The transformation of SUNART RETAIL, the parent company of RT-Mart, has yet to emerge from its pressure-testing phase. On May 18th, SUNART RETAIL released its results for the 2026 fiscal year ending March 31, 2026: full-year revenue was 63.442 billion yuan, a year-on-year decrease of 11.3%; the annual loss was 326 million yuan, compared to a profit of 386 million yuan in the previous fiscal year. SUNART RETAIL stated that revenue pressure primarily stems from CPI fluctuations, weak consumer demand, and intensified homogenized competition within the industry, which has diverted in-store foot traffic and reduced the number of items per transaction. From an industry perspective, pressure on hypermarkets is not unique to SUNART RETAIL. Instant retail has captured high-frequency demand for fresh produce and daily necessities, discount stores have reshaped consumer decision-making with curated SKUs and a low-price perception, and warehouse membership clubs have reinforced differentiation through bulk packaging, private labels, and membership systems. In contrast, the advantages traditionally built by hypermarkets on being "large and comprehensive" and offering one-stop shopping are being dismantled. The pressure on foot traffic has further extended to the leasing of storefronts within shopping arcades. For hypermarkets, rental income from these arcades is not entirely independent lease revenue but rather ancillary income dependent on the supermarket's customer flow. A decrease in in-store traffic weakens merchants' business expectations, increases vacancy rate pressure, and reduces the supermarket's bargaining power in rent negotiations. In the 2026 fiscal year, SUNART RETAIL's rental income was 2.8 billion yuan, a decrease of 230 million yuan or 7.6% year-on-year. To counter pressure on the old model, SUNART RETAIL is also advancing a business format restructuring. As of the end of March 2026, the company operated 462 hypermarkets, 34 mid-sized supermarkets, and 6 membership stores, totaling 502 physical stores. Following the entry of DCP Capital, SUNART RETAIL established a trinity business format layout comprising "large stores, mid-sized supermarkets, and front-end warehouses." Mid-sized supermarkets and front-end warehouses are seen as new models that are closer to communities and better suited for instant retail. Data shows partial progress in the new formats. During the reporting period, the mid-sized supermarket format added 3 new stores, with online revenue accounting for 31% of its total; front-end warehouses were established in cities including Shanghai, Luoyang, and Jinan, with the operational scale reaching 9 by year-end, a net addition of 7 during the fiscal year. In fresh produce, the company improved efficiency through nationwide joint procurement and category restructuring, achieving nearly 3% growth in fresh produce sales volume and a 0.8 percentage point increase in gross margin. Specifically, the self-operated pork category, which began nationwide joint procurement in September 2025, achieved a same-store sales increase of over 20% nationwide from January to March 2026. Concurrently, SUNART RETAIL is accelerating its transformation focused on low prices, product restructuring, and private label development. In the 2026 fiscal year, sales of the two main private label series, "Thumbs Up Super Save" and "RT-Mart Select," grew over 60% year-on-year, with their sales share reaching 3.2%, meeting the annual target. The company plans to further increase this share to 5% in the next fiscal year. The division of labor between the two product lines is relatively clear: "Thumbs Up Super Save" focuses on extreme cost-effectiveness and price competitiveness, tasked with driving order and performance growth; "RT-Mart Select" emphasizes differentiation and quality-to-price ratio, leaning more towards gross margin contribution. However, the partial growth driven by low prices and private labels has not yet translated into an overall recovery in customer traffic. The incremental gains from new formats, new categories, and private labels are temporarily insufficient to offset the contraction rate of the core hypermarket business. In the 2026 fiscal year, SUNART RETAIL's total order volume remained essentially flat compared to the previous year. Online B2C business order volume grew by 5.5%, but same-store sales calculated by merchandise sales declined by 11% year-on-year. Changes in internal senior management have further increased the uncertainty surrounding the transformation. Over the past two years, SUNART RETAIL has seen four CEOs in succession: Lin Xiaohai, Shen Hui, Li Weiping, and Hua Yuneng. In March 2026, Li Weiping, who had been in the role for just over three months, was dismissed due to prolonged absence, and DCP Capital co-founder Hua Yuneng took over. Despite performance pressures, SUNART RETAIL maintained its dividend arrangement. The board has declared a second interim dividend for the year ended March 31, 2026, amounting to approximately 811 million Hong Kong dollars, equivalent to about 698 million yuan. In the 2026 fiscal year, the company paid dividends totaling 2.173 billion yuan to shareholders, higher than the 1.702 billion yuan paid in the previous fiscal year. How to balance cash returns, store adjustments, and transformation investments will continue to test SUNART RETAIL's capital allocation capabilities.
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