SUNART RETAIL (06808) Issues Profit Warning: Expects Interim Net Loss and Loss Attributable to Owners of the Company Both to Be Approximately RMB 500 Million to RMB 550 Million

SUNART RETAIL (06808) Issues Profit Warning: Expects Interim Net Loss and Loss Attributable to Owners of the Company Both to Be Approximately RMB 500 Million to RMB 550 Million Text: SUNART RETAIL (06808) announced that for the six months ended September 30, 2026 (the relevant period), the Group is expected to record a net loss and a loss attributable to owners of the Company, both calculated in accordance with Hong Kong Financial Reporting Standards, of approximately RMB 500 million to RMB 550 million (unaudited), compared with a net loss and a loss attributable to owners of the Company of RMB 127 million and RMB 123 million, respectively, in the same period last year. During the relevant period, the Group expects to record (i) adjusted EBITDA, i.e., adjusted earnings before interest, taxes, depreciation and amortization, of approximately RMB 1.0 billion to RMB 1.05 billion (unaudited, a non-HKFRS measure); and (ii) net cash generated from operating activities of approximately RMB 1.75 billion to RMB 1.8 billion (unaudited), compared with net cash generated from operating activities of RMB 1.323 billion in the same period of 2025. The Group continues to advance the optimization of its store asset portfolio, prudently evaluates the operating performance of each store, exits stores under operating pressure at appropriate times, and continues to achieve substantive progress in various operational reforms, helping to gradually narrow losses. The expected net loss and loss attributable to owners of the Company are primarily attributable to: (i) during the period, the declining trend in average transaction value narrowed, but customer traffic declined somewhat due to market competition diversion, resulting in a decrease in revenue; (ii) expense savings partially offset the profit erosion caused by the revenue decline; (iii) merchandise and supply chain adjustments, as well as store and storefront street renovations, are still in the transition and adjustment stage; and (iv) certain stores planned for closure continued to incur losses during the relevant period, thereby exerting short-term pressure on profit for the current period. The Group is actively advancing a comprehensive upgrade across both merchandise and space. On the merchandise side, it is building a nationwide centralized procurement system, developing private label brands, streamlining SKUs and optimizing category structure. On the store side, it is implementing floor area reduction, releasing space to expand storefront streets, steadily advancing modular store renovations, while simultaneously promoting the layout of new stores and front warehouses, and building a multi-format layout comprising hypermarkets, mid-size supermarkets and front warehouses. The Group continues to optimize store rental costs and adjust inefficient store assets. The Group remains committed to structural transformation; after the short-term pain, improvements in merchandise strength, store efficiency and asset structure will gradually consolidate the foundation for long-term operations.