Sun Art Retail Group Limited issued a profit warning for the financial year ended 31 March 2026, forecasting a net loss and loss attributable to shareholders of approximately RMB0.30–0.35 billion. The guidance contrasts sharply with the RMB0.39 billion net profit and RMB0.41 billion profit attributable to shareholders reported for FY 2025, signalling a significant year-on-year reversal in performance.

Management attributed the expected loss to two main factors:

1. Softer consumer spending: Both the average number of items per transaction and average selling prices declined during the period, eroding revenue and gross profit despite a “stable with mild recovery” gross margin. 2. Lower retail gallery income: Reduced contributions from this segment further pressured the bottom line.

Operating fundamentals showed resilience in other areas. The company reported stable operating cash flow and maintained adjusted EBITDA strength, suggesting core liquidity remains intact. Management indicated that ongoing working-capital optimisation and controlled capital expenditure should allow continued investment without materially impacting liquidity.

Sun Art Retail is pursuing an omni-channel growth strategy focused on product centrality, nationalised procurement, deeper supplier partnerships, accelerated private-label expansion, and technology-driven efficiency gains. A management incentive scheme is also being formulated to enhance organisational vitality.

The board will evaluate dividend distribution after reviewing audited results and available distributable reserves. No dividend proposal has been made to date.

Final audited results for FY 2026 will be published within the timeframe required by Hong Kong listing regulations. Shareholders and potential investors are urged to exercise caution when dealing in the company’s securities until the official results are released.