Laiyifen held an online performance briefing on October 14, attempting to clarify the polarizing results of its 2025 interim report: revenue grew by 8.21% year-on-year to 1.94 billion yuan, but the non-deduction net loss was 56.6132 million yuan, a staggering decline of 536.91%. The comprehensive gross profit margin shrank to 32.61%, down 8.66 percentage points year-on-year, with a significant drop in net cash flow from operating activities.
A glaring statistic is the number of stores: as of the end of June, there were a total of 2,979 stores nationwide, representing a 14.2% year-on-year decrease. Nearly three years after launching the "10,000 Stores" initiative, the total number of stores remains around 3,000, far from the goal of "10,000 stores by 2023" that has now been quietly rescinded. Despite growth in all-channel revenue, the question remains—what has happened at Laiyifen?
Declining Gross Profit Margin: The Cost of an 8.66 Percentage Point Drop The management explained that "the decrease in gross profit margin is primarily due to changes in the new business structure." The interim report indicated that the income growth rate of the company's second-largest sector, "other food and innovative categories," was rapid, though its gross margin was lower than that of traditional snacks and preserves.
Laiyifen has ventured into seven new categories—beverages, dairy products, freshly brewed coffee, marinated dishes, refrigerated pastries, pre-packaged meals, and fresh produce—to create a "second growth curve," but this has pulled down the overall gross margin by nearly 5 percentage points.
Compounding this issue is the increased promotion efforts to counter the impact of extremely low-priced snacks offered by competitors, leading to further erosion of gross profits.
"Looking at the short term, the new businesses are still in the nurturing phase, and economies of scale have yet to manifest; in the long term, unless they can secure category leadership in these new arenas, low gross margins may become the norm," noted an industry insider.
Store Transformations: A Risky Leap from Direct Sales to Franchising Laiyifen was once regarded as a benchmark in the industry for its strong focus on direct sales, which still constituted a substantial proportion as of 2022. However, in just three years, over half of its stores have transitioned to franchise operations.
"Closing direct-operated stores is a proactive optimization," management emphasizes repeatedly, stating that the company is shifting from "traditional retail" to "chain management services + supply chain platform," with increased franchise representation as a core path in this transformation.
However, data reveals a narrative of "passive contraction": revenue from directly operated stores fell by 21% year-on-year, while income from the franchise system grew by 19% year-on-year.
Since the initiation of the "10,000 Stores" strategy, the total number of stores has decreased rather than increased, leading Laiyifen to concede that "10,000 stores is not a 2023 operational target, but a long-term vision." While competitors like "Snack Busy" and "Zhao Yiming" have surpassed the 10,000 store mark, Laiyifen's slow expansion seems out of step.
Whether accelerating franchising can yield economies of scale relies significantly on the bargaining power of the supply chain and the profitability model of individual stores, both of which still remain in the validation stage.
AI and Overseas Expansion: Great Story, Minimal Revenue During the earnings meeting, Laiyifen devoted considerable discussion to its vision of "AI + overseas expansion": launching the "Store Sales Management Platform" in May, integrating DeepSeek’s large model, and achieving a 30% improvement in sales forecasting accuracy. The deployment of 51 intelligent models within the Pentagon alert command platform and the AI customer service partially replacing human roles were highlighted. The company made inroads into overseas markets in South Korea, Vietnam, and Thailand, exporting over 30 SKUs.
While digitalization and cost reduction promise benefits, the short-term impact on profitability appears limited. International expansion is a growth component, but the current scale is minimal, making it challenging to offset the decline in gross margins from the main business.
In contrast, investors are increasingly questioning "money spent, where is the effect?"—sales expenses rose year-on-year in the first half, indicating that costs associated with AI and overseas expansion might be hidden within, yet this has not prevented profits from switching from profit to loss.
Emerging Consumer Markets: Can Children’s Snacks and Blind Box IPs Become the "Stopgap"? On the policy front, increased national fertility subsidies have positioned children's snacks as a blue ocean market. Laiyifen has launched 43 varieties of children’s snacks and set up dedicated sections in offline stores, although sales composition remains low.
Market concerns focus on how the company will differentiate itself to enhance competitiveness amid the onslaught from discount snack brands. The management's response was to emphasize "high quality and high cost performance," aiming to reduce costs through multi-format ecological platforms and supply chain optimizations, allowing consumers to "spend less for better snacks."
However, the tension between "high quality" and "high cost-effectiveness" is evident. With the gross margin evidently declining, Laiyifen has yet to present a quantifiable roadmap for achieving both "lower prices and improved quality."
(Note: This article was created with AI assistance and does not constitute investment advice.)
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