Raising prices three times a year, Lao Pu Gold earned nearly 3.4 billion more. The management team states, "We not only profit from rising gold prices but also from falling prices."

This article is sourced from: Time Weekly Author: Liu Ting

In 2025, the price of gold skyrocketed, and Lao Pu Gold (06181.HK) also delivered an impressive performance report.

On March 23, Lao Pu Gold released its 2025 performance report, showing a company revenue of 27.303 billion yuan, a year-on-year increase of 221%; the profit attributable to the parent company was 4.868 billion yuan, nearly 3.4 billion yuan more than the previous year, a year-on-year increase of 230.5%; gross profit grew by 193.4% to approximately 10.274 billion yuan.

However, entering 2026, the gold market experienced severe fluctuations. Just a few days ago, the international spot gold price briefly fell below $4,100 per ounce, marking the largest single-week decline since March 1983.

During the performance exchange meeting, how to respond to the impact of gold price fluctuations on operations became the most concerning question for investors. In this regard, Lao Pu Gold’s management clearly stated, “No hedging,” and repeatedly emphasized that the trend of gold prices is not a variable for performance, but rather “brand strength, product strength, and channel strength.”

“High-end customers are the main support for performance when the economy is under no pressure; when the economy is under pressure, they are the ballast for performance,” the management stated.

Lao Pu Gold is attempting to switch from the retail logic of traditional gold stores to the premium logic of luxury goods, but whether this path is viable still raises many questions.

                      Long lines at Lao Pu Gold's entrance, photographed by Time Weekly reporter            

“Not only making money from rising gold prices, but also from falling prices.”

In 2025, the gold industry fell into a paradox of growth; while gold prices soared, terminal sales did not improve.

Taking China Gold and Yuyuan Group as examples. In January this year, China Gold released a performance forecast, expecting a net profit attributable to the parent company of 286 million to 368 million yuan for 2025, a year-on-year decline of 65% to 55%. Yuyuan Group’s latest annual report shows that the company’s revenue in 2025 dropped by 22.49%, with a net profit attributable to the parent company losing 4.897 billion yuan, while it had a profit of 125 million yuan the previous year.

When explaining the main reasons for the decline in net profit, China Gold stated that due to the impact of the gold market and new policy factors, the sales of the company’s main investment and consumer gold products were both affected, leading to a decrease in foot traffic at terminal stores, and the overall sales faced temporary phase pressure.

Meanwhile, Lao Pu Gold’s financial report shows that the weighted average price of gold rose from 633.21 yuan per gram in January 2025 to 979.92 yuan per gram in December 2025, an increase of 54.8%.

This phenomenon of increasing prices while sales become difficult is referred to in the industry as the “price increase trap.” In 2025, several leading companies in the industry chose to close inefficient stores to recover cash flow.

“The current wave of gold store brand closures is rooted in structural mismatches between oversupply and weak demand,” said jewelry industry brand marketing expert Cui Deqian to a Time Weekly reporter. The rapid rise in gold prices has squeezed consumer willingness, compounded by high rent and high labor costs, resulting in a dual squeeze on industry profit margins, making store closures a realistic option for survival.

Even Lao Pu Gold, which is under the spotlight, has been affected. Lao Pu Gold pointed out in its financial report that after the first two price adjustments in 2025, the price of gold continued to rise rapidly, which caused the company’s gross margin to slightly decline to approximately 37.6% during the reporting period. It was only after the third price adjustment in October 2025 that the gross margin returned to over 40%.

This has drawn more attention to Lao Pu Gold’s strategy regarding changes in gold prices. Generally speaking, when faced with fluctuations in raw material prices, most gold jewelry brands choose to hedge through financial instruments. However, at the performance meeting, Lao Pu Gold’s answer was “no hedging.” “Lao Pu does not only earn from rising gold prices; it can also earn from falling prices.”

Lao Pu Gold’s management stated that the company has strong support in brand reputation, market image, product premium capability, customer relationship management, and after-sales service systems. When gold prices decline, a new payment relationship between consumers and the brand will be established based on strong product strength, brand strength, channel strength, and customer service strength, ensuring normal sales performance.

“The simple logic is: no matter whether you are good or bad, strong or weak, always provide the highest emotional value to the other party, and you will always maintain an undefeated position.”

Lin Ling (pseudonym), a senior practitioner in the gold industry, told a Time Weekly reporter that from the perspectives of pricing strategy and store opening logic, Lao Pu Gold is trying to use brand premium to make gold prices no longer the decisive variable in business.

