Alibaba Group Holding Limited has reached an agreement to divest its Intime department store chain in China to a consortium led by the textile and apparel company Youngor Group, in a transaction valued at approximately RMB 7.4 billion, equivalent to $1.0 billion.
The prominent online marketplace operator, which holds a 99 percent stake in Intime, anticipates incurring a loss of about RMB 9.3 billion or $1.3 billion due to this strategic sale.
This divestiture aligns with Alibaba's broader strategy to pivot away from brick-and-mortar retail operations, redirecting its focus towards its primary e-commerce and cloud computing sectors.
Alibaba initially acquired the Intime chain in 2017 for around $2.6 billion, reflecting its intention at the time to make significant inroads into physical retail.
In a noteworthy development, Alibaba underwent a comprehensive reorganization in 2023, segmenting its operations into six distinct divisions while realigning its strategic focus on the e-commerce and cloud computing arms.
Eddie Wu, CEO of Alibaba Group, expressed during the announcement of the company's second-quarter results in mid-November, "Our confidence in our core businesses has never been stronger, and we are committed to investing in their long-term growth. Our ancillary operations are also showing improved operational efficiency, with many either enhancing their profitability or narrowing their losses."
Earlier this year, Bloomberg reported that Alibaba had approached various prospective buyers for Intime, which has been listed under 'all others' in its financial disclosures.
Alibaba, in collaboration with the 1 percent minority stakeholder, has announced plans to divest 100 percent of its equity interest in Intime to a buyer consortium that includes the Youngor Group and members of Intime's management team.
The completion of this transaction is contingent upon receiving merger control approval in China as well as satisfying other standard closing conditions.
This expected financial loss will be reflected in Alibaba's upcoming earnings announcement. In their most recent second-quarter report, Alibaba reported a 63 percent year-over-year increase in net income, reaching RMB 43.6 billion or $6.21 billion, although the adjusted net income saw a 9 percent decline to RMB 36.5 billion or $5.2 billion. The second-quarter revenue rose 5 percent year-over-year to RMB 236.5 billion or $33.7 billion.
In Hong Kong, Alibaba's shares concluded Tuesday's regular trading session at HK$83.40, marking a decline of 1.13 percent. In pre-market trading on the NYSE, the shares were down approximately 0.2 percent, trading at $85.87.
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