---
title: "Narrowing Losses: Is Yonghui Superstores Approaching a Turning Point?"
description: "Traditional supermarkets have faced successive impacts from e-commerce, new retail, and the pandemic, making transformation and upgrading an inevitable trend. Yonghui Superstores, founded in 2001, once maintained high double-digit revenue growth for over a decade, earning the title of \"China's No.1 supermarket.\" However, by 2022, its net profit fell into losses due to external environmental impacts and its own transformation efforts. Despite the harsh conditions, Yonghui has made progress in digital business. As the external environment improves, the company's performance pressure may gradually ease."
author: "New Distribution"
publisher: "New Distribution"
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published: "2023-01-31"
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# Narrowing Losses: Is Yonghui Superstores Approaching a Turning Point?

> Traditional supermarkets have faced successive impacts from e-commerce, new retail, and the pandemic, making transformation and upgrading an inevitable trend. Yonghui Superstores, founded in 2001, once maintained high double-digit revenue growth for over a decade, earning the title of "China's No.1 supermarket." However, by 2022, its net profit fell into losses due to external environmental impacts and its own transformation efforts. Despite the harsh conditions, Yonghui has made progress in digital business. As the external environment improves, the company's performance pressure may gradually ease.

**Introduction**: Traditional supermarkets have faced successive impacts from e-commerce, new retail, and the pandemic, making transformation and upgrading an inevitable trend.
Founded in 2001, Yonghui Superstores once maintained high double-digit revenue growth for over a decade, ultimately earning the title of "China's No.1 supermarket." However, fast-forwarding to 2022, Yonghui's net profit fell into losses due to external environmental impacts and its own transformation and upgrading. Yet, amidst the harsh winds, Yonghui has made some progress in digital business. As the external environment improves, the performance pressure on the company may gradually ease.

**Current Operating Status**
On January 30, Yonghui Superstores released its 2022 performance forecast, estimating a net loss attributable to shareholders of listed companies of -2.74 billion yuan, narrowing losses by 1.20 billion yuan compared to the same period last year; it also estimated a non-GAAP net loss attributable to shareholders of -2.40 billion yuan, narrowing losses by 1.44 billion yuan year-on-year. The reasons for the 2022 loss forecast are primarily the impact of the pandemic and asset impairment. In 2022, due to the COVID-19 pandemic, many Yonghui stores temporarily suspended operations, significantly affecting shopping demand and consumer psychology in major cities' offline stores. The financial assets held by the company saw a substantial decline in value in 2022, resulting in a fair value change loss of 640 million yuan. Additionally, based on preliminary calculations, the company expects to provision for impairment of long-term equity investments and other long-term assets of approximately 600 million yuan in 2022. Furthermore, the company is vigorously developing its online business, which requires certain cost investments for cultivation.

Yonghui previously established a strategic positioning as a "customer-centric, fresh-food-based, omni-channel digital retail platform." In 2022, the company invested approximately 700 million yuan in technology; online business sales grew by 21%, with a loss of 440 million yuan, narrowing losses by 400 million yuan year-on-year. In the 2022 performance forecast, the company mentioned that during the pandemic, it continuously promoted organizational changes and increased investment in technology and digitalization. In terms of stores, it continuously optimized and improved asset quality, slightly increasing short-term costs. As the economic environment recovers, the company's digital transformation progresses, and store layout further optimizes, various business indicators have shown improving trends, with same-store sales turning positive in December.

**Transformation Breakthroughs**
In recent years, traditional supermarkets have faced successive impacts from e-commerce, new retail, and the pandemic, making transformation and upgrading an inevitable trend. Yonghui Superstores, as a leading fresh-food supermarket, is no exception. As early as 2016, Yonghui paid attention to the new retail format, and in 2018, it began implementing the digital transformation strategy of "Technology Yonghui, Digital Empowerment." During this exploration, the company successively incubated new retail stores such as Super Species, Yonghui Life, and Yonghui MINI, but neither Super Species nor Yonghui MINI helped Yonghui break through. Currently, the company is also transforming into "membership warehouse stores," combining its own people-friendly approach, providing customers with high-cost-performance products without charging membership fees. However, Yonghui warehouse stores are still in the exploratory stage, and the company has barely disclosed their 2022 operating data.

Additionally, it is worth noting that Yonghui is improving its gross margin by developing private-label brands. Data shows that in the first three quarters of 2022, it achieved operating revenue of 70.907 billion yuan, a year-on-year increase of 1.53%; the comprehensive gross margin for the first three quarters was 19.94%, an increase of 1.19 percentage points year-on-year, achieving dual growth in operating revenue and comprehensive gross margin. According to media reports, before the Spring Festival, Yonghui's private-label brands, including Chan Da Shi, Hui Ma Dao Jia, Yonghui Farm, and You Song, focused on creating 13 core bestsellers for the Spring Festival scenario, launching 72 new year gift boxes, holiday packaging & extra-large packs, and over 30 pre-made dish products. Data from the week before New Year's Eve showed that Yonghui's private-label brands achieved sales of nearly 150 million yuan in 7 days, a year-on-year increase of 111%. In the third quarter of 2022, compared to some peers with double declines in revenue, Yonghui showed signs of "revival." Furthermore, despite taking many detours in the exploration process, it has made good progress in online business and private-label brand development, while maintaining its core advantages in the fresh food category.

However, Yonghui has not yet disclosed its 2022 revenue situation. If revenue maintains an upward trend, it may indicate that the company has reached an important "turning point." If revenue declines, the time left for the company's transformation and adjustment may be limited.

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