Following a major adjustment, the company is once again reporting losses. The narrative of Yonghui Superstores Co.,Ltd. (601933.SH) transitioning from "scale expansion" to "quality growth" is being challenged by continuously deteriorating financial data. On January 21, Yonghui Superstores announced that it expects its 2025 net profit attributable to shareholders to be -2.14 billion yuan, compared to a loss of 1.47 billion yuan in the same period last year, representing a year-on-year expansion of the loss scale by approximately 45.58%. Regarding store layout, Yonghui Superstores deeply renovated 315 stores in 2025 and closed 381 stores that did not align with the company's future strategic positioning. What is the root cause of Yonghui Superstores' consecutive years of losses? Jiang Han, a senior researcher at the Pangoal Institution, believes that Yonghui has fallen into the "diseconomies of scale" trap; early rapid expansion led to high fixed costs, while per-store output continues to decline. Its traditional advantage in fresh produce supply chains has been diluted by new models like Hema and Sam's Club, failing to effectively translate into user loyalty in the digital era. Furthermore, Yonghui's organizational mechanisms are rigid, and it has been slow to react to consumer stratification and channel changes, causing it to miss opportunities in new scenarios like community group buying and instant retail. Jiang Han further analyzed that the large-scale store closures are indeed a strategic contraction aimed at stopping the bleeding and surviving. If the remaining stores can focus on high-potential business districts in top-tier cities and integrate instant retail capabilities, a new model might be built. However, if capital is consumed too quickly and financing channels are restricted, the company could slide into a liquidity crisis. It is currently in a critical window for "healing," where success or failure hangs in the balance. As of the market close on January 21, Yonghui Superstores' stock price was 4.66 yuan per share, down 4.7%, with a total market capitalization of 42.29 billion yuan.
The company underwent significant adjustments last year. Yonghui Superstores pointed out that the impact of the 2025 store renovations on company profits mainly includes asset scrapping losses related to the renovations, revenue loss from suspended operations for decoration, and one-time startup costs, among others. The total for asset scrapping and one-time investments amounts to approximately 910 million yuan, while the estimated gross profit loss from stores closed for renovation is about 300 million yuan. Yonghui Superstores admitted that closing the 381 stores also resulted in significant losses, primarily comprising asset scrapping losses, staff optimization severance compensation, and lease-related breach of contract penalties.
To address the crisis, in terms of product strategy, Yonghui Superstores first reformed its supply chain last year. Upholding the principles of "sunshine transparency, quality-driven, and efficiency improvement," it focused on five directions: "sunshine supply chain, direct procurement at naked prices, core focus, cold chain upgrade, and store synergy," aiming to solve traditional supply chain pain points through systematic measures. Based on these reforms, Yonghui Superstores stated that the company faced short-term pressure from stockouts and declining gross margins, which impacted revenue. However, as the supply chain reforms deepened, these effects have gradually been eliminated. Bo Wenxi, Deputy Chairman of the China Enterprise Capital Alliance and Chief Economist for China, believes that Yonghui's move is more like a "surgical" scraping of the bone to heal the wound: closing underperforming stores, making impairment provisions, and conducting a private placement to replenish funds, aiming to clear out risks in one go and prepare for a lighter operation by 2027. But this "surgery" is accompanied by significant blood loss: the 2025 net profit attributable to shareholders of -2.14 billion yuan is the largest loss in five years; the asset-liability ratio is nearly 90%. If consumption remains weak in 2026 or the private placement fails, the company will face the risk of a cash flow breakdown. Therefore, the current state is "under surgery"—not yet out of danger, but also not simply "waiting to die." Whether it can survive the 2026 observation period will determine if it is reborn or slides into a "terminal" state. Regarding external investments and asset impairment, Yonghui Superstores stated that the stock of Advantage Solutions, an overseas equity investment held by the company, incurred a fair value change loss of -236 million yuan this year due to continuous stock price declines. Additionally, the company conducted impairment tests on its long-term assets (primarily assets of persistently loss-making stores) and made impairment provisions. Based on preliminary calculations, the company is expected to record a long-term asset impairment of 162 million yuan this year. Bo Wenxi stated that asset impairment and the store closures represent a "one-time hemorrhage," and this overseas equity investment has become an "accelerator" for the expansion of the company's losses. Regarding why Yonghui's "Pang Donglai-style" renovations have had limited effect, Jiang Han believes that the "Pang-style reform" focuses on store experience but did not simultaneously restructure product mix and supply chain efficiency, resulting in a low input-output ratio. Secondly, the renovations were concentrated in specific stores, lacking omni-channel synergy, making it difficult to achieve economies of scale. Furthermore, consumer perception of the "Pang-style reform" is limited; the brand's image remains that of a traditional supermarket, failing to effectively attract younger customer groups.
