Pou Sheng, the retail subsidiary of Yue Yuen, forecasted a decline in year-over-year net profits due to weak consumer sentiment in China associated with COVID-19 lockdowns and lower store traffic in cities where it operates.

Pou Sheng said it expected to record revenue of approximately RMB14,394 million and a net profit attributable to owners of the
company of approximately RMB99 million for the nine months ended September 30, representing a decline of approximately 20 percent and 83 percent, respectively, compared with the same period in 2021. Despite the decline in the results for the first nine months, the net profit attributable to owners of the company for the third quarter was approximately RMB81 million, reversing the losses during the same quarter of 2021 and the second quarter of 2022.

Pou Sheng said the expected decrease in net profit attributable to owners of the company for the nine months was led by the decline in revenue amidst weak consumer sentiment following continued COVID-19 outbreaks.

Pou Sheng stated, “The declining store traffic in shopping venues across cities in which the Group operates, volatile and mixed retail sentiment and intensified COVID-19 control measures with the decision to maintain a strict policy by the authorities, inevitably posed pressure on the revenue and results of the Group during the period under review. The Group has made efficient adjustments to the overall strategic planning to combat the dilemma. The digital transformation has helped to lift the contribution of sales from the Group’s omnichannel, offsetting the sluggish in-store performance. Meanwhile, the Group has integrated the resources of brick and mortar network, re-defined retail regions, and strengthened the online/offline integration and membership loyalty programs to maximize the efficiency in resource utilization. The Group will dynamically modify the strategies to adapt itself to the “new normal” in a timely manner.”

Nine-month results are expected to be released on November 10.