Premium fruit isn't selling! Pagoda expects a loss of nearly 400 million yuan

Recently, Pagoda issued a profit warning announcement, expecting the company's owner loss for last year to reach 350 million yuan to 400 million yuan, turning from profit to loss.

Regarding the loss, the company officially stated it was mainly due to weak consumption and high store rents. At the same time, last year the company completed the implementation of the "High-Quality Fruit Expert and Leader" new strategy set at the beginning of the year to enhance customers' brand recognition of the company. The new strategy involved some store renovations, marketing activities, hiring a Beautiful Life Ambassador and other activities, which led to increased expenses for the company last year.

Data shows that in recent years, in order to seize market share, the number of Pagoda franchise stores has been continuously increasing. Although earlier, with the increase in franchise stores, Pagoda's revenue also rose sharply.

Data shows: in 2022, Pagoda's total revenue was 11.312 billion yuan, an increase of 9.9% compared with 2021; in 2023, Pagoda's operating revenue was 11.390 billion yuan, an increase of about 0.7% compared with the same period in 2022. It is not difficult to see that in 2023, Pagoda's growth had already shown weakness. In terms of stores, a large number of closures also occurred in the past two years. Data shows: the number of stores decreased from 6,081 as of December 31, 2023 to 5,116 as of December 31, 2024, a decrease of 965 stores

Of course, Pagoda's weak revenue growth is not unrelated to market demand and fierce competition. Some industry insiders pointed out that last year China's fruit market competition was fierce, with supply exceeding demand, consumers had more choices when buying fruit, and the prices of premium fruits also continued to decline due to market competition.

In addition, last year Pagoda was named by 315, and was exposed for behaviors including using rotten fruit to make high-priced fruit cuts, storing overnight fruit in refrigerators and selling it as fresh fruit the next day, and arbitrarily defining cherry grades. To a certain extent, this brought a certain negative impact on Pagoda's reputation.

Regarding subsequent development, Pagoda stated it will take measures such as continuously meeting consumers' demand for high-cost-performance products as the foundation, optimizing operating efficiency; in order to expand sales scale and meet market demand, Pagoda will expand its fruit gift product line, develop holiday-limited gifts and small-package gifts, etc., to build a fruit gift brand; further reduce franchise costs, stimulate franchisees to continue expanding their franchise stores, and other measures to enhance competitiveness.

It is not yet known whether these measures can help Pagoda turn losses into profits in the new year, but judging from the current competitiveness of the fruit market, it is still somewhat difficult. Given the current economic situation, there is a relatively large contrast with Pagoda's positioning of focusing on premium fruits. Under the influence of the economic environment, consumers' purchasing behavior and preferences are more sensitive to price, and for premium-positioned fruits, consumers will choose more cautiously in terms of price.

Information shows that Pagoda was founded in 2001, focusing on the "premium fruit" route. In January 2023, Pagoda was listed in Hong Kong, China, and was called by the industry the "first stock in China's fruit retail chain."