Core Viewpoint - The chairman of the company, Yu Huiyong, emphasizes the importance of educating consumers rather than simply catering to their lack of knowledge about product quality and pricing [1][2]. Company Performance - In 2024, the company reported a revenue of 10.273 billion yuan, a year-on-year decrease of 9.8%, primarily due to a reduction in store count [5]. - The total number of stores decreased from 6,093 in 2023 to 5,127 in 2024, resulting in a net closure of 966 stores, a decline of 15.9% [5]. - The company's gross profit for 2024 was 764 million yuan, a significant drop of 41.9%, with the gross margin falling from 11.5% in 2023 to 7.4% in 2024 [5]. - The net profit turned from profit to loss, with a net loss of 386 million yuan in 2024, a year-on-year decline of 206.7%, marking the company's first annual loss since its IPO in 2020 [5]. Strategic Initiatives - The company is implementing a "high quality-price ratio" strategy, which involves lowering product prices to attract consumers while increasing promotional efforts and member benefits [5]. - The chairman stated that the company will continue to optimize costs but will not compromise on product quality [4]. Market Reaction - Since its IPO on January 16, 2023, the company's stock price has fallen from a peak of 6.98 HKD per share to 1.74 HKD per share, representing a 75% decrease in market value, with a current market capitalization of approximately 2.7 billion HKD [7].

Core Viewpoint - The controversy surrounding the chairman of Baiguoyuan's comments on consumer education and pricing has led to a significant drop in the company's stock price, highlighting the challenges faced by the company in maintaining its market position and consumer perception [1][2]. Group 1: Company Performance - Baiguoyuan reported a revenue of 10.273 billion yuan for 2024, representing a year-on-year decrease of 9.8% [2]. - The company experienced its first-ever net loss in 2024, with a net profit turning from a profit of 362 million yuan in 2023 to a loss of 386 million yuan in 2024 [2]. Group 2: Store Operations - In 2024, Baiguoyuan underwent a significant store closure, with a net reduction of 965 stores, averaging 2.64 closures per day [2]. - The pace of store closures accelerated in the second half of the year, with 895 stores closed within just six months [2]. Group 3: Consumer Perception and Controversy - The chairman's remarks about not catering to consumer demands and focusing on educating consumers sparked backlash, with social media users criticizing the high prices of Baiguoyuan's products [1]. - The company defended the chairman's comments, stating that the media had selectively edited his statements to create controversy [1].

Group 1 - The chairman of Baiguoyuan, Yu Huiyong, stated that the company will not cater to consumers, emphasizing the importance of educating consumers rather than exploiting their ignorance [1][2][3] - Baiguoyuan's 2024 financial report highlighted a significant focus on "cost-performance," with the term appearing 25 times, despite consumer complaints about high prices and declining quality [2][5] - The company has experienced a decline in performance, with 2024 revenue at 10.273 billion, a 9.8% decrease year-on-year, and a net loss of 386 million, marking its first loss [5][10] Group 2 - Baiguoyuan has seen a reduction in the number of stores, with a total decrease of 966 stores from 2023 to 2024, dropping from 6,093 to 5,127 [5][10] - The number of franchise stores decreased from 6,081 to 5,116, while self-operated stores fell from 12 to 11 [5][10] - The company's approach of claiming to educate consumers has been criticized, suggesting that true consumer needs must be understood and addressed for effective market positioning [6][12][14]

Core Viewpoint - The company Baiguoyuan, known as the first stock in the fruit retail chain, is facing significant controversies and financial difficulties, highlighted by a recent statement from its chairman regarding high fruit prices, which has led to public backlash and a sharp decline in stock price [1][2]. Financial Performance - In 2024, Baiguoyuan reported a total revenue of 10.273 billion yuan, a year-on-year decrease of 9.8% - The gross profit was 764 million yuan, down 41.9% year-on-year - The company recorded a net loss of 386 million yuan, marking a 206.7% decline compared to the previous year, representing its first annual loss since its listing in 2020 [1][2]. Store and Membership Dynamics - By the end of 2024, the total number of Baiguoyuan stores decreased from 6,093 in 2023 to 5,127, a net closure of 966 stores, reflecting a 15.9% decline - The number of paid members fell from 1.171 million to 854,000, indicating a significant drop in consumer willingness to pay for memberships [2][3]. Profitability Challenges - The gross margin plummeted to 7.4% in 2024 from 11.5% in 2023, primarily due to a "high quality-price ratio" strategy that involved lowering product prices to attract consumers - Rising fixed costs from store renovations, digital system upgrades, and marketing investments further squeezed profit margins [2][3]. Market Competition and Consumer Behavior - The fruit retail industry is characterized by long supply chains, high waste, and high costs, with Baiguoyuan facing competition from traditional fruit stalls, farmers' markets, and emerging models like fresh e-commerce and community group buying - Economic factors have led to a downgrade in consumer spending, making them more price-sensitive, which conflicts with Baiguoyuan's high-priced offerings [3]. Franchisee Relations and Brand Image - Tensions between franchisees and the company have surfaced, with reports of franchise stores struggling to sell products and being forced to take on unsold inventory, leading to waste and negative brand perception - Complaints against Baiguoyuan have accumulated, with a total of 2,293 complaints reported on the Black Cat Complaint platform [3]. Executive Compensation and Dividends - Despite underperforming financial results, Baiguoyuan plans to distribute a total of 221 million Hong Kong dollars in dividends from 2023 to 2025 - The founders, Yu Huiyong and Xu Yanlin, hold at least 33.4% of the company's shares, potentially earning 73.814 million Hong Kong dollars in dividends over three years, alongside a combined salary of 4.263 million yuan during the same period [4].

