Sun Art Retail Group (6808) H2 25/26 earnings summary

Executive summary

• Revenue for FY 2025-2026 was RMB63,442 million, down 11.3% year-over-year due to weak consumer demand and intense competition.

• Adjusted EBITDA was RMB3,157 million, with a margin of 5.0%, reflecting a 22.8% year-over-year decline.

• Net loss for the year was RMB326 million, reversing from a profit of RMB386 million in the prior year.

• Gross profit margin improved by 0.1 percentage points to 24.2%, supported by supply chain optimization and higher private brand penetration.

• The company is executing a three-year strategy focused on product upgrades, omni-channel expansion, store transformation, and new store openings.

Financial highlights

• Gross profit was RMB15,372 million, down 10.8% year-over-year, with merchandise margin at 20.8%.

• Expenses declined 5.5% year-over-year to RMB16,005 million, reflecting cost optimization and rental negotiations.

• Net cash position stood at RMB10,063 million, with self-owned property valuation at RMB36,101 million.

• CapEx was RMB545 million, lower than the previous year due to project completions and smarter investments.

• Inventory turnover days increased to 55, but returned to normal by May.

Outlook and guidance

• Targets 40% online sales penetration and 20% private brand sales over several years.

• Store transformation to reach 60% by year-end, with all 500 stores to be transformed within three years.

• Expects mid to high single-digit growth in fresh food and private brand sales.

• Dividend policy remains stable and consistent, with HKD 0.085 per share paid for 2026.

• Strategic focus on becoming the preferred daily essentials hub within a 3-km radius, emphasizing healthy products and enjoyable experiences.