On August 15, PAGODA GP (02411) released its performance forecast for the first half of 2025. During the reporting period, the company expects a net loss attributable to shareholders of 330-380 million yuan, with revenue declining by no more than 25%. Additionally, as of June 30, 2025, the group's total number of stores was 4,386, a decrease of over 700 stores compared to the end of last year.

According to the announcement, PAGODA GP's revenue and profit decline were primarily influenced by three major factors: first, advancing a high-quality, high-value strategy by actively adjusting product structure, reducing gross margins, and passing benefits to consumers; second, continuously implementing store network optimization strategies, guiding franchisees to actively review store locations or business districts, relocating or closing underperforming stores while concentrating resources on advantageous locations; third, increased one-time expenses related to asset impairments and stock incentive cost allocations.

It can be observed that these profit changes were all proactive adjustments by PAGODA GP, representing a "inward-focused" self-upgrade. Therefore, under strategic adjustments, experiencing "short-term pain" has inevitably become a necessary path. However, combining company announcements and securities firm research data, PAGODA GP has currently completed key stages of strategic adjustment and is welcoming a turnaround inflection point.

**Strategic Transformation Taking Effect, Core Operating Metrics Gradually Improving**

Since the second half of 2024, PAGODA GP shifted from a "premium" strategy to a parallel "high-quality + high-value" approach. For fruits with high consumer price sensitivity (such as watermelons and lychees), the company launched promotional activities like "Good Fruit Gratitude," while strengthening store service standards through initiatives such as "open kitchen" projects and "three-no return" policies.

In this "inward-focused" self-upgrade, accompanied by improving core operating metrics, PAGODA GP's strategic transformation effects are gradually materializing. Specifically, according to research reports and company profit warning announcements, under strategic adjustments in the first half of 2025, PAGODA GP's single-store sales have stabilized and recovered, with customer traffic expected to grow by double digits year-over-year. Meanwhile, through improving the proportion of high-margin fruit products to optimize product structure, single-store gross profit also achieved single-digit year-over-year growth and double-digit sequential growth.

Simultaneously, according to the profit warning announcement, the company's store adjustments concluded in the first half of this year, with a new round of expansion set to begin. The second half will actively explore new store formats to adapt to different business districts and consumer preferences, restart store expansion plans, and enhance the group's overall profitability through expanding product categories, optimizing product mix, and scaling store operations.

"Recovery after painful restructuring is always closer to vitality than wild growth." With PAGODA GP's latest operating data achieving a positive cycle of "customer traffic recovery - single store optimization - franchise revival," the company's new growth cycle is undoubtedly imminent.

**Product Branding + Supply Chain Deepening Dual-Drive, Long-term Development Promising**

China's fruit industry has enormous market scale. According to Frost & Sullivan data, the market exceeded 1.2 trillion yuan in 2021, and the industry is expected to maintain a 7.6% compound annual growth rate over the next five years. In stark contrast, the fruit industry structure remains fragmented, with the top 5 companies holding less than 5% market share. The "large industry, small companies" characteristic means tremendous consolidation opportunities for leading enterprises.

As the domestic fruit retail leader, PAGODA GP maintains solid foundations in supply chain, brand effects, and operational capabilities. On the supply chain front, its global procurement team exceeds 300 people, establishing partnerships with over 800 direct sourcing bases across 26 countries. In product branding, by the end of 2024, PAGODA GP had launched 46 signature fruit private label brands, accounting for 14.7% of sales, with products like "Huahuang Pineapple" and "Mizong Kiwi" establishing differentiated advantages and brand recognition.

These strategic deployments have built strong competitive moats for the company and are expected to support further market share gains in the fruit retail sector, which offers significant consolidation potential. Currently, driven by improving marginal indicators such as customer traffic recovery, single-store optimization, and franchise confidence revival, operations are showing staged turning characteristics. If expansion proceeds smoothly in the second half of 2025, combined with improving consumer conditions, PAGODA GP is positioned to enter a dual-track of performance and valuation appreciation.