Core Viewpoint - The company experienced a significant decline in revenue and net profit in 2024, with a revenue of 67.574 billion yuan, down 14.07% year-on-year, and a net profit of -1.465 billion yuan, indicating challenges in store performance and profitability [1] Financial Performance - In 2024, the company reported a revenue of 67.574 billion yuan, a decrease of 14.07% year-on-year, and a net profit of -1.465 billion yuan, with a non-recurring net profit of -2.410 billion yuan, resulting in a non-recurring net profit margin of 0.08%, down 1.05 percentage points year-on-year [1] - For Q1 2025, the company achieved a revenue of 17.479 billion yuan, down 19.32% year-on-year, with a net profit of 0.148 billion yuan, a decline of 79.96%, and a non-recurring net profit of 0.137 billion yuan, down 77.07%, leading to a non-recurring net profit margin of 2.76%, down 1.98 percentage points year-on-year [1] Store Operations - The revenue fluctuations are primarily attributed to a reduction in the number of stores, with 232 stores closed in 2024, leaving a total of 775 stores by the end of the year [1] - As of Q1 2025, the company continued to reduce its store count, completing only 47 store renovations, which contributed minimally to sales [1] - However, the renovated stores have begun to show profitability, with 41 stores that have been open for over three months generating a profit of 14.7 million yuan in March and a total profit of 74.72 million yuan for the quarter [1] Business Segments - The company reported revenue from various segments in 2024: food and daily necessities at 34.943 billion yuan, fresh and processed food at 28.825 billion yuan, other income at 2.673 billion yuan, and rental income at 1.133 billion yuan, with respective year-on-year declines of 14.03%, 12.82%, 28.08%, and 6.77% [2] - The gross margins for these segments were 18.81%, 12.79%, 99.96%, and 78.66%, with slight year-on-year changes [2] Cost Management - The overall gross margin for the company in 2024 was 20.46%, down 0.78 percentage points year-on-year, with sales, management, R&D, and financial expenses accounting for 19.33%, 2.65%, 0.27%, and 1.68% respectively, showing an increase in expense ratios [2] - In Q1 2025, the expense ratios for sales, management, R&D, and financial costs were 16.63%, 2.45%, 0.24%, and 1.46%, indicating a mixed trend in cost management [2] Strategic Focus - The company is shifting towards quality retail and restructuring supplier relationships, focusing on core suppliers, key products, and long-term strategies while opposing frequent supplier changes [2] - As of April 2025, the company has engaged in procurement discussions with over 300 quality supply chain enterprises, including suppliers for major U.S. retailers [2] Investment Outlook - The company is expected to see continuous improvement in store efficiency as it enters a deeper phase of transformation, with projected revenues of 61.483 billion yuan, 92.247 billion yuan, and 108 billion yuan for 2025-2027, reflecting a year-on-year change of -9.01%, +50.04%, and +17.08% respectively [3] - The projected net profits for the same period are 0.63 billion yuan, 1.105 billion yuan, and 1.819 billion yuan, with corresponding price-to-earnings ratios of 790X, 45X, and 27X [3]