Core Viewpoint - The company, Baiguoyuan, has issued a profit warning, expecting a net loss of 330 million to 380 million yuan for the six months ending June 30, 2025, with revenue anticipated to decrease by no more than 25% year-on-year [2][3]. Group 1: Strategic Transformation - Baiguoyuan attributes its net profit loss to the phase impact of actively promoting strategic transformation and upgrading operational efficiency [3]. - The company continues to implement its "high-quality, high-cost-performance fruit expert and leader" strategy, which aims to optimize product mix and pricing mechanisms, leading to a deliberate reduction in gross margin to meet consumer demand for high-quality, cost-effective products [3][4]. - Baiguoyuan is optimizing its store network by guiding franchisees to reassess store locations and markets, resulting in a decrease in the number of stores from 6,025 as of June 30, 2024, to 4,386 as of June 30, 2025 [3]. Group 2: Financial Impact - Increased one-time non-cash expenses, such as asset impairment provisions and stock incentive expense allocations, have also negatively impacted the current profits [4]. - The "Good Fruit Repayment" campaign is designed to enhance price competitiveness by selecting a high-value fruit each month to sell at cost or minimal profit, aimed at increasing customer repurchase rates and brand recognition, although this strategy has pressured gross margins [4]. Group 3: Future Outlook - Despite the current strategic transformation causing short-term performance fluctuations, the company emphasizes that it aligns with its "high-quality, cost-effective" development path, with customer traffic showing a growth trend and sales stabilizing [4]. - Baiguoyuan plans to enhance overall profitability through measures such as diversifying product types, optimizing product mix, and expanding store scale, including exploring new store types to adapt to different markets and consumer preferences [4]. Group 4: Challenges - The company faces skepticism regarding its "high-end fruit" positioning, as complaints about product quality persist, indicating that the perceived quality does not support high pricing [5]. - The relationship between Baiguoyuan and its franchisees is described as precarious, with issues such as forced distribution and high spoilage rates impacting profitability and leading to widespread store closures [5]. - Baiguoyuan is currently experiencing a trust deficit, where the gap between brand narrative and actual product quality exacerbates the erosion of consumer confidence, highlighting the need to rebuild trust and support franchisees to navigate current challenges [5].