Alibaba Bringing Macy's To China

Wednesday has been a big news day for Chinese Internet giant Alibaba Group Holding Ltd BABA. The biggest headline is certainly the company’s fiscal Q1 revenue miss, but Alibaba also announced a major partnership with one of America’s most iconic department stores.

Earnings numbers
Alibaba reported earnings per share of $0.58 versus consensus expectations of $0.56. While the numbers are an improvement over last year, quarterly revenue of $3.16 billion came up short of the $3.28 billion consensus estimate, and the stock is being punished by more than 5.0 percent in pre-market trading.


Bringing Macy’s to China
The timing of the announcement of the Macy’s Inc M deal was likely carefully chosen, as Alibaba management tries to soften the blow from the quarterly numbers. Under the terms of the deal, Macy’s China Limited will launch an exclusive flagship online store on Alibaba’s Tmall Global platform, providing hundreds of millions of Chinese consumers access to Macy’s merchandise.

The deal is a major feather in the cap of Alibaba, as Macy’s becomes the first U.S. department store to join Tmall Global. “Macy’s is one of the most iconic brands in the world and we are honored Macy’s China Limited has chosen us as their exclusive partner to grow their business in China,” Alibaba Group CEO Daniel Zhang said in a press release.

Busy week
The Macy’s deal comes on the heels of an announcement earlier this week that Alibaba acquired an interest in consumer electronics retailer Suning Commerce Group.

With the Chinese economy on shaky ground, Alibaba finds itself in a similar boat as Baidu Inc BIDU. Both companies are now attempting to stop their bleeding share prices by announcing large buyback plans. Baidu’s plan calls for up to $1 billion in buybacks, while Alibaba’s new plan calls for $4 billion in buybacks.

Both stocks are down more than 25 percent in 2015.

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Posted In: EarningsNewsConsumer DiscretionaryDepartment Stores
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