Red Bean (Hongdou) has warned of another loss year, projecting a 2025 net loss attributable to shareholders of between RMB 280 million and RMB 360 million, the company announced on 20 January. This follows a first-ever listed‑company loss in 2024 of RMB 238 million and caps a multi‑year slide in revenue and profitability for one of China’s best‑known legacy menswear groups.
The company’s predicament reflects broader structural shifts in Chinese apparel consumption. Per capita clothing expenditure in the first half of 2025 was only RMB 843, a year‑on‑year rise of just 2.1%, and growth has decelerated sharply; demand for traditional, formal menswear has been hollowing out as buyers favour casual, fashionable and comfort‑driven options and migrate to diverse online and omni‑channel retailers.
Red Bean has not been passive. Management has retooled product mixes, launched “zero‑feel” comfort shirts and hired younger celebrity endorsers in attempts to recapture relevance. The firm also pursued an aggressive channel strategy: converting hundreds of franchise stores to company‑run outlets since 2021 in an effort to upgrade the brand and lift margins.
Yet the numbers show the limits of that approach. Group revenue fell by about 15% last year, a decline of roughly RMB 370 million, while gross profit contracted by about RMB 200 million. The company trimmed operating costs—sales, administrative and R&D spending fell by RMB 120 million—but investment gains also eased and were insufficient to offset weaker core sales.
A closer look at the HOdo men’s chain reveals acute operational pain. By end‑September 2025 the brand operated 907 stores, of which 485 were direct and 422 were franchise or joint‑operation outlets. From January to September, direct stores generated RMB 308 million in sales and franchise outlets RMB 143 million, plunging 30.2% and 40.5% respectively year‑on‑year; the gulf in profitability is stark, with direct stores posting a 51.8% gross margin versus a mere 2.3% at franchised locations.
Red Bean’s woes are compounded by a history of frequent strategic pivots and leadership turnover since the company’s rise in the 1990s. The brand was founded out of a No. 1950s local knitwear factory and grew into a household name under founder Zhou Yaoting. His son Zhou Haijiang has steered the listed company for years, but board and chair changes—most recently the 2024 transfer of the group chair to cousin Zhou Hongjiang—have left questions about long‑term strategic continuity.
The firm’s earlier diversification into property and finance, and the subsequent divestment of those assets in 2017 to refocus on apparel, illustrate a recurring theme: the company’s fortunes have depended heavily on management choices and timing. After attempting to climb into a higher‑end positioning in the early 2020s—moving from “light‑fashion” to “classic comfortable” menswear and beefing up flagship stores—revenues plateaued around RMB 2.3 billion from 2021 to 2023 before sliding to RMB 1.96 billion in 2024.
For investors and industry watchers, Red Bean’s troubles are a case study in the fragility of legacy retail brands in China’s evolving consumer landscape. Sustained declines in foot traffic, weak mall demand and the rise of digitally native competitors mean that expensive channel experiments and celebrity campaigns will not automatically deliver a turnaround. The company now faces a choice between further lean restructuring, deeper brand reinvention targeted at younger cohorts, or seeking strategic partners to stabilise capital and operational execution.
Absent a rapid shift in market dynamics or a decisive strategic reset, Red Bean’s projected second consecutive loss suggests the company will remain mired in restructuring for some time. The larger lesson is that many of China’s once‑dominant regional apparel champions must reinvent business models or cede market share in an era when consumer tastes and retail economics have changed for good.