---
title: "Yonghui Superstores Q1 Financial Report Released: Performance Gradually Warming Up"
description: "Yonghui Superstores released its Q1 2023 financial report, showing revenue of 23.802 billion yuan, up 24.07% quarter-on-quarter but down 12.63% year-on-year, with net profit attributable to shareholders of 704 million yuan, up 40.24% year-on-year. Despite challenges, the company's online business is growing, and it remains the second-largest retailer in China by market share."
author: "赵胜男"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2023-05-03"
language: "en"
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# Yonghui Superstores Q1 Financial Report Released: Performance Gradually Warming Up

> Yonghui Superstores released its Q1 2023 financial report, showing revenue of 23.802 billion yuan, up 24.07% quarter-on-quarter but down 12.63% year-on-year, with net profit attributable to shareholders of 704 million yuan, up 40.24% year-on-year. Despite challenges, the company's online business is growing, and it remains the second-largest retailer in China by market share.

Opening a New Chapter
In recent years, discussions about Yonghui Superstores have often been accompanied by hot keywords such as "difficult transformation," "shrinking," and "dilemma." Its operations have been on a downward trend, and it once faced the risk of delisting. On the evening of April 28, Yonghui Superstores released its Q1 2023 financial report, revealing the latest developments. The report shows that in Q1 2023, the company achieved operating revenue of 23.802 billion yuan, up 24.07% quarter-on-quarter from Q4 2022, but down 12.63% year-on-year from Q1 2022. Net profit attributable to shareholders was 704 million yuan, up 40.24% year-on-year. From the revenue composition, sales in Q1 2023 slowed slightly compared to the same period last year, which is a microcosm of the entire industry, as the overall Chinese supermarket industry is currently sluggish. Why? Due to the impact of the pandemic and lockdowns, consumers developed a habit of hoarding goods during the three years of the pandemic, creating a peak in supermarket sales. Since the beginning of this year, with no more lockdowns, consumers' hoarding habits have gradually dissipated, and supermarket performance has naturally been less than satisfactory.

Although Yonghui's offline business has slowed, its online channel sales have been surging. In terms of online business, Yonghui Superstores achieved sales of 15.936 billion yuan in 2022, up 21.37% year-on-year, accounting for 17.69% of total revenue. In Q1 2023, the company's online business sales reached 4.02 billion yuan, with an average order value increase of 6%, reflecting that Yonghui's online development has begun to take shape.

Now, Yonghui Superstores, struggling to turn around, appears somewhat desolate. However, according to Kantar Consumer's statistics on retailer market share, Yonghui Superstores is the second-largest retailer brand in China. In the year ending March this year, Yonghui Superstores held a 5.7% share of the Chinese retail market, second only to Gaoxin Retail Group's 7.8% and higher than Walmart Group's 5.6%.

Founded in 2001, Yonghui Superstores was initially positioned as a "supermarket and department store discount store" with features of "low prices, high-quality service, rich variety, and international management." It was born during a period of rapid development in the domestic supermarket industry and was one of the first circulation enterprises in China to introduce fresh agricultural products into modern supermarkets. It successfully went public in just nine years, becoming a benchmark in the industry. Although it has faced continuous pressure in recent years due to product quality and the overall environment, it has never given up and has actively sought change.

The Road to Transformation
As consumers continue to upgrade and the consumer market changes, Yonghui Superstores has begun to transform and upgrade towards a high-quality, high-end market direction, investing significant funds in the "new retail" strategic layout.

1. Digital Transformation
Digital transformation is an essential means in today's business competition, and almost all enterprises have the concept of digital transformation, with the difference lying in the depth of implementation. To promote digital transformation, Yonghui Superstores has invested substantial funds and human resources. In 2021, Yonghui's technology investment reached 670 million yuan, and it established a thousand-person Yonghui Big Technology Center. Its self-developed full-chain retail digital system "YHDOS" has also been put into large-scale use in Fuzhou and other places. In its 2022 financial report, Yonghui stated that during the reporting period, through the promotion and application of tools such as intelligent ordering and intelligent scheduling, and the full launch of the YHDOS system, it focused on improving store efficiency, personnel efficiency, and product efficiency. The company maintained a high rate of new product launches and replacements, and some benchmark stores saw personnel efficiency increase by 30%-50%, showing some results. In addition, the company strengthened the digital transformation of offline stores, improved service quality, provided more convenient shopping methods, promoted online-offline interaction and integration, allowing online consumers to better understand offline products, while also driving traffic to offline stores, increasing foot traffic, and achieving a win-win situation online and offline. At the same time, by building its own e-commerce platform and cooperating with other e-commerce platforms, it promoted the expansion of online business, optimized the consumer shopping experience, and enhanced brand influence. Currently, the results of online-offline integration are considerable. According to the Q1 2023 financial report, the company's online business sales reached 4.02 billion yuan, with an average order value increase of 6%. According to the 2022 annual report, full-year online business revenue was 15.936 billion yuan, accounting for 17.69% of total revenue, up 21.37% year-on-year, with both revenue and proportion reaching historical highs.

