China’s Weak Consumer Market: Nayuki Tea’s Losses Nearing Nearly 1 Billion Yuan Last Year

On the evening of March 7, China’s tea beverage giant Naixue announced that the group is expected to have a year-on-year decline in revenue of 1.24% to 7.05%, with a net loss of approximately 880 million to 970 million yuan for the previous year.

The announcement stated that Naixue is expected to achieve a revenue of about 4.8 billion to 5.1 billion yuan in 2024, with a year-on-year decline of 1.24% to 7.05%. It recorded an adjusted net loss (non-International Financial Reporting Standards measurement) of about 880 million to 970 million yuan last year, and is expected to realize a net loss of about 880 million to 970 million yuan.

According to the announcement, the board believes that the main reasons for the net loss in 2024 are three-fold:

Firstly, the weak performance of the consumer market, with more customers tending towards cautious or purposeful consumption. In addition, the intensified competition in the ready-to-drink tea industry led to fluctuations in both the revenue and operating profit margin of Naixue’s directly operated stores in 2024.

Secondly, the group closed some underperforming stores in 2024, resulting in closure losses. The group plans to continue closing or transforming poorly performing stores, requiring the provision of impairment losses on assets for this purpose.

Lastly, the group recorded losses from equity investees and impairment losses from certain investments.

As of the close of the Hong Kong stock market on March 7, Naixue’s tea was reported at 1.64 Hong Kong dollars per share, a 5.2% decline.

Naixue’s tea was founded in 2015 and is headquartered in Shenzhen, Guangdong Province. As the “first stock of new-style tea drinks”, Naixue’s tea was listed on the Hong Kong Stock Exchange on June 30, 2021. According to the official website, Naixue’s tea currently has a presence in nearly 100 major cities across the country, with over 1200 stores. However, in recent years, the competition in the tea beverage market has become increasingly fierce.