--- title: "Lao Pu Gold: With gold prices softening, is the 'Hermès of gold' story shattered?" type: "Topics" locale: "en" url: "https://longbridge.com/en/dolphin/post/43586340.md" description: "This earnings report reconfirms the legacy jeweler is not a true luxury brand, since genuine luxury volumes don't plunge just because gold prices fall. At its core, it is a gold retailer with high operating leverage, wrapped in an 'Eastern high-end luxury' narrative." datetime: "2026-08-25T12:30:52.000Z" locales: - [en](https://longbridge.com/en/dolphin/post/43586340.md) - [zh-CN](https://longbridge.com/zh-CN/dolphin/post/43586340.md) - [zh-HK](https://longbridge.com/zh-HK/dolphin/post/43586340.md) author: "[Dolphin Research](https://longbridge.com/en/dolphin.md)" generator: "portal-rs" --- # Lao Pu Gold: With gold prices softening, is the 'Hermès of gold' story shattered? **Laopu Gold: With gold prices slumping, is the 'Hermès of Gold' narrative shattered?** On the afternoon of Aug 25 (Beijing time), Laopu Gold (6181.HK) released 1H26 results, a middling print landing at the low end of prior guidance. Key takeaways below: $LAOPU GOLD(06181.HK) **1) Revenue was lackluster, below expectations.** 1H26 revenue came in at RMB 19.8bn (+60% YoY), at the lower bound of the Jul pre-announced range (RMB 19.8–20.45bn), signaling Jun was weaker than the company anticipated. Implied Q2 revenue was only RMB 2.3–3.3bn, down 16–42% YoY. In other words, nearly all 1H26 earnings were driven by the late-Feb rush ahead of the price hike, while the three months post-hike produced less than RMB 3.0bn of sales. This indicates the 'price-hike expectation' was a stronger consumer driver than Laopu's brand power. **2) Domestic store openings paused, pivot to footprint upgrades and offshore expansion.** Laopu ended the period with 45 stores and no net additions. Channel focus is on enlarging and upgrading existing stores (five Shanghai stores undergoing full upgrades this year; 10–12 stores planned for optimization in 2026, six completed) and on overseas openings (Macau Parisian opened end-May; 4–5 new offshore stores planned for the year, mostly in H2). Offshore expansion is essentially the only current growth lever not tied to the direction of gold prices. **3) Store productivity is still rising fast.** Offline store revenue was RMB 15.4bn (+43.5% YoY), and Dolphin Research estimates semiannual sales per store at RMB 340mn, up ~23% YoY. This suggests the 'better location + larger footprint' strategy is working. Online platform revenue reached RMB 4.4bn (+172% YoY), with mix rising from 13% to 22.2%. Online momentum remains stronger than offline. **4) Operating leverage lifted profitability to a record high.** Benefiting from low-cost gold inventory accumulated in H2 last year plus the Feb price hike, GPM expanded 320bps YoY to 41.3%, essentially back to prior peaks. Sales and G&A ratios edged down YoY, pushing core OPM to 28.6%, a new high. **5) Inventory climbed further.** Inventory rose to RMB 19.0bn, indicating Laopu restocked at higher gold prices in 1H, raising blended inventory costs. This likely pressures GPM in H2. **6) Detailed financials:** **Dolphin Research’s overall view** Chairman Xu Gaoming once said, 'Do not assume Laopu only makes money when gold rises and cannot profit when it falls.' The past six months marked Laopu’s first prolonged downcycle in gold post-listing. Judging by the results, it is clearly hard to make money when gold is trending down. Field checks show that in Q2, as gold’s downtrend accelerated, store traffic at Laopu’s terminals fell visibly. Versus the 2–3 hour queues before the late-Feb price hike, weekday lunchtime off-peak traffic turned quiet, hot SKUs were broadly in stock without frequent