(Yicai) Sept. 23 -- Shares of Suning.Com fell after the troubled Chinese retailer said its largest shareholder Alibaba Group Holding plans to cut its stake in the company.

Suning [SHE: 002024] closed 4.8 percent down at CNY1.78 (25 US cents) today. Stocks of firms at operational risks, such as Suning, have a maximum price fluctuation of 5 percent, which was rounded to 4.8 percent in this case, given the low price, according to the Shenzhen Stock Exchange’s regulations.

Alibaba’s subsidiary Hangzhou Haoyue Enterprise Management will sell up to 263 million shares of Suning, equal to about 2.9 percent of the total, through centralized bidding and bulk trading in the three months starting on the 15th trading day from the announcement, the Nanjing-based firm said yesterday.

Alibaba invested CNY23.8 billion (USD3.3 billion) to buy a stake in Suning through its subsidiary Taobao in 2015 to foster cooperation in online and offline retail.

However, due to intensified competition in the e-commerce industry and other challenges, including the impact of the Covid-19 pandemic, Suning has faced operational difficulties since 2020, leading to a significant decline in its stock value.

In February last year, Taobao sold its entire 20 percent stake in Suning to Haoyue Enterprise Management for CNY2.8 billion (USD393.6 million). Based on the transaction price, Alibaba has lost nearly 90 percent of its original investment in Suning.

Suning’s second-largest shareholder is its founder Zhang Jindong. In 2021, he slashed his holdings in Suning and resigned as chairman. Zhang still owns 17.7 percent of the company.

Suning was in the red from 2020 to 2023, with a cumulative loss of CNY67.9 billion (USD9.5 billion). Last year, it turned losses into a net profit of CNY611 million (USD85.9 million), thanks to one-time gains from asset sales. After excluding non-recurring gains and losses, the company still lost CNY1 billion.

In the first half of this year, Suning logged a net profit of CNY48.7 million (USD6.8 million). But after excluding non-recurring gains and losses, it lost CNY865 million. Its revenue inched up 0.4 percent to CNY25.9 billion (USD3.6 billion) in the period.

Editors: Dou Shicong, Futura Costaglione