GOME Retail FY2025: Revenue Up 13.50%, Net Loss Halved but Auditor Issues Going-Concern Disclaimer

GOME Retail (00493) released its audited results for the year ended 31 December 2025, reporting a 13.50% rise in revenue to RMB0.54 billion (FY2024: RMB0.47 billion). Despite top-line growth, gross profit declined 66.22% to RMB25.03 million as gross margin fell from 15.61% to 4.65% on an unfavourable product mix and higher cost of sales.

Loss attributable to shareholders narrowed 48.89% year-on-year to RMB5.94 billion. Excluding non-operating items, the adjusted loss was RMB0.94 billion, down 24.15%. Basic loss per share decreased to RMB0.126 from RMB0.246.

Operating expenses improved: selling and distribution costs fell 26.15% to RMB209.48 million, while administrative expenses dropped 36.08% to RMB759.53 million. Impairment losses on right-of-use assets were cut by 70.28% to RMB1.09 billion, and other expenses and losses declined 63.03% to RMB1.55 billion. Net finance costs eased 9.26% to RMB1.81 billion.

Liquidity remains strained. As at 31 December 2025, cash and cash equivalents totalled RMB56.15 million against current interest-bearing bank and other borrowings of RMB23.56 billion, most of which are in default or cross-default. Current liabilities exceeded current assets by RMB40.38 billion, resulting in net liabilities of RMB26.87 billion.

Management is pursuing multiple measures to relieve pressure, including restructuring bank debts, trade payables and convertible bonds, executing debt-to-equity swaps, disposing of properties and exploring further fund-raising. Discussions with major bondholders JD.com and Pinduoduo on asset transfers or equity settlement are ongoing.

KTC Partners CPA Limited issued a disclaimer of opinion, citing multiple material uncertainties that cast significant doubt on the Group’s ability to continue as a going concern. The auditor was unable to obtain sufficient evidence to support management’s cash-flow forecasts and assumptions.

Capital expenditure fell 66.67% to RMB1.00 million, while inventories dropped 48.33% to RMB62.35 million, improving inventory turnover to 65 days. Trade and bills payables declined 11.18% to RMB4.54 billion.

No final dividend was proposed for FY2025 as the Board prioritises liquidity.

Management targets further debt resolution, asset-light expansion via franchise and online channels, and tighter cost control in 2026, but continuation as a going concern remains contingent on successful execution of restructuring initiatives.