Sun Art Retail Group (6808) H2 25/26 earnings summary

Executive summary

• Revenue for the year ended 31 March 2026 fell 11.3% to RMB63,442m, amid weak demand and intense competition.

• Net loss was RMB326m, versus a prior-year profit of RMB386m.

• Adjusted EBITDA fell 22.8% to RMB3,157m; margin was 5.0%.

• Gross profit margin improved 0.1 percentage points to 24.2%, supported by supply-chain optimization and private brands.

Financial highlights

• Gross profit decreased 10.8% to RMB15,372m; lower gallery rental income weighed on results, partly offset by fresh-food mix and private brands.

• Expenses declined 5.5% to RMB16,005m, a RMB936m reduction, supported by workforce and cost optimization.

• Profit from operations was RMB386m, down 72.9% year-over-year.

• Cash and equivalents were RMB11,913m; net cash stood at RMB10,063m, down 19.7%.

• Capital expenditure was RMB545m, lower year-over-year as the Kunshan project neared completion.

Outlook and guidance

• Three-year strategy targets transformation of all ~500 stores, online sales penetration of 40% from ~30%, and private-brand penetration of 5% next FY, 6%-7% thereafter and 20% long term.

• Store transformation was ~25% complete, with a 60% target by FY-end; transformed stores recorded sales increases, varying by store and transformation level.

• Management aims for stable EBITDA above RMB3bn, a slight performance increase and full-year profitability, while continuing operating investment.

• Strategic priorities include becoming the preferred daily essentials hub within a 3-km radius, accelerating front warehouses, and investing in digitalization, supply chains and talent.