"The No. 1 Stock in Home Retailing" Explodes! Massive Loss of 24 Billion Yuan, Collapsing, Sellers Turning to Electronics, Cars, and Food Services to Survive

Ask AI · Red Star Macalline suffers a massive loss of 24 billion yuan, how does the housing market downturn drag down furniture demand?

The negative impact of the still-weak real estate market on downstream industries seems to be accelerating this year. The home furnishing industry, which is directly related, may feel it most acutely.

On March 30th, the well-known home decoration and furniture retailer Macalline (Red Star Macalline) (601828, SH; 01528, HK), listed in both A-shares and H-shares, released its 2025 annual report revealing a big loss: net profit attributable to parent company plummeted by 24 billion yuan, not only the third consecutive year of loss, but the loss also surged nearly six times compared to 2024!

However, perhaps due to prior expectations, the stock price had already fallen in advance. On March 31st, the stock prices of Red Star Macalline in both A-shares and H-shares remained relatively stable, with A-shares up slightly by 0.41%, down about 10% for the year; H-shares closed down 1.56%, but still up over 3% for the year.

In 2015, Red Star Macalline was listed on the main board of the Hong Kong Stock Exchange as “China’s No. 1 home retail stock,” and in 2018, it was listed on the main board of the Shanghai Stock Exchange, becoming the first home industry A+H stock.

Performance Collapse

The 2025 annual report shows that revenue reached 6.5819 billion yuan, down 15.8% from 7.8213 billion yuan in 2024.

The gross profit decline was similar, at 15.2%, dropping from 4.99B yuan in 2024 to 4.2297 billion yuan in 2025.

However, the net profit attributable to parent company was quite ugly. The 2025 report shows that the total annual loss attributable to owners was 24.0937 billion yuan, up 590% from a loss of 3.49B yuan in 2024; the core net loss attributable to owners was 5.4922 billion yuan, up 313.8% from 1.3274 billion yuan in 2024.

In terms of earnings per share, the loss in 2024 was 0.80 yuan per share, which directly jumped to a loss of 5.53 yuan per share in 2025.

Looking at these three key financial indicators from previous years, 2025 was undoubtedly a year of major “collapse” for Red Star Macalline’s performance.

Data from Eastmoney’s statistics over the past nine years show that the peak performance of Red Star Macalline in recent years was in 2019, with total revenue reaching 16.47 billion yuan, after which it declined year by year.

The trends of gross profit and net profit attributable to parent are also similar, peaking in 2019, then “sliding down the slide.”

However, the more critical turning point for net profit attributable to parent occurred in 2023, when Red Star Macalline first reported a loss of 2.4 billion yuan. Although 2024 was also a loss, the amount increased only slightly compared to 2023. By 2025, the three-digit cliff dive was almost too shocking to watch.

Main Business Shrinks, Rent Significantly Declines

Regarding the decline in revenue and profit in 2025, Red Star Macalline did not shy away from the direct impact of industry contraction.

In the annual report, the company pointed out that, affected by the sluggish real estate industry and the continued decline in demand for home building materials, the demand in the home retail market weakened. The company has been continuously reducing rent and management fees to stabilize and retain tenants, while attracting high-quality tenants and brands with favorable commercial conditions, and offering rent and management fee discounts during initial expansion, which has significantly impacted leasing and management income, leading to a notable decrease in rent levels compared to previous years.

It is worth noting that in 2025, Red Star Macalline’s main business is realized through three methods: self-operated malls (74 stores, accounting for 74.2% of revenue), entrusted management malls (218 stores, accounting for 18.1%), and cooperative operated malls (7 stores).

However, even the core businesses (self-operated and entrusted management malls) have shrunk in number.

The annual report shows that the total number of malls decreased by 42 compared to the previous year, with self-operated malls down by 3 and entrusted management malls down by 39… The total operating area of malls nationwide decreased by nearly 2 million square meters, covering 21 fewer cities.

Reflected in the revenue side of the company’s annual report, rent and related income from self-operated malls declined by 8.9%. The company stated that this was mainly due to fluctuations in the relevant industry, affecting the operation of malls and tenants, resulting in a phased decline in mall occupancy rates and rent.

Revenue related to entrusted management malls decreased even more significantly, by 18.4%, mainly due to the reduction in the number of entrusted management malls.

Entrusted Management Malls’ Gross Margin Is the Only Bright Spot

Another point to note is that although revenue from entrusted management malls declined sharply, their gross margin was more advantageous than that of self-operated malls, becoming one of the few bright spots in the annual report.

The data provided by the company shows that the overall gross profit margin in 2025 was 64.3%, up 0.5 percentage points from 63.8% in 2024, mainly due to the increase in gross margin of entrusted management malls.

Specifically, the gross margin of self-operated malls slightly declined year-on-year, while the gross margin of entrusted management malls increased by nearly two percentage points, slightly boosting the overall gross profit margin.

It is worth noting that the gross margin of building decoration services plummeted from 14.8% in 2024 to -43.6% in 2025. In other words, each service provided in the building decoration category is directly generating losses.

The revenue from building decoration services mainly comes from construction, design, and decoration services, accounting for only 1.6% of the company’s total revenue in 2025. But the negative gross margin suggests that this service is basically a loss-making “boast,” not intended to make money but to boost mall popularity. However, overall, the effect seems limited.

Striving to Develop Multi-Format Operations

Faced with an industry-wide downturn, Red Star Macalline is actively seeking ways to respond, aiming to reposition itself and create a “second growth curve.”

The company stated in the annual report that it has upgraded its strategic positioning to “a new commercial operator for home life and a home industry ecological service provider,” focusing on upgrading its core home business while expanding home industry ecological services to achieve both scale and value enhancement.

Specific measures include expanding its main business scope, introducing more formats, and enriching revenue sources. The main channels are:

One is the high-end appliance ( MEGA-E ) strategy, opening appliance stores in malls; two is developing offline channels for new retail furniture, connecting with online brands, becoming the fastest-growing secondary category; three is M+ high-end home decoration design centers, achieving “design-driven traffic + mall conversion”; four is entering the automotive sector, doubling the operating area; five is developing catering services to enhance the mall’s lifestyle functions; six is seizing the new track of health and wellness home, establishing a “Silver Age Lifestyle Aesthetic Museum” in Shanghai.

It’s clear that, in order to reverse the operational decline, Red Star Macalline is really working hard. Hopefully, it can achieve good results in 2026.