Dive Brief:

• Alibaba Group Wednesday reported quarterly results that largely missed estimates, and shares suffered in early trading to hover just above its IPO price last September.

• Q1 revenue increased 28% to $3.16 billion, down from an average 56% in the past year and below estimates of $3.28 billion. Q1 gross merchandise volume increased 34% to 673 billion, below analysts’ expected growth of 38% growth. That GMV and Alibaba’s growth is the slowest in three years, according to Reuters. 

• Alibaba also announced Wednesday a new partnership with Macy’s, Macy’s China Limited, where the Chinese retailer will sell Macy’s merchandise to Chinese shoppers on Tmall Global. Macy’s is the first U.S. department store to sell on Alibaba’s Tmall Global. 

Dive Insight:

Alibaba’s shares have fallen some 17% since its IPO last year and were down Wednesday morning after releasing its quarterly results; the company also announced Wednesday a $4 billion, two-year share buyback.

Alibaba’s woes come as China’s economy falters and as the market, even in good times, has matured in the larger cities there. “Online shopping in larger cities in China has already reached saturation,” Li Muzhi, a Hong Kong-based analyst at Arete Research Service LLP, told Bloomberg. “Alibaba needs to invest in new areas to search for other avenues of growth.”

The company says it plans just that. Alibaba announced Tuesday that it's expanding its brick-and-mortar presence and logistics capabilities in China with a $4.6 billion investment in Chinese electronics retailer Suning.

In addition to a continued focus on GMV growth and attention to the retailers’ doing business on Alibaba’s marketplaces, Alibaba Group CEO Daniel Zhang said the company's priorities include international growth.

“We are excited about our top strategic priorities, including internationalization, winning in mobile, expanding our ecosystem from cities to villages, and investing in core technologies that will propel our cloud computing business,” Zhang said in a statement.

The Macy's partnership announced today helps with this plan, and appeals to Chinese consumers that have visited Macy's stores in the U.S.—a win for both companies. 

“Millions of Chinese tourists have come to know and love Macy’s when they travel to New York, San Francisco, Chicago and other American destinations,” said Terry J. Lundgren, chairman and chief executive officer of Macy’s, Inc., in a statement. “By making Macy’s accessible in China through Alibaba’s Tmall Global, we have an opportunity to deepen our relationship with international customers and to grow sales.”

Besides these announcements, Alibaba CFO Maggie Wu also said that the retailer’s fundamentals are strong. “We also made significant progress monetizing our mobile traffic, with our mobile revenue exceeding 50% of our total China commerce retail revenue for the first time,” Wu said in the company’s report. “Again, we have generated strong free cash flow of US $1.5 billion this quarter. We continue to execute our growth strategy and focus on long-term value creation. The fundamental strength of our business gives us the confidence to invest in new initiatives, add new users, improve customer experience and expand our products and services.”

Still, the maturation of the Chinese market, the shakes in the economy, increased competition from Chinese marketplace company JD.com, and the company’s ongoing problem with fake goods flooding its marketplaces will likely continue to give Alibaba a run for its money in the short term. The company appears to be well aware of that, recently expanding its counterfeit goods hotline to include English, for example.