JD.com seen making gains against Alibaba but at high cost

New York

JD.COM Inc has been slowly nibbling away at Alibaba Group Holding Inc's dominant share of China's burgeoning online shopping market. And the costs are adding up.

Analysts in the past four weeks have lowered their average profit forecast for JD.com this year to 34 US cents per share from 78 cents, data compiled by Bloomberg show. The 56 per cent reduction was the biggest in that period among US-traded Chinese companies with a market capitalisation of more than US$3 billion.

The lower profit projections come as JD.com, which received backing from Tencent Holdings and entered the online-to-offline market in 2014, boosts spending on its financing arm and services aimed at drawing customers to brick-and-mortar stores. Fourth quarter marketing expenses surged 81 per cent to 2.7 billion yuan (S$572 million), while its adjusted loss was 48 US cents per share, compared with an average estimate of an 18 US cents loss, according to company filings and data compiled by Bloomberg. Sales beat forecasts, increasing 57 per cent to 54.6 billion yuan …