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Leading smartphone recycler ATRenew Inc. (RERE.US) has posted strong growth and a second consecutive operating profit on an adjusted basis in its latest quarterly report, with quarterly revenue up 45.7% year-on-year on strong product and service revenue gains. But its executives and the investment community were more focused on what lies ahead for the company, as strict Covid control measures look set to potentially push China into its first economic contraction since the start of the pandemic.

Signs of battening down the hatches in preparation for the Covid disruptions were present throughout ATRenew’s latest report. Those include tightening spending and increasing overall efficiency. It also forecast a drag on its revenue growth in the second quarter as the company is heavily affected by the lockdown in Shanghai where its headquarters and more than 100 stores are located.