cross-store transfers, and monthly average volume in Q2 was only ~40% of Mar. This aligns with our prior view. We wrote earlier that once gold enters a downcycle, compounded by consumer 'sell-the-drop' wait-and-see behavior, slower turnover would hit Laopu’s results and even drive same-store declines, and Laopu did not pass that stress test. From another angle, Dolphin Research tracked Laopu’s promo intensity year-to-date and saw discounting fall from roughly 10% off to ~11.4% off as gold slid from the early-year high of $5,599 to $4,000 by end-Jun (-29%). Discounting moved largely in step with gold, which implies the 'Hermès of Gold' luxury narrative was badly dented in the downtrend. **However, note that although gold has rebounded from the Jun low to around $4,600 in Aug, Laopu’s discount deepened further from ~11.4% off to ~14.1% off, the largest since listing,** and it also skipped the usual annual price hike seen last year. This diverges from the gold price recovery. **Dolphin Research infers that price-sensitive cohorts have been deterred outright.** Even with gold stabilizing, demand has not returned, forcing Laopu to lean harder into discounts to pull traffic back. Pricing is being used tactically to chase volume. That creates an awkward trade-off. Without promos, Q2 revenue would have been even lower, but once discounting starts, the consumer’s reference point shifts from 'it could be higher next time' to 'it may be cheaper next time.' In short, Laopu is sacrificing some brand equity to support near-term results. Dolphin Research has argued that Laopu’s model is essentially a psychological design to erase weight-based benchmarks: locations opposite Hermès, displaying item prices without per-gram prices, manufactured scarcity, and scheduled annual hikes that only go up. The aim is to make consumers feel they are buying 'luxury' rather than gold. This report reconfirms Laopu is not luxury in essence, as true luxury does not see sales plunge when input prices fall. It is a gold retailer with high operating leverage, wrapped in an Eastern high-end luxury narrative. Valuation-wise, stripping out the one-off pre-hike rush, Dolphin Research models H2 revenue modestly above H1, implying full-year revenue of ~RMB 35.8bn. We cut H2 earnings assumptions and apply a ~19% net margin, which after the prior share price decline yields ~9x 2026E P/E, below peers such as Chow Tai Fook and Lao Feng Xiang. Overall, the core cap on Laopu’s valuation is the high uncertainty of profitability under its current model. As long as Laopu avoids any financial hedging, we think it will carry a structural discount regardless of brand execution. This is more of a gold price-following range-trade idea. **Detailed takeaways from the report:** **I. Top-line landed at the lower end of guidance** 1H26 revenue was RMB 19.8bn (+60% YoY), at the lower bound of the Jul guidance. Based on the Mar pre-announcement (Q1 revenue RMB 16.5–17.5bn; net profit RMB 3.6–3.8bn), Q1 contributed ~86% of 1H revenue and ~87% of profit (midpoints), and the three months after the price hike delivered under RMB 3.0bn of sales. By channel, online revenue was RMB 4.4bn (+172% YoY), with mix up from 13% to 22.2%. Goldman’s third-party tracking shows the 'Tmall flagship' collapsed ~63% YoY in Q2 sales, and Citi notes 'SKP + Tmall' combined share fell from ~30% to ~20%, suggesting Tmall declines were offset by gains from Douyin, JD, and WeChat mini programs. In short, online is diversifying away from Tmall, improving channel quality. Offline, Laopu’s main battlefield, delivered RMB 15.4bn in H1 (+43.5% YoY), with mix down from 86.9% to 77.8%. Offline growth (+43.5%) lagged online (+171.9%) and total (+60.3%), indicating Q2’s real hit was to physical store traffic rather than overall brand penetration. **1H26 overseas revenue was RMB 3.32bn, up 108% YoY, with mix rising from 12.9% to 16.7%.