(Yicai) Nov. 14 -- JD.Com's shares slides after the Chinese e-commerce giant said profit more than halved in the third quarter, dragged down by heavy investment in new businesses, especially in its food delivery venture launched earlier this year.

JD.Com [HKG: 9618] ended 6 percent lower at HKD116.90 (USD15.20) a share in Hong Kong today. Its New York-listed stock [NASDAQ: JD] fell 1.7 percent to USD30.71 yesterday.

Net profit plunged 55 percent to CNY5.3 billion (USD745.1 million) in the three months ended Sept. 30 from a year earlier, the Beijing-based company said in an earnings report released yesterday. Revenue rose 15 percent to CNY299.1 billion (USD42 billion), with merchandise income climbing 11 percent and that from services surging 31 percent.

JD.Com posted a quarterly operating loss of CNY1.1 billion, versus an operating profit of CNY12 billion a year ago, with the decline mainly due to more investments in new businesses, the company said. Marketing spending more than double to CNY21.1 billion, largely to promote new business initiatives.

“JD Food Delivery continued to drive healthy progress," said Sandy Xu, chief executive of JD.Com. "It also continued to generate synergies with JD's core retail business, particularly in driving user growth, user shopping frequency, and cross-category purchases."

Income from new businesses, including JD Food Delivery, which the firm launched in February, JD Property Development, social e-commerce platform Jingxi, and overseas operations, more than tripled to CNY15.6 billion (USD2.2 billion). Food delivery saw steady growth in gross merchandise value and orders, while overall quarterly investment narrowed on a sequential basis.

Hyper competition in the food delivery market has not produced business-model innovation nor added incremental value to the industry, but has instead disrupted pricing systems and caused problems for merchants, and is therefore unsustainable, Xu said. JD.Com's main focus is on improving platform systems and enhancing user, merchant, and rider experience, she pointed out.

JD Retail, the firm’s core business which includes JD Health, JD Industrials, and other divisions, covering self-operated retail, platform operations, and advertising services, had revenue of CNY250.6 billion, an increase of 11 percent from a year earlier. 

China’s national subsidy program has boosted consumption since last year, especially of home appliances and computers, Xu pointed out. Beyond driving a short-term uptick in demand, it has also accelerated product innovation, digitalization, and green upgrades, she noted.

JD.Com's income from general merchandise jumped 19 percent in the third quarter from a year ago, with that from electronics and home appliances gaining 4.9 percent and from platform and advertising climbing 24 percent. The number of annual active users exceeded 700 million last month.

JD.Com will continue to leverage its advantages in merchandise, pricing, and services to consolidate and enhance market share, it said. For example, the company will work with brands on more customized products, offering competitive pricing through scale and supply chain capabilities, and improving omni-channel shopping experiences.

As of the end of the third quarter, JD.Com had over 20 JD Mall outlets nationwide and more than 100 JD Appliance City flagship stores. In addition, orders from the JD Merchandising Manager livestream studio surged more than 150 percent during the latest Double 11 shopping festival from a year earlier.

JD Logistics saw revenue jump 24 percent to CNY55.1 billion, the fastest pace in two years, with the company accelerating its global footprint similar to other Chinese peers. On Oct. 9, the unit said it would buy a local instant delivery business from JD.Com for USD270 million. 

Editor: Martin Kadiev