Sun Art Retail Group Limited signalled a sharp deterioration in interim profitability, advising shareholders that it expects to post a net loss and loss attributable to owners of approximately RMB0.50–0.55 billion for the six months ended 30 September 2026. The prior-year comparable period recorded a net loss of RMB0.13 billion, underscoring a fourfold year-on-year setback.
Management cited four principal headwinds: 1. Customer traffic softness amid heightened competition, which constrained revenue despite a moderating decline in average ticket size. 2. Ongoing product and supply-chain realignment coupled with store and gallery space overhauls, placing near-term pressure on margins. 3. Losses from outlets slated for closure during the transformation phase. 4. Cost-savings initiatives that only partially offset the revenue shortfall.
Operating metrics show mixed progress. Adjusted EBITDA is projected at RMB1.00–1.05 billion, while net cash generated from operating activities is expected to reach RMB1.75–1.80 billion, up 32–36 percent from RMB1.32 billion a year earlier. Management attributes the stronger cash inflow to working-capital optimisation and tighter cost control as the group continues to streamline its store portfolio.
Transformation efforts remain focused on: • Establishing a national joint-procurement platform, expanding private-label offerings and pruning SKUs to sharpen category mix. • Converting under-performing hypermarket space into gallery areas, rolling out modular store revamps, and expanding a multi-format network comprising hypermarkets, superstores and front warehouses. • Negotiating lower rental costs and selectively exiting loss-making stores to stabilise long-term profitability.
Sun Art believes its liquidity position is adequate to support ongoing capex and expansion. Subject to the availability of distributable reserves, the board may still consider an interim dividend, though no proposal has been made to date.
Final audited figures will be disclosed in the interim results announcement. Shareholders and potential investors are advised to exercise caution when dealing in the company’s securities.
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