Pagoda Suffers Tough 2024 Amid Store Closures and Falling Membership

On Feb. 3, Shenzhen Pagoda Industrial (Group) Corporation Limited, one of China’s biggest fruit retailers, announced that it expects a loss attributable to shareholders of between 350 million Chinese yuan (US$47.9 million) and 400 million yuan (US$54.8 million) for fiscal year 2024, in stark contrast to the profit of 362 million yuan (US$49.6 million) registered in fiscal year 2023. At the same time, the fruit retail giant forecasts that its revenue for 2024 will decrease by no more than 15% compared with the 11.391 billion yuan (US$1.56 billion) recorded in 2023.

In its announcement, Pagoda attributed the performance decline to several key factors. The first of these was weak domestic consumption. To address this challenge, the company actively adjusted in the second half of 2024 by optimizing its product portfolio and lowering gross margins to cater to consumer demand for cost-effective products. Second, the number of franchised stores decreased significantly, from 6,081 as of Dec. 31, 2023, to 5,116 as of Dec. 31, 2024 — a reduction of 965 stores. Third, expenditures increased owing to the implementation of new strategies. In 2024, Pagoda launched a series of initiatives aimed at strengthening its position as a market leader and an expert in high-quality fruit. These efforts included store renovations, marketing campaigns and the hiring of brand ambassadors. While these measures served to enhance brand awareness, they also resulted in higher expenses during fiscal year 2024.

As of June 30, 2024, Pagoda’s franchised store count stood at 6,011, marking a net decrease of 70 stores compared with the end of 2023. The pace of these closures accelerated in the second half of the year, with the total dropping by another 895 stores by the end of December, averaging almost five stores per day.

Pagoda is also grappling with membership attrition. As of June 30, 2024, the number of paying members had dropped to 1.071 million, a decline of around 100,000 from the 1.171 million signed up at the end of 2023.

Since its listing on the Hong Kong Stock Exchange in January 2023, Pagoda’s stock price has fallen from the offering price of 5.6 Hong Kong dollars (US$0.72) to the current price of 1.26 Hong Kong dollars (US$0.16), a decline of nearly 80%. The market remains cautious about the company’s future performance. At the time of writing, Pagoda’s total market capitalization stood at 1.847 billion Hong Kong dollars (US$237.1 million).

Image: Shenzhen Pagoda Industrial (Group) Corporation Limited

This article was translated from Chinese. Read the original article.