Sunart Retail (06808) has issued an announcement stating that, for the six months ending September 30, 2026 (the relevant period), under Hong Kong Financial Reporting Standards, the group is expected to record a net loss and a loss attributable to owners of the company of approximately RMB 500 million to RMB 550 million (unaudited), compared with a net loss of RMB 127 million and a loss attributable to owners of the company of RMB 123 million in the same period last year.
During the relevant period, the group expects to record (i) adjusted EBITDA, meaning adjusted earnings before interest, taxes, depreciation and amortization, of approximately RMB 1.0 billion to RMB 1.05 billion (unaudited, a non-Hong Kong Financial Reporting Standards measure); and (ii) net cash generated from operating activities of approximately RMB 1.75 billion to RMB 1.8 billion (unaudited), compared with net cash generated from operating activities of RMB 1.323 billion in the same period of 2025.
The group continues to advance the optimization of its store asset portfolio, prudently evaluates the operating performance of each store, and exits underperforming stores at appropriate times. Various operating reforms continue to make substantive progress, helping losses gradually narrow.
The expected net loss and loss attributable to owners of the company are mainly attributable to: (i) the declining trend in average customer spending narrowing during the period, but customer traffic falling back due to market competition diversion, resulting in a revenue decline; (ii) cost savings partially offsetting the profit erosion caused by the revenue decline; (iii) merchandise and supply chain adjustments, as well as store and shopping street renovations, still being in the transition and adjustment stage; and (iv) some stores planned for closure continuing to generate losses during the relevant period, thereby creating short-term pressure on current period profit.
The group is actively promoting a comprehensive upgrade in both merchandise and retail space. On the merchandise side, it is building a nationwide centralized procurement system, developing private brands, streamlining SKUs, and optimizing category structure. On the store side, it is implementing area reductions, releasing space to expand shopping streets, steadily advancing modular store renovations, and simultaneously promoting the layout of new stores and front warehouses, while building a multi-format layout of hypermarkets, mid-sized supermarkets, and front warehouses.
The group continues to optimize store rental costs and adjust inefficient store assets. The group adheres to structural transformation. After short-term pain, improvements in merchandise strength, store efficiency, and asset structure will gradually solidify the foundation for long-term operations.
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