Intime Retail Group Co. hit a record high for a second straight day in anticipation naming Alibaba Group Holding Ltd.’s chief executive officer as its chairman will boost the department-store operator’s prospects in China.
Beijing-based Intime rose as much as 13 percent Tuesday, after the shares spiked 20 percent a day earlier when it said Alibaba CEO Daniel Zhang Yong will become the head of its board as well that of the strategic development committee. The shares were up 2.5 percent as of 1:20 p.m. in Hong Kong trading.
The appointment “could potentially mark an important shift in Intime’s strategy, with it potentially becoming Alibaba’s key vendor in the premium apparel, footwear and accessories space,” Ricky Tsang, an analyst at Goldman Sachs Group Inc., wrote in a note to clients Tuesday. Alibaba could also inject assets into Intime, Tsang wrote.
The move would help give Alibaba a new platform to expand its e-commerce business into brick-and-mortar stores. China’s largest e-commerce operator is fending off a lawsuit from Kering SA over fake Gucci sales, nine months after the luxury-brand owner withdrew a similar complaint.
Zhang’s appointment is to take effect after Intime’s founding chairman Shen Guojun retires following the retailer’s annual meeting on June 5. After major shareholder Shen’s exit, Alibaba could take control of Intime by exercising its convertible bonds and lift its stake to 26 percent from 9.9 percent, HSBC Holdings Plc analyst Lina Yan wrote in a report.
Intime, the largest operator of department stores and shopping centers in China’s wealthy Zhejiang province, had earlier formed a venture with Alibaba to help expand its online-to-offline sales, according to Bloomberg Intelligence analyst Catherine Lim.
The company is also benefiting from improved store sales growth, as well as making progress on its assets disposal exercise, possibly through a real-estate investment trust, that may lead to higher shareholder payouts, said Lim.