Lao Pu Gold Chairman: We do not use hunger marketing; our gross profit margin will remain between 40% and 43%.

Original | Yongliu Business Author | Lin Geng

In a year of soaring gold prices, Laopu Gold wants to prove that it sells more than just gold.

This company, which started with traditional gold craftsmanship, achieved an operating income of 27.303 billion yuan in 2025, a year-on-year increase of 221%; net profit attributable to the parent company was 4.868 billion yuan, a year-on-year increase of 230.5%; basic earnings per share were 28.35 yuan.

The company also announced a final dividend of 11.95 yuan per share. Such a dividend arrangement is rare for a consumer company still in a high-speed expansion phase.

The market still holds extremely high expectations for its subsequent performance. Management expects that sales in the first quarter of 2026 will reach between 19 billion and 20 billion yuan, with net profit expected to fall between 3.6 billion and 3.8 billion yuan.

This kind of growth is not just fast; it also seems to push a company originally classified as a gold and jewelry retailer into the valuation imagination of high-end consumer brands. Laopu Gold attempts to prove to the market that it is not just a gold retailer lifted by gold prices, but a company that hopes to maintain pricing power and brand momentum both during rising and falling gold prices.

Cycle Bonuses and Gold Prices

Laopu Gold’s performance explosion over the past two years has clearly benefited from this round of rising gold prices. The increase in gold prices directly raised the average transaction price and expanded profit margins. What the market is truly worried about is a cycle reversal. Once gold prices turn downward, what kind of impact will this company face?

Management provided a clear response at the earnings meeting. Xu Gaoming, Chairman, General Manager, and R&D Director of Laopu Gold, stated that the company has experienced a complete gold downcycle in its 16 years of establishment. In his view, the real test during a gold price decline is not whether the company can sell gold, but whether the brand premium and product strength are solid enough.

Xu Gaoming believes the company has established a relatively clear brand image and credibility in the market. When gold prices rise, the product value itself is sufficient to support sales; during a downcycle, the company must rely on brand channels and premium capabilities to stabilize demand.

However, this does not entirely eliminate doubts in the capital market. Gold price fluctuations have already had a substantial impact on gross margins. After the first two price adjustments in 2025, due to the rapid increase in gold prices, the company’s gross margin temporarily fell to about 37.6%; it wasn’t until the third price adjustment was completed in October that the gross margin returned to over 40%. If gold prices significantly decline in the future, whether fixed-price products can continue to be accepted by consumers remains an observation point.

Heavy Asset Model and Inventory

What is truly worth examining is not just the profit statement but the balance sheet.

As of the end of 2025, Laopu Gold’s total assets reached 21.25 billion yuan, with total liabilities of 10.16 billion yuan, and inventory as high as 16.04 billion yuan. Compared to 4.09 billion yuan at the end of 2024, this scale has nearly tripled.

The company’s explanation is that the production cycle for traditional handcrafted gold items is relatively long, with processing times for different ornaments and gold items ranging from 25 to 90 days. To respond to the rapid growth in same-store sales, as well as store expansion and optimization in the second half of the year, the company must prepare sufficient inventory in advance. As a result, inventory turnover days increased from 195 days last year to 216 days.

This is a typical heavy asset growth model. When gold prices rise, the appreciation of inventory itself can bring additional gains; however, once gold prices sharply decline, this inventory of over 16 billion yuan may also face pressure.

Xu Gaoming candidly stated at the earnings meeting that 90% of the funds from each financing are directly invested in the procurement of gold materials. This means that Laopu Gold is not using capital market funds to subsidize brand stories, but rather using real gold and silver to exchange for raw materials, merchandise, and future sales. The only issue is that this model ultimately requires a sufficiently strong brand premium to support it.

Price Increases, Gross Margin, and Queues

From the management’s perspective, Laopu Gold clearly believes it has this capacity to support.

Xu Gaoming stated that the company adjusts prices 2 to 3 times a year, with the most recent price increase reaching 30%. The basis for price adjustments is, firstly, the bargaining power brought by brand momentum, and secondly, predictions of consumer market reactions and existing sales conditions.

At the same time, he also clearly stated that the company will maintain its gross margin between 40% and 43%, and will not adopt a pricing system with gross margins over 70% like international jewelry brands.

This statement is crucial. It indicates that Laopu Gold hopes to position itself as a high-end brand, while also not fully aligning itself with luxury goods in public narratives. It seeks a balance more suited to the Chinese gold consumption psychology: prices must be high enough to support brand perception; profits must be substantial, but should not appear excessive.

