--- title: "SUNART RETAIL Remains Trapped in the Hypermarket Contraction Cycle" type: "News" locale: "en" url: "https://longbridge.com/en/news/286790695.md" description: "In fiscal year 2026, SUNART RETAIL reported revenue of RMB 63.442 billion, a year-on-year decrease of 11.3%, and a net loss of RMB 326 million. Revenue pressure stemmed from CPI fluctuations, weak consumer demand, and intensified industry competition. Rental income also fell by 7.6% to RMB 2.8 billion. The company is advancing business format restructuring by increasing the number of medium-sized supermarkets and front warehouses, with some new formats showing progress; fresh food sales volume grew by nearly 3%" datetime: "2026-05-18T14:57:36.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/286790695.md) - [en](https://longbridge.com/en/news/286790695.md) - [zh-HK](https://longbridge.com/zh-HK/news/286790695.md) --- # SUNART RETAIL Remains Trapped in the Hypermarket Contraction Cycle The transformation of SUNART RETAIL, the parent company of RT-Mart, has yet to emerge from its stress-testing phase. On May 18, SUNART RETAIL released its financial results for the fiscal year ended March 31, 2026: full-year revenue amounted to RMB 63.442 billion, a year-on-year decline of 11.3%; the company recorded a net loss of RMB 326 million for the year, compared to a net profit of RMB 386 million in the previous fiscal year. SUNART RETAIL stated that revenue pressure primarily stemmed from CPI fluctuations, weak consumer demand, and intensified homogeneous competition within the industry, which diverted store foot traffic and reduced the number of items per transaction. From an industry perspective, the pressure on hypermarkets is not unique to SUNART RETAIL. Instant retail has intercepted high-frequency demand for fresh produce and daily necessities, discount stores have reshaped consumer decision-making with selected SKUs and a low-price perception, while warehouse membership stores have strengthened differentiation through large-packaging, private labels, and membership systems. In contrast, the advantages traditionally built by hypermarkets on being "large and comprehensive" and offering one-stop shopping are being dismantled. Foot traffic pressure has further transmitted to the leasing side of in-store commercial streets. For hypermarkets, rental income from in-store commercial streets is not entirely independent lease revenue but rather ancillary income dependent on store foot traffic. A decline in store visits weakens merchants' operational expectations, increases vacancy rate pressure, and lowers the hypermarket's bargaining power in rent negotiations. In fiscal year 2026, SUNART RETAIL's rental income was RMB 2.8 billion, a year-on-year decrease of RMB 230 million, or 7.6%. To hedge against the pressures of the old model, SUNART RETAIL is also advancing business format restructuring. As of the end of March 2026, the company operated 462 hypermarkets, 34 medium-sized supermarkets, and 6 membership stores, totaling 502 physical stores. After DHC Capital took control, SUNART RETAIL established a trinity business layout of "Large Stores – Medium Supermarkets – Front Warehouses," with medium supermarkets and front warehouses viewed as new models closer to communities and better suited for instant retail. Data indicates that the new formats have made partial progress. During the reporting period, three new medium-sized supermarkets were added, with online revenue accounting for 31%; front warehouses were launched in cities such as Shanghai, Luoyang, and Jinan, reaching an operational scale of 9 by year-end, with 7 added during the fiscal year. In the fresh food sector, the company improved efficiency through nationwide centralized procurement and category restructuring, resulting in a nearly 3% growth in fresh food sales volume and a 0.8 percentage point increase in gross margin. Notably, the self-operated pork category, which implemented nationwide centralized procurement starting in September 2025, achieved a same-store sales volume growth of over 20% nationwide from January to March 2026. Meanwhile, SUNART RETAIL is accelerating its transformation around low prices, product restructuring, and private label development. In fiscal year 2026, sales of the two major private label series, "Da Muzhi Chao Sheng" and "Runfa Zhenxuan," grew by more than 60% year-on-year, with their sales contribution reaching 3.2%, meeting the annual target. The company plans to further increase this proportion to 5% in the next fiscal year. The division of labor between the two product lines is relatively clear: "Da Muzhi Chao Sheng" focuses on extreme cost-performance and price competitiveness, tasked with driving order volume and performance growth; "Runfa Zhenxuan" emphasizes differentiation and quality-to-price ratio, contributing more to gross margins. However, the incremental gains from low prices and private labels have not yet translated into an overall recovery in foot traffic. The division of labor between the two product lines is relatively clear: "Da Muzhi Chao Sheng" focuses on extreme cost-performance and price competitiveness, tasked with driving order volume and performance growth; "Runfa Zhenxuan" emphasizes differentiation and quality-to-price ratio, contributing more to gross margins. But the incremental contributions from new formats, new categories, and private labels are currently insufficient to offset the contraction speed of the core hypermarket business. In fiscal year 2026, SUNART RETAIL's total order volume remained basically flat compared to the previous year. While online B2C business order volume grew by 5.5%, same-store sales calculated by goods sold declined by 11% year-on-year. Internal management changes have further increased the uncertainty of the transformation. Over the past two years, SUNART RETAIL has seen four CEOs: Lin Xiaohai, Shen Hui, Li Weiping, and Hua Yuneng. In March 2026, Li Weiping, who had been in office for just over three months, was removed from his position due to long-term loss of contact, and DHC Capital co-founder Hua Yuneng took over. Despite performance pressure, SUNART RETAIL maintained its dividend distribution arrangement. The board declared a second interim dividend for the year ended March 31, 2026, amounting to approximately HKD 811 million, equivalent to about RMB 698 million. In fiscal year 2026, the company paid dividends totaling RMB 2.173 billion to shareholders, higher than the RMB 1.702 billion paid in the previous fiscal year. How to balance cash returns, store adjustments, and transformation investments will continue to test SUNART RETAIL's capital allocation capabilities. Risk Warning and Disclaimer The market involves risks, and investment should be approached with caution. This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial status, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. 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