In the first half of the year, consumption of gold jewelry on the mainland of China decreased by over 30%, with the leading gold jewelry brand, Lao Feng Xiang, experiencing a drop of over 60% in revenue and over 70% in net profit in the second quarter. Additionally, during this period, Lao Feng Xiang closed more than 540 franchise stores.
Lao Feng Xiang’s semi-annual report for 2026 shows that the company’s operating income for the first half of the year was 19.987 billion yuan, a year-on-year decrease of 40.08%, with a net profit attributable to the parent company of 716 million yuan, a decrease of 41.34%.
Based on the data from the semi-annual and first quarter reports, the revenue for the second quarter was approximately 6.245 billion yuan, down by 60.56% year-on-year, with a net profit attributable to the parent company of around 169 million yuan, a decrease of 72.21%, marking a significant widening of the decline compared to the first quarter.
The net cash flow from operating activities in the first half of the year decreased from 4.705 billion yuan in the same period last year to -208 million yuan. Lao Feng Xiang attributed this mainly to a decrease in cash received from the sale of goods and services. While revenue significantly dropped, selling expenses increased by 12.37% to 474 million yuan, primarily driven by higher advertising and sales service expenses.
Lao Feng Xiang’s revenue and net profit have been declining continuously in 2024 and 2025, with the decline in the first half of this year expanding to over 40%.
In terms of business composition, the jewelry and accessories revenue for Lao Feng Xiang in the first half of the year was 18.299 billion yuan, a decrease of 35.11% year-on-year, while the revenue from gold trading decreased to 1.511 billion yuan, a decline of 69.48%.
The company stated that since the Chinese authorities implemented new gold tax policies in November last year, products such as gold bars, coins, and medals have been classified as investment gold products, leading to a significant decline in the sales volume of related products in the wholesale business.
Lao Feng Xiang has traditionally relied on expanding sales through its wholesale and franchise systems. Wholesale income accounted for over 70% of the company’s revenue in 2025, with a gross profit margin of about 9% in the wholesale business. In the first half of this year, the company’s overall gross profit margin was 12.16%.
In the first half of the year, Lao Feng Xiang closed more than 540 franchise stores, with 342 of them located in third and fourth-tier cities, accounting for about 63% of the total closed franchise stores. After deducting the new stores opened during the same period, the total marketing points both domestically and abroad decreased from 5,355 at the end of 2025 to 4,916, a net decrease of 439.
As of the end of June, there were still 4,703 franchise stores, accounting for approximately 95.7% of all points of sale.
Lao Feng Xiang is not the only jewelry company shrinking its store footprint. Chow Tai Fook reduced its mainland stores by 969 as of the end of the fiscal year in March, with same-store sales declining by 17.8%, marking the fourth consecutive year of decline.
Data from the China Gold Association shows that gold jewelry consumption on the mainland in the first half of the year decreased to 132.13 tons, a year-on-year decrease of 33.88%, while the consumption of gold bars and coins increased by 28.42% to 339.34 tons, indicating a further shift in gold demand from jewelry wear to investment.
According to data from the World Gold Council, gold jewelry demand in China in the second quarter was only 50 tons, down by 28% year-on-year, marking the weakest second quarter since 2005. Jia Shuchang, the head of research in the Asia Pacific region at the World Gold Council, stated that consumer confidence remains low and economic growth is slowing, leading consumers to be more cautious in their spending on non-essential items like gold jewelry.