Queues are the most dramatic external manifestation of this balance. They are both proof of brand popularity and the most easily questioned aspect of the market. In response to discussions about resellers and hunger marketing, management denied that the company intentionally creates scarcity, stating that the purchase limits during shopping events are not for hunger marketing but to restrict resellers. The company itself often experiences supply shortages and has no need to deliberately create tension.

High-End Customers as a Ballast

More important than the queues is the change in customer structure.

Xu Gaoming specifically discussed the importance of high-end customer management at the meeting. He said that during times of pressure in the consumer market, high-end customers serve as a ballast for performance; since the second half of last year, the effects of high-end customer management have begun to show, and the significant increase in performance in the first quarter of this year also benefited from high-end customer operations.

Meanwhile, the company disclosed that 260,000 new users were added in 2025, bringing total users from 350,000 to 610,000, with a repurchase rate reaching 35%. This set of numbers means that the most noteworthy change for Laopu Gold is not how many grams of gold were sold, but whether it is forming a sufficiently thick group of high-net-worth, high-repurchase customers.

This is precisely where it distinguishes itself from traditional gold retailers. Traditional gold retail is more closely tied to wedding consumption and cyclical demand; Laopu Gold, on the other hand, attempts to transform gold from a one-time purchase into a continuous expression of identity, aesthetics, and lifestyle. The company has repeatedly emphasized in public materials that its brand has gradually gained the attention of high-net-worth individuals. Such statements certainly carry an element of corporate self-narrative, but at least they explain why Laopu Gold currently places such high importance on high-end customers, rather than simply pursuing a broader mass customer flow.

Overseas Becomes a New Narrative

If the keyword for 2025 is high-end customers and price increases, then the keyword for 2026 may be optimization and going overseas.

Management stated at this performance meeting that in 2026, the expansion of domestic stores will adopt a more conservative attitude, focusing on optimizing existing stores, planning to optimize 8 to 12 stores nationwide; meanwhile, it will actively promote overseas, having had preliminary contacts in Hong Kong and Macau, as well as Singapore, Malaysia, Japan, South Korea, and Thailand. If it aligns with brand channel positioning, the company will open stores in major cities in these markets.

This means Laopu Gold is no longer seeking extensive store openings in the mainland but is placing greater emphasis on store quality, location, and sales efficiency. The next phase of incremental imagination is increasingly left for the overseas market.

This also aligns with its channel logic throughout its journey. The company’s stores are primarily located in core malls of first-tier and new first-tier cities, including high-threshold commercial centers like SKP and MixC. It does not pursue the large-scale store openings typical of traditional jewelry chains, but rather resembles luxury brands that strategically position themselves around a few high-potential malls. From the very beginning, Laopu Gold’s store strategy has been more about brand display than just retail terminals.

Gold Stock or Brand Stock

If Laopu Gold is viewed as a gold stock, then the impressive growth in 2025 naturally partially comes from rising gold prices and market sentiment; high inventory and relatively heavier asset attributes will also amplify risks when gold prices turn.

But if it is viewed as a brand stock, what truly needs to be reassessed are its pricing power, store efficiency, high customer stickiness, and cultural premium, especially its ability to turn traditional gold items into high-end consumer goods.

Laopu Gold clearly hopes the market accepts the second interpretation. Xu Gaoming even elevated the competition to a cultural level at the earnings meeting, stating that if international luxury brands truly wish to enter this field, they would not fear direct competition, as it is not only a contest of brand strength and overall corporate capabilities, but also a contest of cultural genes.

The company’s self-positioning is already quite clear. What it wants to sell is not just gold, but a high-end consumer narrative packaged with Chinese classical craftsmanship, intangible cultural heritage symbols, and Eastern aesthetics.

However, this narrative still requires time to validate. After all, a company with an income of 27.3 billion yuan, a profit of 4.868 billion yuan, yet with 16 billion yuan tied up in inventory, could either become an atypical sample among Chinese consumer brands or expose heavier asset attributes during a cycle reversal than fashion or cosmetics brands. Its most alluring aspect today is also its most dangerous: the binding of brand and gold is too tight here.

But at least in 2025, Laopu Gold has proven one thing. It is no longer just a queue brand selling traditional gold bracelets and items in shopping malls, but is attempting to repackage gold from a value-preserving commodity into a consumer good that carries cultural significance, identity expression, and price discipline. In a consumer market that generally lacks high-growth examples, such a company will certainly be sought after. However, what investors will ultimately pay for will not just be the long queue at the door, but whether it can sustain high gold prices, strong inventory, and a strong brand simultaneously in the coming years.