Core Viewpoint - The controversy surrounding Baiguoyuan's chairman's remarks has intensified public scrutiny over the company's declining performance, store closures, and food safety issues, leading to questions about its business model and brand value [1][2]. Financial Performance - In 2024, Baiguoyuan reported a revenue of 10.273 billion yuan, a year-on-year decline of 9.8% [2] - The company experienced a net loss of 386 million yuan, marking a staggering year-on-year drop of 206.7%, representing its first loss since going public [2] - The number of stores decreased from 6,093 in 2023 to 5,127 in 2024, resulting in the closure of 966 stores, averaging 2.64 closures per day [2] - The gross profit margin fell from 11.5% to 7.4%, indicating a significant decline in profitability [2] Strategic Issues - Baiguoyuan's high-end pricing strategy has failed, as evidenced by the need to implement low-price promotions to attract customers, despite the chairman's insistence on not lowering prices [2] - The company's focus on "educating consumers" has alienated its customer base, particularly in lower-tier markets where price sensitivity is high [3] - Rapid expansion has led to a decline in supply chain and quality control capabilities, exacerbating the challenges faced by franchisees and contributing to the wave of store closures [3] Brand and Market Perception - The company's high-end image has been severely damaged by food safety scandals, including the use of rotten fruit in products and lack of proper food handling certifications [2] - Consumer backlash has been significant, with numerous complaints about product quality, leading to a perception of Baiguoyuan as out of touch with market demands [1][2] - Comparisons have been drawn between Baiguoyuan and other failed brands, highlighting the risks of high pricing combined with low quality [1]

Core Viewpoint - The article emphasizes that companies suffering from internal issues will only accelerate their decline if they do not undergo transformation, suggesting that being listed can exacerbate existing problems rather than solve them [1][18]. Company Overview - Hong Jiu Fruit Products was suspended from trading last year due to failure to release financial reports, and a year later, Baiguoyuan was removed from the Hong Kong Stock Connect and the Hang Seng Composite Index [2][3]. - On March 10, Baiguoyuan's stock plummeted by 22.54%, with its market value dropping to less than 1.7 billion [4]. Financial Performance - The primary reason for Baiguoyuan's stock decline was the profit warning issued by the group, predicting a loss of 350-400 million for 2024, compared to a profit of 362 million in 2023 [5]. Market Dynamics - The narrative of "listing as the peak" has been prevalent in the new consumption sector, driven by challenges in consumer spending post-mask era and the rush to achieve performance before IPOs, leading to inflated valuations [7]. - Baiguoyuan's franchise store count decreased from 6,081 to 5,116, a drop of 15.87%, indicating a significant loss of franchisee confidence [9]. Management and Strategy Issues - Baiguoyuan's management has been criticized for several errors leading to a decline in corporate value, including: 1. Ignoring product quality and food safety, resulting in frequent complaints [10]. 2. Blind expansion with low operational efficiency, neglecting store profitability [10]. 3. Poor supply chain management, leading to cash flow issues [10]. 4. Insufficient digital capabilities compared to competitors [10]. 5. Disregarding member value, with a loss of 100,000 paid members in the first half of 2024 [10]. 6. Ineffective pricing strategy due to intense competition in the fresh produce sector [10]. 7. Cash flow difficulties, with accounts receivable exceeding 1 billion and significant provisions for losses [13]. 8. Weak e-commerce performance, with no significant improvement in local business [14]. 9. Loss of corporate culture and talent, leading to high turnover [10]. 10. Erosion of shareholder confidence, as management and major shareholders sold off shares during stock price declines [10]. Future Outlook - The company announced a strategic shift towards high cost-performance in August 2024, but this strategy has not shown positive results and may worsen the situation for the company and its franchisees [11][12]. - The article suggests that addressing supply chain management issues is crucial for recovery, as fruit procurement costs account for over 95% of total costs [15][16].