Core Viewpoint - The departure of Dong Yuhui has significantly impacted Dongfang Zhenxuan's performance, leading to a substantial decline in revenue and profit for the 2025 fiscal year [2][5][10]. Financial Performance - For the 2025 fiscal year, Dongfang Zhenxuan's revenue from continuing operations was 4.4 billion yuan, and GMV was 8.7 billion yuan, representing year-on-year declines of 32.7% and 39%, respectively [2][5]. - The net profit for the continuing operations was 6.2 million yuan, a staggering drop of 97.5% year-on-year [6][8]. - The number of employees decreased by approximately 25%, with a reduction of 482 employees compared to the previous year [8]. Market Position and Competition - Dongfang Zhenxuan's main account has frequently fallen out of the top ten in the Douyin sales rankings, with the lowest ranking being 22nd in October of the previous year [3][11]. - In contrast, the account "With Hui" has consistently maintained a top-three position, remaining at the top since November of the previous year [3][11]. Challenges in Transformation - Dongfang Zhenxuan's transition to an "online Sam's Club" model faces multiple challenges, including supply chain management, channel dependency, and slowing membership growth [3][19]. - The GMV from the company's own app accounted for 15.7% of total GMV, with revenue from the app increasing from 900 million yuan to 1.1 billion yuan [19][20]. Membership Growth - The growth of paid membership has slowed, with only 65,700 new members added in the 2025 fiscal year, compared to 74,800 in the second half of the 2024 fiscal year [20][21]. - The total number of paid members reached 264,300 by the end of the 2025 fiscal year, indicating a deceleration in membership growth [20]. Impact of Key Personnel Changes - The departure of key figures, including Dong Yuhui, has led to a decline in user engagement and brand loyalty, as evidenced by a drop in followers for Dongfang Zhenxuan's main account [10][12]. - The company has acknowledged management issues and is working on restructuring to stabilize its operations [5][14].

Core Insights - The stock price of Dongfang Zhenxuan has increased by over 130% since July, doubling within a month [1] - The company appears to have moved past the challenges posed by the departure of key influencer Dong Yuhui over a year ago [2] - Despite the recent surge, there are concerns about the sustainability of this growth, as similar patterns have occurred in the past [5] Financial Performance - Dongfang Zhenxuan reported an estimated revenue of approximately $150 million for the period from March to May 2025, reflecting a year-on-year decline of about 30%, although the rate of decline has narrowed compared to previous periods [9] - The operating profit for the same period was around 79 million yuan, with an operating profit margin of approximately 7%, which is a 3 percentage point increase from the previous quarter [10] - In June 2025, the Gross Merchandise Value (GMV) grew by about 28% year-on-year, reaching 880 million yuan, indicating a gradual recovery in revenue [11][12] Business Strategy and Product Development - Dongfang Zhenxuan has successfully launched new products, including a cotton sanitary napkin that sold 180,000 units in two days, generating over 19 million yuan in total sales [13] - The company has expanded its product categories beyond food to include high-margin daily necessities, with its self-owned brand gross margin increasing from 10% to 21% [14] - The membership model has attracted 228,300 paid members, with a high repurchase rate of 86% and a satisfaction rate of 99.3%, indicating strong customer loyalty [15] Competitive Landscape - Dongfang Zhenxuan is being compared to Sam's Club, especially in light of recent trust issues faced by Sam's China, positioning Dongfang Zhenxuan as a potential alternative [6][15] - The company operates on a flexible model compared to the high maintenance costs associated with Sam's physical stores, which may provide a competitive advantage [18] Operational Challenges - Despite recent successes, Dongfang Zhenxuan still relies heavily on a traditional selection and outsourcing model for logistics, which complicates cost control and inventory management [19][21] - The company faces ongoing challenges related to inventory costs and transportation expenses, which have been cited as reasons for not achieving profit growth despite increased revenue [21] - As the company expands its product offerings, it must enhance its brand management to avoid potential damage to its reputation, similar to issues faced by Sam's Club [22][24] Future Outlook - The recent stock price surge reflects a revaluation of Dongfang Zhenxuan's strategy to move away from influencer dependency and focus on supply chain management [26] - Continued success in launching popular products and maintaining GMV growth could support the elevated valuation [26] - The company must navigate a competitive market characterized by price competition and challenges in customer acquisition to sustain its growth trajectory [26]