GOME Retail (00493) has announced its interim results for the six months ended June 30, 2026, revealing a significant narrowing of losses despite continued revenue decline.

The group recorded revenue of RMB176 million, a decrease of 40.74% year-on-year from RMB297 million in the prior corresponding period. Loss attributable to owners of the parent company came in at RMB314 million, marking a substantial 76.67% reduction compared with the RMB1.346 billion loss reported in the same period last year. Basic loss per share stood at RMB0.5 fen.

Navigating Challenging Market Conditions

According to the company's official announcement, the reduction in sales revenue was primarily due to decreased supply from certain suppliers and a subdued market environment. Despite operating in a complex landscape marked by both challenges and opportunities, GOME has maintained its corporate vision of "GOME, Home Beauty, Life Beauty" while focusing on its core business and advancing along three strategic pillars: debt resolution, asset-light transformation, and new business cultivation.

During the reporting period, the external economic environment was complicated by international geopolitical factors, while domestic economic growth faced downward pressure with weak consumer markets. The home appliance sector, in particular, experienced significant headwinds. Nevertheless, the group pressed forward with debt resolution efforts, successfully addressing several major liabilities through debt-to-equity swaps and asset disposals, which created favorable conditions for repairing corporate credit and supply chain relationships.

Strategic Progress and New Business Ventures

The company has been actively pursuing an asset-light operating model centered on franchising and franchise-like arrangements. A notable development during the period was the completion of an acquisition of 51% equity in Levo Asia Pacific Industrial Co., Ltd. through the issuance of new shares, representing an important step in cultivating new growth drivers. Management believes that Levo's existing infrastructure will strengthen the group's cross-border e-commerce and supply chain capabilities, enabling efficient procurement, logistics, and distribution of health products while supporting sustainable growth.

This acquisition aligns with the company's strategic objective of building a resilient and diversified revenue base that reduces dependence on traditional retail categories. Management considers this acquisition to hold significant strategic value.

Financial Highlights and Cost Reduction

The first half of 2026 saw a steady start for the domestic economy, though growth momentum slowed from the second quarter onward. Consumer market recovery fell short of expectations, with fluctuations in total retail sales of consumer goods. The home appliance and other durable consumer goods sectors faced considerable challenges with an overall downward trend, keeping operational pressure elevated throughout the reporting period.

Gross profit margin improved notably to 11.74%, up 4.84 percentage points from 6.90% in the same period last year. Operating expenses, including marketing and administrative costs, decreased to RMB359 million from RMB512 million previously. Other expenses and losses declined to RMB268 million from RMB622 million, while net finance costs reduced to RMB698 million from RMB968 million.

Outlook and Market Expectations

Following the economic slowdown in the second quarter of 2026, the Political Bureau of the CPC Central Committee meeting held at the end of July 2026 clearly emphasized increasing counter-cyclical adjustment efforts, expanding domestic demand, optimizing supply, ensuring and improving people's livelihoods, and fostering momentum for sustained economic development toward a promising start of the 15th Five-Year Plan period.

Company management believes that the timely implementation of these specific policies could provide confidence and momentum for consumer market recovery in the second half of the year. However, the actual situation and the timing of recovery remain uncertain, and the group continues to face short-term operational pressures.