Red Star Macalline Continues to Seek Breakthrough Amid Transformation

On August 29, 2025, Red Star Macalline Home Furnishing Group Co., Ltd. released its interim report for the first half of the year. The report showed that the company achieved operating revenue of RMB 3.337 billion in the first half, representing a year-on-year decline of 21.0%. According to Red Star Macalline, this drop was mainly due to multiple overlapping factors: retail demand in the home furnishing sector remained weak, and the operational pressure on tenant merchants sharply increased. To “retain and support tenants,” the company proactively expanded rent concessions.In addition, the number of managed shopping centers decreased, and the development progress of some projects was delayed, leading to a contraction in overall revenue.According to the announcement, although the company’s overall gross margin slightly increased by 0.8 percentage points to 61.5%, this improvement was insufficient to offset the drag caused by falling revenue. During this period, Red Star Macalline reported a net loss attributable to shareholders of RMB 1.9 billion, widening from a loss of RMB 1.25 billion in the same period last year. The largest contributor to this loss was a one-time impairment of investment properties totaling RMB 2.042 billion (compared to RMB 919 million in the previous year).In terms of shopping center layout, Red Star Macalline demonstrated a pattern of “contraction in self-operated centers, optimization in managed centers.”

As of the end of June, the company operated 76 self-operated shopping centers under three models: owned, leased, and joint-venture partnerships, covering a total operating area of approximately 19.36 million square meters—a net decrease of two centers from the beginning of the year. Managed centers numbered 235, with an operating area of about 11.87 million square meters, representing a net decrease of 22 centers over six months. Additionally, the company had 23 franchised projects, opening a total of 369 home furnishing and building materials stores/industrial streets.During the year, adjustments in the shopping center segment were frequent. Among self-operated centers, the Chongqing Nanping and Guangzhou Haizhu locations were closed. In the managed segment, 22 stores that either reached the end of their contract or were terminated early were closed, spanning over a dozen cities including Zhejiang, Hebei, Henan, and Sichuan.Meanwhile, Red Star Macalline advanced its business model transformation by converting three formerly managed centers in Tangshan, Hebei, and Tianjin into self-operated centers to strengthen control over key regions. At the same time, two self-operated centers in Baotou, Inner Mongolia, and Changzhou, Jiangsu, were shifted to managed centers, adopting a light-asset model to further penetrate the market.

Currently, 16 self-operated centers are in the planning stage, with a total construction area of approximately 2.63 million square meters—13 owned and 3 leased—and the company holds 256 signed managed-center projects with approved land plots.In 2023, Red Star Macalline’s actual controller, Che Jianxing, was forced to seek assistance due to a debt crisis. At that time, Che sold 70% of Red Star Real Estate and the equity of seven logistics subsidiaries for RMB 4 billion and RMB 2.312 billion, respectively, to Sino-Ocean. Meanwhile, 80% of the property management platform, Macalline Property, was sold to CIFI Everbright Services for RMB 696 million. In January of the same year, Jianfa Co., Ltd. acquired 29.95% of Red Star Macalline’s shares for nearly RMB 6.3 billion in cash, becoming the largest shareholder, while Che Jianxing stepped back to the position of second-largest shareholder.Despite these changes, Red Star Macalline has continued to face challenges and remained in a performance adjustment phase.By reviewing Red Star Macalline’s performance reports from the past two years, it is evident that the company has faced significant financial challenges. In 2023, Red Star Macalline generated revenue of approximately RMB 11.5 billion, representing a year-on-year decline of 18%, with a net loss attributable to shareholders of RMB 2.216 billion.

In 2024, revenue fell further to RMB 7.821 billion, a year-on-year drop of 32.1%, while net losses attributable to shareholders expanded to RMB 2.984 billion. Combining this with the net loss of RMB 1.9 billion reported in the first half of 2025, Red Star Macalline has accumulated nearly RMB 7.1 billion in losses over the past two and a half years.The combination of sluggish core business performance and various impairment losses has trapped the company in a cycle of continuous losses. On the debt side, according to the interim report, the company’s interest-bearing debt within its consolidated financial statements stood at approximately RMB 32.467 billion, up 9.8% from the beginning of the year. The company’s current debt-to-asset ratio is 59.02%, slightly higher than 57.40% at the end of last year. Both the current ratio and quick ratio are at 0.32. Furthermore, the company faces short-term repayment pressure, with a total principal of USD 249 million in U.S. dollar bonds due in August 2025, carrying a coupon rate of 5.2%.Facing declining performance, Red Star Macalline has been actively seeking breakthrough opportunities and exploring new growth drivers. Since Jianfa Co., Ltd.

became the controlling shareholder, Red Star Macalline has leveraged resources from the “Jianfa Group” to pursue transformation through digital upgrades, focusing on scenario innovation, policy incentives, and technology empowerment to drive a performance rebound.To promote integrated upgrades across its business formats, the company proposed the “3+ Star Ecosystem” strategy, centering on the concept of “home” and integrating home furnishing, home appliances, and home decoration within the ecosystem. Additionally, it launched a strategy to upgrade its high-end appliance segment by establishing flagship stores under the “Mega-E Smart Electric Oasis” concept to drive growth in the premium appliances business. The company also unveiled the M+ Home Design Center initiative to build the largest nationwide home design service network.Moreover, Red Star Macalline established an automotive service company, introducing the new energy vehicle segment to expand its multi-format, one-stop home consumption ecosystem.

On the digital front, the company is enhancing its operations through intelligent solutions, focusing on four key areas: strategic business support, process efficiency, model-driven insights, and intelligent applications. This includes optimizing tenant management, customer service, and data modeling, while deploying innovative tools such as AI shopping assistants and intelligent customer service to improve management efficiency and user experience.The company has also actively leveraged policy incentives, aligning with the national “trade-in” initiative. Through a dual-subsidy model of “government support + enterprise concessions,” Red Star Macalline completed 743,000 trade-in orders in the first half of the year, generating sales of RMB 7.31 billion, with central government subsidies totaling RMB 1.17 billion, contributing significantly to performance.Although challenges persist, proactive adjustments and strategic initiatives could potentially lead to a performance rebound. If the company successfully implements its new business formats, Red Star Macalline still has the opportunity to reclaim its former glory as a leading home retail giant.