Alibaba Group’s growth is not a recovery for investors to celebrate

Alibaba Group’s strong rebound in both revenue and profit last quarter are impressive. Sales climbed 34 per cent and operating income jumped 42 per cent after paltry results the quarter before. But investors should be aware just where those numbers are coming from before they celebrate a recovery.

While primarily an e-commerce company — accounting for half of revenue last financial year — the single-biggest contributor to growth in the June period was what the Chinese company calls “new retail.” In the backward world of online sales, this actually refers to brick-and-mortar businesses such as supermarkets. That category, lumped together as “others,” climbed 88 per cent from a year prior.