Were there any oversights in Yonghui Superstores' series of adjustments? Jiang Han believes that the 910 million yuan one-time investment reflects strategic determination, but it lacks clear verification of a "renovation-repurchase-profitability" closed loop. Secondly, pushing store closures and renovations simultaneously can easily lead to a cliff-like drop in revenue and employee instability. Additionally, the current path leans heavily on physical space renovation, without fully integrating online fulfillment and member operations, making the reform positioning still somewhat vague. When can Yonghui Superstores turn around? According to Jiang Han's analysis, if Yonghui can focus on building a high-density, high-efficiency store network in core regions, there is still potential for regional profitability. It needs to accelerate the divestment of non-core assets to recoup cash flow to support digital infrastructure. Deep collaboration with upstream manufacturers to develop private labels could enhance gross margin space. However, overall, the industry has entered a stage of stock game, making a turnaround extremely difficult. In Bo Wenxi's view, 2026 will still be a "year of reducing losses" for Yonghui Superstores, with the earliest possibility of entering a profit contribution period in 2027. A turnaround depends on three things: stabilizing the gross margin; reducing the debt ratio; and increasing the proportion of "direct procurement + private labels" in the supply chain. If these indicators are met, break-even might be achieved in 2027; otherwise, high debt plus high rents will drag the company into a "continuous bleeding" channel.
Under the weight of heavy losses! Yonghui attempts to change the current situation. Twenty-seven years ago, Yonghui Superstores was established in Fujian by Zhang Xuansong and Zhang Xuanning. In 2009, eleven years after its founding, Yonghui Superstores entered the Beijing market. In 2010, it listed on the main board of the Shanghai Stock Exchange. During its glorious period, Yonghui Superstores, with a market capitalization of 117.9 billion yuan in 2018, ranked among the top 500 Chinese private enterprises. But variables were also brewing; as the Zhang brothers' management philosophies diverged, Yonghui began to experience turbulence from personnel changes to performance. On February 7, 2025, Juncai International, a wholly-owned subsidiary of Miniso Group Holding Ltd. (9896.HK), acquired approximately 2.668 billion unrestricted tradable shares of Yonghui Superstores (accounting for 29.4% of its total share capital) held by Dairy Farm International, JD World Trade, and Suqian Hanbang Investment Management Co., Ltd., collectively, becoming the largest shareholder of Yonghui Superstores.
Even before Miniso's entry, Yonghui Superstores initiated the "Pang-style reform" to save itself. Announcement materials show that in May 2024, Yonghui reached a consensus with Pang Donglai, whereby Pang Donglai would assist Yonghui Superstores with on-site renovations. As of September 30, 2025, a total of 222 renovated Yonghui Superstores stores had been opened. The "Pang-style reform" tested Yonghui's courage and was also a choice made out of necessity. Why is that? Back when international giants like Walmart and Carrefour only occupied first- and second-tier cities and hesitated to expand into lower-tier markets, Yonghui Superstores leveraged its "fresh produce at low prices + localized procurement" to exert a differentiated advantage and became the brave one, bringing a more scaled supermarket novelty to third- and fourth-tier cities. As e-commerce, community group buying, and discount stores successively moved down, traffic in third- and fourth-tier cities was intercepted by mobile pre-sales and next-day pickups. Consequently, Yonghui's "fresh produce + hypermarket" model became a cost burden in county-level areas due to excessively large floor areas and overly broad SKUs. In Bo Wenxi's view, the "pioneering红利 (bonus)" of Yonghui's past has turned into a "depreciation burden," and its vitality has naturally waned. In recent years, as Yonghui's performance declined, Pang Donglai, which had cultivated its market low-key for decades and gained fame for its super-strong service consciousness, ironically became the "teacher" for the former pioneer Yonghui. As Pang Donglai's effectiveness gained wider recognition, many determined followers emerged in the retail sector, and Yonghui became one of them. However, despite initiating the "Pang-style reform," improving deep-seated management issues and boosting performance is not something that can be achieved overnight.
