Youyou Foods Co Ltd

Youyou Foods addressed the decline in gross margin and the surge in accounts receivable at its results briefing on September 23. Board Secretary Xie Yaling said the company will optimize its product and channel layout, and improve credit period management and settlement arrangements across its direct-sales channels. The company's gross margin has been declining in recent years, standing at 28.97% in 2024 and 25.73% in 2025, before slipping further to 23.08% in the first half of this year, down 4.49 percentage points from a year earlier. Xie Yaling said the fluctuation in gross margin was mainly affected by a combination of factors including the industry market environment, product structure, channel layout iteration, and supporting operating policies. A research note from Pacific Securities last month pointed out that the year-on-year decline in first-half gross margin was mainly due to a higher proportion of new channels with relatively lower gross margins, such as membership supermarkets and snack discount stores. As of the end of the first half, the company's accounts receivable stood at 218 million yuan, up 63.86% from 133 million yuan at the end of 2025. Xie Yaling said this was mainly due to revenue growth in direct-sales channels during the first half, and that the company will strengthen customer credit assessment and payment collection tracking. In terms of performance, Youyou Foods achieved revenue of 1.034 billion yuan in the first half of this year, up 34.08% year on year, while net profit attributable to shareholders reached 124 million yuan, up 14.42% year on year.

Youyou Foods has disclosed its latest employee stock ownership plan, and the performance assessment targets fall short of the company's actual growth rate last year. According to the draft, the plan covers no more than 175 participants, with total funds raised not exceeding 48 million yuan, of which the incentive fund contributed by the company is capped at 24 million yuan. Shares will be purchased through competitive trading on the secondary market. The performance assessment uses 2025 results as the baseline, requiring revenue growth of at least 25 percent in 2026 and at least 50 percent in 2027, implying a compound annual growth rate of about 22.5 percent. By comparison, the company's revenue growth rates for 2024, 2025, and the first quarter of 2026 were 22.37 percent, 34.39 percent, and 39.62 percent respectively. Song Xiangqing, vice president of the China Society of Business Economics, pointed out that the assessment relies solely on revenue, without incorporating net profit or gross margin, and the two-year cycle provides insufficient medium- to long-term discipline, making it easy to interpret as a phased incentive windfall for core employees. The company's recent explosive growth has been driven mainly by entry into emerging channels such as Sam's Club, but gross margins remain under sustained pressure. In 2025, gross margin fell by 3.2 percentage points year-on-year, and in the first quarter of this year it dropped another 2.82 percentage points, primarily due to the rising revenue share of low-margin channels. Industry insiders believe the company needs to offset downward pressure on gross margins through measures such as tiered channel pricing and differentiated new product price increases.