2. Supply Chain Upgrade
Supply chain upgrades can reduce the loss rate of fresh products, improve operational efficiency, and also reduce intermediate markup links to establish cost advantages, while ensuring the freshness that consumers care about most. As an enterprise that started with fresh business, Yonghui Superstores is well aware of the critical role supply chain optimization plays in the company's development. If the fresh product loss rate is high, it becomes a difficulty constraining development. According to data from Southwest Securities research reports, the fresh product loss rate in the fresh industry is about 20-30%, while Yonghui Superstores' fresh product loss rate is only 3-4%, far below the industry level. This achievement is attributed to Yonghui Superstores' supply chain construction that covers the whole country and deeply penetrates down to sixth-tier cities. By connecting upstream high-quality procurement, strong logistics distribution, cold chain system preservation, and store-to-home services, Yonghui Superstores has established a comprehensive supply chain system, and with the help of an intelligent middle platform, it has achieved efficient operation of supply chain optimization. The benefits of supply chain upgrades to Yonghui Superstores are sustainable. Both digital transformation and supply chain upgrades are correct choices made by Yonghui Superstores for future development, and they have achieved significant results. However, in the process of transformation and change, it is inevitable to encounter some unsatisfactory situations, such as the exploration of supermarket formats.

3. Exploration of Supermarket Formats
In recent years, Yonghui Superstores has extensively explored new supermarket formats, such as expanding mini stores and warehouse stores. The trend of smaller supermarket stores is currently a development direction. Yonghui began testing mini stores in December 2019, and Yonghui Mini, positioned as a fresh food store at the doorstep of community residents, began large-scale expansion. In just one year, nearly 600 Yonghui Mini community fresh food stores were opened. Due to overly rapid development, in the first half of 2020, the number of Yonghui Mini stores decreased to 458, and in the second half of 2020, it further decreased to 156. By 2021, only 33 Yonghui Mini stores remained. According to its 2021 annual report, "Yonghui Mini" stores incurred losses of 130 million yuan. In 2021, Yonghui began to try warehouse membership stores, but Yonghui's warehouse stores differ from conventional warehouse stores. First, they are warehouse-style but not membership-based, meaning there is no paid entry threshold, and anyone can enter and shop. Second, Yonghui warehouse stores are currently more based on the renovation of existing stores rather than the usual independent expansion of new stores. Due to the lack of significant changes, consumers' awareness of Yonghui warehouse membership stores is not high, and the initial effect was not obvious. In the first half of 2022, warehouse membership sales grew by more than 20%, gradually showing results, but the future remains to be seen.

Hesitant but Promising
With the rapid development of the social economy, market competition has become extremely fierce. The challenges faced by Yonghui Superstores are not limited to competition from traditional physical stores, but also include dispersed customer flow, weakened price advantages, and product quality issues.

1. Dispersed Offline Customer Flow
Consumers now have increasingly diverse shopping channels to choose from. New channels such as instant retail, community group buying, and B2C e-commerce platforms have emerged, and traditional supermarkets like Yonghui are gradually losing their competitive advantage, with fewer consumers choosing offline supermarkets. Young consumers prefer convenient and fast shopping methods such as instant retail and community stores, and going to shopping malls is no longer the mainstream trend.

2. Weakened Price Advantage
During the three-year pandemic, many consumers developed habits of community group buying and online shopping out of necessity. Yonghui's once-proud price advantage is vulnerable in the face of community group buying. In addition to the heavy subsidies from internet giants, community group buying also bypasses most of the pain points of fresh retail in its business model: it does not need to build physical stores, does not need delivery, does not need inventory, and its invented "group leader" role, because they are familiar with the community and have a trust foundation with residents, also minimizes the cost of attracting new customers.

3. Food Safety Issues
According to People's Daily Online, on April 8, 2021, Yonghui Superstores had 15 batches of food products fail random inspections in stores in Fuzhou, Putian, and other places, involving excessive levels of ofloxacin, enrofloxacin, and cadmium (drug and heavy metal exceedances). Such exposure of food problems is disheartening to consumers. This is not an isolated case. From 2018 to 2021, it was almost on the list every year. If food safety issues are not resolved in a timely manner, they will definitely be hidden risks in the future. Perhaps considering the strong public opinion, Yonghui Superstores has begun to strictly control suppliers, strengthen management of the upstream supply chain, increase testing coverage for products, especially perishable fresh products, conduct strict testing before procurement, and prohibit the procurement of any products that fail testing. It has also strengthened the source-logistics-store testing and traceability. It has also strictly controlled and upgraded its food safety testing management and technology. Whether these measures are mere formalities or genuine improvements will be tested by time.

Overall, Yonghui Superstores is currently facing various problems and challenges, and the road to innovation is not smooth. But fortunately, Yonghui Superstores has the ability to continuously innovate and optimize its product and service quality. The Q1 financial report also proves that Yonghui's profitability is still intact, and its online business is gradually gaining traction. In the future, Yonghui will continue to attempt innovations in models and other aspects, and there is still significant room for development. I believe that in the near future, Yonghui Superstores will have the opportunity to rebuild its glory. Let us wait and see.


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