“Lao Pu Gold is not fighting against the cycle of gold prices; it is trying to withdraw from price-centric games, attempting to shift the anchor of growth from price to premium,” Lin Ling pointed out. Once the premium logic is established, fluctuations in gold prices are merely cost variations; however, once the premium weakens, price volatility will pose significant challenges for business operations.

                      Photographed by Time Weekly reporter            

Conservative store openings, competing with international brands

If we look only at the total number of stores, Lao Pu Gold is a conservative company.

By the end of 2025, Lao Pu Gold had opened 45 self-operated stores in 16 cities, all located in 34 well-known commercial centers, including 6 stores in the SKP series and 12 in the MixC series. In 2025, Lao Pu Gold only added 10 new stores while optimizing and expanding 9 existing stores.

At the performance meeting, when discussing store expansion, Lao Pu Gold’s response remained conservative. “Before achieving the utmost performance in existing stores, the domestic new store expansion plan will take a conservative approach. In addition, the company will actively promote new store expansions in major cities across 6-7 countries such as Singapore, Malaysia, South Korea, and Thailand,” Lao Pu Gold’s management stated, revealing that the focus in 2026 will primarily be on optimizing existing stores.

In the gold retail industry, store expansion often means a different logic. Scale replaces income, density replaces market share, and quantity replaces presence. Lao Pu Gold’s approach is to continue entering key business districts while shifting the growth focus back to individual stores. By adjusting locations, expanding areas, iterating products, and operating high-end customer management, it aims to transform a store into an efficiency model close to that of luxury goods stores.

This is also key to understanding Lao Pu Gold’s channel logic. According to the financial report, Lao Pu Gold achieved an annualized sales performance of nearly 1 billion yuan per store on average in 2025. Frost & Sullivan data shows that Lao Pu Gold ranks first in terms of store efficiency and sales per square meter in domestic shopping malls.

Entering shopping malls with higher rents, entering denser luxury brand environments, and entering demographics with greater purchasing power. Behind this is the rise of the luxury jewelry sector.

HSBC analysis states that over the past five years, luxury jewelry has been the fastest-growing category in the luxury goods industry, benefiting from a better product value proposition (compared to handbags and other products), ongoing creativity, and the introduction of products that resonate with different age groups and have excellent value retention.

At the same time, luxury brands themselves are also doubling down on this sector. Recently, Kering Group announced that it would establish a separate jewelry business division to integrate all its jewelry businesses, including Boucheron, Pomellato, DoDo, and Qeelin.

The financial report also shows that the overlap rate of Lao Pu Gold’s consumers with the clientele of international luxury brands like Louis Vuitton, Hermès, and Cartier has increased from 77.3% in July 2025 to 82.4% in March 2026.

Faced with the challenge from international luxury brands, how will Lao Pu Gold defend its position? In this regard, the management stated: “The likelihood that the three major international luxury goods groups will personally enter the field of traditional gold is quite low. If they truly want to change their positioning and enter this sector, the Chinese who sing Peking opera will definitely not fear foreigners coming to sing Peking opera and compete on the same stage. This is not merely a contest of market brand power and corporate comprehensive strength; it is essentially a cultural contest.”

“(Lao Pu) almost has no customer base looking at cost-performance ratio.” At the performance meeting, Lao Pu Gold’s management candidly stated that Lao Pu has always emphasized making products first, using products to find customers, and letting customers come voluntarily. “The overall customer base is very large, with a high proportion of high-net-worth customers, as well as many customers who value quality-price ratio, but there are hardly any who care too much about cost-performance ratio. Cost-performance ratio is not an attribute of high-end brands; high-end brands are more about creating cultural premiums, craftsmanship premiums, and aesthetic premiums.”

Additionally, Lao Pu Gold revealed that regarding average transaction price and product line segmentation, the company has two lines. The line below 100,000 yuan mainly involves accessories, which currently has not found any competing brands in the market that can rival Lao Pu. “Lao Pu’s gold products can achieve a very high average transaction price but will not compete with international jewelry brands on high-priced accessories.”

For a long time, the Chinese gold industry has largely remained within the logic of wholesale and processing, with pricing dependent on gold prices and competition relying on channel expansion. As Lao Pu Gold incorporates products, aesthetics, and customer structure into its pricing system, this traditional path is beginning to show signs of loosening.

Against this backdrop, the industry benchmarks are also changing. As international luxury giants begin to integrate the jewelry landscape, if customer aesthetic fatigue arises or the traditional gold sector approaches its ceiling, whether Lao Pu Gold can maintain growth remains a question mark.