Earlier this month, premium fruit chain Pagoda (百果园) released its financial report with a profit warning. For the 2024 financial year, the group would likely see a 350 million RMB loss (48.27 million USD). This caused Pagoda shares to drop further, extending a decline that began when they peaked in January 2024 and have since lost nearly 80% of its value.
The Shenzhen-based Pagoda group was once called a member of the “triumvirate” or even the number one in fruit retail and is known for its high-end brand positioning and price to match. Topics from “How much salary do you have to earn to afford Pagoda” to “fruit assassin” (水果刺客, “assassin” is a term Chinese netizens use to describe premium-priced commonplace items, such as the Chicecream ice cream). With its premium positioning, this earned it rapid growth and a public listing on the Hong Kong Stock Exchange (HKEX) in January 2023.
However, with the “rational consumption” and even “reverse consumption” consumer sentiment, the group saw its revenue drop 0.69% in 2023 and its profit growth rate was also down 11.8% before declining further in H1 2024. In fact, at the end of 2024, Pagoda had 5,116 stores across the country, down 965 compared to 6,081 in late 2023. It meant that the brand lost 4.86 stores every day on average in H2 2024, mostly due to high costs.
Over 99% of its branches are franchisees which means the brand is highly reliant on its franchising. Pagoda is currently waiving franchising fees between August 2024 and July 2025 as well as subsidising its branches to rebuild franchisee confidence. However, it remains to be seen whether it would be effective. Other pundits also point out the need for Pagoda to gain differentiation from competitors after its premium positioning has lost its appeal.
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