LYFEN(SH:603777) Xin Lang Cai Jing·2025-10-17 10:16Core Viewpoint - The company reported a mixed performance in its 2025 semi-annual report, with revenue increasing by 8.21% to 1.94 billion yuan, but a significant net loss of 56.61 million yuan, a decline of 536.91% year-on-year. The gross profit margin fell sharply to 32.61%, down 8.66 percentage points, and cash flow from operating activities also decreased significantly [1]. Revenue and Profitability - Despite a revenue increase, the company experienced a drastic decline in net profit, attributed to changes in the business structure and the introduction of lower-margin new products [1][2]. - The gross profit margin's decline was primarily due to the rapid growth of the second-largest business segment, which includes lower-margin products compared to traditional offerings [1]. Store Operations - The total number of stores decreased by 14.2% year-on-year, with a total of 2,979 stores as of June, indicating a failure to meet the previously stated goal of reaching 10,000 stores by 2023 [1][4]. - The company is transitioning from a direct sales model to a franchise model, with over half of its stores now being franchises, although this shift has not yet resulted in overall store growth [3][4]. New Business Initiatives - The company has entered seven new product categories, aiming to create a "second growth curve," but this has negatively impacted the overall gross margin [1]. - The new business initiatives are still in the cultivation phase, and the long-term success depends on achieving category leadership in these new markets [2]. Digital Transformation and International Expansion - The company is investing in AI and international expansion, with initiatives such as a sales management platform and entry into overseas markets like South Korea and Vietnam. However, these efforts have not yet translated into significant revenue [5]. - The increase in sales expenses related to AI and international efforts has not prevented the company from reporting a loss [5]. Market Positioning and Consumer Trends - The company is focusing on high-quality and cost-effective products to differentiate itself in a competitive market, particularly in response to the rise of low-cost snack brands [7]. - The introduction of children's snacks is seen as a potential growth area, but current sales from this segment remain low [6].