Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company is undergoing a painful period of store adjustments, with short-term pressure on operational performance, but a long-term turning point is expected as it transitions towards quality retail [4][5] - The company reported a significant decline in revenue and net profit for the first half of 2025, with revenue of 29.948 billion yuan (down 20.7% year-on-year) and a net loss of 241 million yuan [4] - The company is actively optimizing its supply chain and product offerings, which has temporarily impacted profit margins [5][6] Financial Performance Summary - For the first half of 2025, the company achieved revenue of 29.948 billion yuan, with a net loss of 241 million yuan, compared to a profit of 275 million yuan in the same period of 2024 [4] - The second quarter of 2025 saw revenue of 12.469 billion yuan (down 22.6% year-on-year) and a net loss of 388 million yuan [4] - The company expects net profits for 2025-2027 to be -738 million, 410 million, and 1.195 billion yuan respectively, with corresponding EPS of -0.08, 0.05, and 0.13 yuan [4] Supply Chain and Store Adjustment - The company is deepening its supply chain reforms, having signed contracts with 2,860 standard suppliers and reduced the number of suppliers by approximately 50% [6] - The self-owned brand development is progressing, with two self-owned brand products launched, enhancing competitive differentiation [6] - As of June 2025, the company has adjusted 124 stores, entering a systematic and large-scale adjustment phase [6] Valuation Metrics - The current stock price is 5.21 yuan, with a market capitalization of 47.281 billion yuan [1] - The projected P/E ratios for 2026 and 2027 are 115.2 and 39.6 respectively [4] - The company’s gross margin for the first half of 2025 was 20.8%, down 0.8 percentage points year-on-year [5]