba has announced the sale of its 73.66% stake in Sun Art Retail Group, its hypermarket business in China, for a value of 11,383 million yuan (about 1,504 million euros). The transaction, agreed with the Chinese fund DCP, will mean a net loss of 1,741 million euros for Alibaba.

As detailed by the company in a statement sent to the Hong Kong Stock Exchange, the sales figure is significantly lower than the 3,600 million dollars that the group disbursed in 2020 to acquire control of Sun Art from France's Auchan in an attempt to lead the Chinese retail sector by integrating physical stores with digital platforms.

This transaction marks a further blow to Alibaba's accounts, which recently reported a $1.277 billion loss on the sale of its Intime department store division for $1.016 billion, a fraction of the $2.5 billion it had paid seven years ago.

Alibaba is loosing ‘dead-weight’ 

Alibaba justified the sale of Sun Art as part of its strategy to monetize non-core assets and focus the proceeds on developing its core businesses. This decision will allow the company to “enhance shareholder returns” in an increasingly challenging environment. Since 2020, the Chinese giant's strategy has been impacted by the pandemic's effect on consumption, China's economic recovery challenges, increasing market competition, and conflicts with domestic regulators.

In response, Alibaba implemented a corporate restructuring process in 2023, which included the recent merger of its domestic and international e-commerce divisions into a single subsidiary. The company, now under the leadership of its new CEO, Eddie Wu, plans to focus on its strategic areas: e-commerce and cloud computing. It also seeks to expand its international presence as part of its long-term vision.

The sale of Sun Art is part of a transformation for Alibaba, seeking to adapt to new market dynamics. While the Chinese giant faces significant challenges, its renewed focus on key businesses could lay the foundation for sustained future growth in China and globally.