Yonghui Superstores noted in its 2025 third-quarter report that the decline in company performance was mainly due to impacts from falling revenue and gross margin. The gross margin decline was primarily because the company actively optimized product structure and procurement models during the store renovation process, promoting strategies of "naked pricing" and backend control while phasing out old products and introducing new ones, which are short-term effects of the transition process. Bo Wenxi similarly believes that attributing the situation to short-term effects of the transition risks "avoiding the serious and dwelling on the trivial," because three core indicators—same-store sales, gross margin, and cash flow—have all deteriorated across the board, which can no longer be explained by "one-time expenses." Secondly, Yonghui has accumulated losses exceeding tens of billions over the past 4 years, indicating that the hypermarket model itself has structurally failed under the dual pressure of e-commerce and community discount models. Furthermore, after Miniso took control, conflicts arose between board seats, SKU logic, and strategies for attracting young customers versus the original hypermarket DNA, and the governance磨合 (breaking-in) costs have been downplayed. The real deep-seated challenge is that the "old model is broken, and the new model is not yet established," rather than simply "short-term growing pains." What areas proved more difficult than expected even with the "Pang-style reform"? Bo Wenxi stated that the depth of direct sourcing from fresh produce origins is insufficient, making it impossible to reduce损耗 (shrinkage) to below 3% like Pang Donglai does; it's difficult to uniformly provide Henan-level "high benefits + high authorization" across Yonghui's 400+ stores nationwide, as the human resource cost model is not comparable; Pang Donglai focuses only on regional intensive placement, and its brand appeal relies on 20 years of reputation, which Yonghui cannot replicate with its scattered national presence to achieve "urban emotional identification." In short, the "Pang-style reform" can teach Yonghui "how to make stores warmer," but it cannot save "making the model lighter," nor can it provide "economies of scale"; these lessons can only be learned through joint exploration by Yonghui and Miniso. According to Jiang Han's analysis, the "Pang-style reform" did inject people-oriented, high-salary, high-service理念 (concepts) into Yonghui, improving customer satisfaction and employee morale in some stores in the short term and validating the value of service. However, Pang Donglai's success is built on a foundation of low competition and high loyalty in regions like Xuchang and Xinxiang. Its "high gross margin supports high benefits" model relies on extremely strong cost control and localized operations, which is difficult to replicate on a national scale. Furthermore, the fundamental problems Yonghui faces are systemic shortcomings like traffic depletion, inefficient supply chains, and digital backwardness, which cannot be solved solely by improving service attitudes or employee treatment. Therefore, while the "Pang-style reform" can improve local experience, it cannot substitute for strategic restructuring, technological investment, and organizational transformation, hence its limited effect.
The new leadership team is in place, But can they accurately gauge the future direction? This year, Yonghui Superstores has undergone multiple internal personnel adjustments. On June 26, 2025, company Vice President Zeng Fengrong resigned, and 47-year-old She Xianping took over as Vice President and Chief Product Officer. On September 19, 2025, Yonghui Superstores announced the appointment of 34-year-old "post-90s" Wang Shoucheng as the company's Chief Executive Officer (CEO). In 2017, after graduating at age 26, Wang Shoucheng joined Yonghui as a "Rongcai" management trainee. He has held positions including CEO Business Assistant, Cluster Operations Partner, Fujian Provincial Human Resources Partner, Human Resources Director for the Fujian-Jiangxi Region, and General Manager of the Shanghai Region. He also served as the head of the adjustment team in Yonghui Superstores' Donglai Learning Project, leading the construction of the operational standard system and effectively promoting the renovation project. On October 13, Yonghui Superstores announced its new positioning as the "National Supermarket, Quality Yonghui." CEO Wang Shoucheng, as the national head of renovations, announced externally that future renovations would focus on "People" and "Products," shifting from high-quality horizontal renovations to refined, in-depth upgrades; through continuous people-oriented care and product refinement, truly achieving high-quality vertical breakthroughs. She Xianping introduced the "Product Centralization" strategy—over the next three years, Yonghui will collaborate with core strategic partners to create a series of blockbuster products with sales exceeding 100 million yuan; redefine the value scale of consumption, and strive to become the trusted choice for quality living for mainstream Chinese families.
In Bo Wenxi's view, after Miniso acquired the Yonghui stake, Miniso holds 5 out of 9 non-independent director seats on the board, while the Zhang brothers hold only 2 seats. Furthermore, since March 2025, the head of the reform leading group has been Ye Guofu, Founder, Board Chairman, and CEO of Miniso Group, and the company CEO was also nominated by him. Therefore, Yonghui's future strategy, budget, and personnel decisions are ultimately approved by the "Miniso faction." Zhang Xuansong has relinquished actual control, retaining only the position of Chairman. After the establishment of the new leadership team, in Bo Wenxi's view, this move marks the comprehensive takeover by the "Ye Guofu + younger generation" team. The benefit is a shorter decision-making chain, making them more willing to experiment with youth-oriented initiatives like online sales, IP collaborations, and private labels. The risk lies in the fact that supermarket fresh produce operations are highly experience-dependent; if the young team is unfamiliar with supply chains and fresh produce loss control, it could amplify fluctuations. Additionally, internal veteran employees are watching with wait-and-see attitudes, and the friction costs between old and new cultures will集中体现 (manifest集中) in 2026.
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