** Since Nov 2025, mainland China imposed a 7% VAT on gold jewelry, widening terminal price gaps vs. Hong Kong and Macau, likely drawing tourists to buy gold offshore. Laopu’s penetration in HK/Macau remains low: UBS counts 44 top malls with heavy intl hard luxury presence, where Bvlgari, Tiffany, Cartier, and Van Cleef cover 41–43 each, while Laopu covers only 23. With new entries in six centers including Hong Kong IFC and Macau Parisian, mostly in H2, offshore should continue to accelerate. Domestic revenue reached RMB 16.5bn, up 53% YoY. The growth rate slowed sequentially. **II. No new domestic stores; focus on enlargements and offshore** Laopu ended H1 with 45 stores and no net adds. Versus end-Jun 2025, Laopu newly entered six centers: Shenzhen Bay MixC, Shanghai Xintiandi, Nanjing IFC, Hong Kong IFC, Shanghai Plaza 66, and Macau Parisian, and optimized/expanded nine existing stores. Management targets 10–12 store optimizations in 2026, six done as of the announcement, framing this as a 'location-upgrade phase'—migrating to core mall positions to enlarge space and align positioning with high-end brands. **III. Inventory climbed further, but slowed QoQ** Inventory reached RMB 19.0bn by mid-2026. Dolphin Research estimates procurement plus feedstock at ~RMB 14.6bn, clearly tighter vs. H2 2025’s equity-funded financial stocking (~RMB 16.7bn), looking more like operational restocking. **Using the 1H avg. gold price, unit cost is ~$4,660, while end-2025 inventory costed around $3,850.** Blended cost thus stepped up to ~$4,200, still ~10% below current price. There is some buffer left. **IV. Operating leverage improved profitability** **Helped by low-cost inventory from H2 last year and the Feb price hike, GPM expanded 320bps YoY to 41.3%, near prior highs.** Sales and G&A ratios fell modestly YoY, lifting core OPM to 28.6%, a record. Cost discipline was evident. \ Dolphin Research archive on Laopu Gold: In-depth: Jun 13, 2025 deep dive '[Laopu Gold: 10x in a year! Is Laopu truly the 'Hermès of Gold'?](https://longbridge.cn/en/topics/30698065?channel=SH000001&invite-code=7XHHT4&app_id=longbridge&utm_source=longbridge_app_share&locale=zh-CN&share_track_id=390977a3-acd0-4f3f-883c-352da55854f3)' Jun 17, 2025 deep dive '[Laopu Gold: How long can the 'Hermès of Gold' keep splurging?](https://longbridge.cn/en/topics/30804808?channel=SH000001&invite-code=7XHHT4&app_id=longbridge&utm_source=longbridge_app_share&locale=zh-CN&share_track_id=ea26d983-6855-4ea8-84ef-38614a8e16c8)' Earnings: Aug 20, 2025 earnings take '[Laopu Gold: With gold 'cooling', is the 'Hermès of Gold' still reliable?](https://longbridge.cn/en/topics/33164311?channel=SH000001&invite-code=7XHHT4&app_id=longbridge&utm_source=longbridge_app_share&locale=zh-CN&share_track_id=4fcaf8b1-18f6-47ad-acfb-87807d4f074e)' Mar 23, 2026 earnings take '[Laopu Gold: High-price placement, the 'Hermès of Gold' bet paid off!](https://longbridge.cn/en/dolphin/post/39455329?channel=SH000001&invite-code=UIFH4YD0&app_id=longbridge&utm_source=longbridge_app_share&locale=zh-CN&share_track_id=585840d8-102a-45a8-a2f7-4d366024e45f)' **Risk disclosure and statement:** [**Dolphin Research disclaimer and general disclosure**](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### Related Stocks - [600612.CN](https://longbridge.com/en/quote/600612.CN.md) - [900905.CN](https://longbridge.com/en/quote/900905.CN.md) - [06181.HK](https://longbridge.com/en/quote/06181.HK.md) - [01929.HK](https://longbridge.com/en/quote/01929.HK.md) - [HLPD.SG](https://longbridge.com/en/quote/HLPD.SG.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**