Alibaba names Daniel Zhang as new chief to replace Jonathan Lu

Alibaba, the Chinese ecommerce company, replaced its chief executive on Thursday after its share price briefly dipped below $80 this week, its lowest since its record-breaking initial public offering in September.

The company said Daniel Zhang, chief operating officer, would replace Jonathan Lu as chief executive from Sunday, as it reported sales in the first three months of the year climbed to Rmb17.42bn ($2.8bn) from Rmb12bn, eclipsing Wall Street's forecasts of Rmb16.8bn.

Revenues for the quarter increased 45 per cent year on year. However, net profit plunged 49 per cent to $463m, hit by a share-based compensation expense.

The move to replace Mr Lu, who will remain a vice-chairman of the company, follows a steady decline in Alibaba's share price since November, when it touched a post-IPO high of $119.15.

The move appeared designed to bolster confidence in financial markets, and the stock bounced 7 per cent in premarket New York trading to almost $87.

Retail gross merchandise value on Alibaba's platforms was $97bn. Gross merchandise value, the value of all sales on Alibaba's retail market places Taobao and Tmall, increased 40 per cent year on year, down from 49 per cent in December.

Jack Ma, chairman and founder, predicted in a letter to employees that the company's annual gross merchandise volume would exceed $1tn in five years.

Analysts had expected revenues to slow and margins to come under pressure as online shoppers switch from desktop ecommerce to mobile. Charging for mobile shopping is harder because merchants are unwilling to pay as much for advertising on smartphones.

Still, mobile gross merchandise value grew 157 per cent year on year to $49bn.

Alibaba billed the management reshuffle as making way for a new generation of leaders at the company. "Today, Jonathan Lu and I are very proud to announce that through our efforts in the past years, Alibaba Group is ready to completely hand over management leadership to those of you who were born in the 70s," Mr Ma said in his letter to staff.

Mr Zhang has been at Alibaba since 2007, the company said, and served as chief operating officer since 2013.

The company pitched itself to investors at its IPO in September last year as a way of tapping into the expansion of online shopping in China, but the stock has been hurt recently by concern that its sales growth will slow.

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