Yuyuan Co., a stalwart of China’s A‑share market since 1992, reported a Rmb4.8 billion net loss for 2025 — the first annual loss in its 34‑year listing history. The firm attributed the plunge to large impairment charges on property projects and goodwill, deepening weakness in China’s property market that compressed selling prices and margins, and volatile consumption patterns that hit its retail businesses.
The numbers reveal a steady deterioration. Yuyuan’s net profit had already fallen for three consecutive years through 2024, when it slipped to Rmb125 million from a 2021 peak that exceeded Rmb36 billion. In the first three quarters of 2025 the company recorded a stage loss: an attributable net loss of Rmb488 million and a Rmb953 million loss after adjusting for non‑recurring items.
Yuyuan’s current stress stems from the twin pressure points of real estate and consumption. The group, which traces its roots to the historic Yuyuan bazaar and expanded into modern property development after a 2018 asset reorganisation, now runs a sprawling portfolio spanning property development, commercial real estate and resorts alongside consumer lines such as jewellery, watch retailers, food and beverage, pharmaceuticals and spirits.
The property arm has been forced into a volume‑for‑price strategy. After development and sales revenue fell sharply in 2024, the company reported a 55 percent year‑on‑year revenue increase in property sales for the first three quarters of 2025 — a rise driven by deep discounts to clear inventory — yet gross margin tumbled to roughly 3 percent. That margin compression directly undermined profitability.
On the retail side, Yuyuan’s jewellery and fashion operations — historically among its largest revenue contributors and home to brands such as Laomiao and Ya‑Yi — flagged. Jewellery revenue slid nearly 32 percent year‑on‑year in the first nine months of 2025, reflecting structural shifts in consumer spending, sustained volatility in international gold prices and the short‑term impact of new gold taxation rules implemented in November 2025.
Faced with shrinking margins and cash‑flow strain, Yuyuan has accelerated asset disposals. The company disclosed the sale of a loss‑making Ningbo subsidiary and has, over recent years, sold stakes and properties worth roughly Rmb141.4 billion to shore up liquidity. The Shanghai Stock Exchange has queried the rationale and buyer synergy of some disposals, highlighting regulatory scrutiny and concern about whether sales are value‑preserving or fire sales.
The group has also been pruning its retail footprint: by September 2025 the combined Laomiao and Ya‑Yi network had shrunk by 879 stores to 4,115 outlets. Store rationalisation, while reducing fixed costs, also signals weakening brand traction and a tougher road to recovering top‑line growth if consumer demand normalises only slowly.
Yuyuan’s collapse into an annual loss is emblematic of a wider challenge facing legacy Chinese conglomerates that built their business model on property development plus consumer retail. When property prices fall and consumers tighten spending or reallocate it across categories, the cross‑subsidy that sustained margins disappears. For investors and policymakers the immediate questions are whether Yuyuan can stabilise cash flow without further distressed asset sales, how much capital will be needed to repair balance‑sheet weakness, and what precedent this sets for other “old eight” listed companies rooted in pre‑2000 China.
The financial hit and regulatory attention make near‑term recovery uncertain. Absent a material rebound in property prices, sustained improvement in consumer demand, or new capital injections, Yuyuan will likely continue to rely on disposals and cost cuts — a strategy that risks shrinking its strategic assets and long‑term earnings potential.