Finance Talk | Fitness Store Business "Changes Face," Shuhua Sports Increases Revenue but Not Profit

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Interface News reporter | Tao Zhixian

As a scientific exercise services provider that entered China’s capital markets relatively early, SHUA Sports (605299.SH) was once seen as a benchmark company in the fitness segment. However, with the boom in the industry ebbing, the company’s performance results are no longer as impressive.

In 2025, SHUA Sports reported revenue of 1.57B yuan, up 10.53% year over year; net profit attributable to shareholders was 89 million yuan, down 1.24% year over year.

On one side, revenue is maintaining double-digit growth; on the other, profits have turned downward. Combined with large-scale selling by the company’s actual controller, a major reduction in the store expansion plan, and soaring accounts receivable, among a series of unusual moves, the market can’t help but ask: SHUA Sports, which once loudly touted “5,000 stores by 2030,” what exactly is going on?

“Revenue up, profit not up” performance

SHUA Sports’ business structure is clear and mainly divided into two segments: fitness equipment and display racks. Fitness equipment is absolutely the core, accounting for more than 70% of revenue. In 2025, the company’s fitness equipment business achieved revenue of 1.21B yuan, making up 77% of total revenue.

However, competition in the home and commercial fitness equipment industry has grown extremely intense. Cross-industry encroachment is severe, outdoor pathway product government budgets have been cut, orders have fallen sharply, and SHUA Sports’ performance has shifted from “revenue up, profit not up.”

In 2025, SHUA Sports’ outdoor fitness equipment business revenue was 130 million yuan, down 30.79% year over year, becoming a key variable dragging down overall performance. The main reason is that government fiscal budget cuts have gradually realized the policy dividends from earlier periods, and nationwide fitness procurement orders have clearly declined. Outdoor pathway products’ primary customers are sports bureaus across various localities and government agencies and public institutions—typical policy-driven, fiscal-dependence business.

Even more severe is that SHUA Sports’ home and commercial fitness equipment—what it relies on to survive—is now facing a dual siege from technology brands and internet brands. Players such as Xiaomi, Huawei, Keep, and JD Jingdong-initiated consumer brands have strong momentum, cutting into quickly with smart features, ecosystem advantages, online traffic, and high value for money, rapidly capturing market share in traditional fitness equipment.

“After the home-fitness dividend from that wave of the pandemic faded, the industry directly shifted from high growth into stock-level infighting, and the price war has been fierce.” Fitness equipment industry analyst Zhao Yukun told Interface News, “As a traditional manufacturing company, SHUA needs to compete head-on with Xiaomi, Huawei, and Keep in areas such as online operations, content ecosystems, and smart interaction. Channel and brand premium are being continuously squeezed.”

Industry penetration-rate data further confirms that the growth ceiling has appeared. From 2020 to 2021, China’s penetration rate for home fitness equipment jumped rapidly from about 5% to 15%-18%, with year-over-year growth once exceeding 100%. From 2023 to 2025, the industry entered a plateau period: penetration rose slowly from 18%-20% to 24%-25%, with compound annual growth of 10%-15%, moving into a stage of low-speed growth.

Meanwhile, stubborn issues of a high idle rate and low repurchase rate further suppress demand release. Data from the China Household Electrical Appliances Research Institute & the JD Consumer Research Institute in the report “2024 Home Fitness Equipment Consumption Trend Report” shows that the share of home fitness equipment used less than once per week after purchase reached 68.5%; only 22.4% of users can persist in using it for more than 6 months; the repurchase rate for a second purchase is only 15%-20%, far below the average level in the traditional home appliance industry. “Once the novelty wears off, it just gathers dust,” causing both new demand and repurchase demand to slow down together, leaving the industry trapped in a dilemma of volume growth without profit growth.

Under multiple pressures, it is hardly surprising that SHUA Sports delivered in 2025 a results package of revenue up 10.53% and net profit down 1.24%. Behind “revenue up, profit not up” are the combined effects of the decline of industry dividends, intensifying competition, and a falling gross margin.

Accounts receivable exceed net profit by 4 times

More alarming than the slowdown in performance growth rate is SHUA Sports’ increasingly deteriorating financial quality. As of the end of 2025, both the company’s two key indicators—accounts receivable and inventory—were high, with serious capital occupation and continuously accumulating operating risks.

By the end of 2025, SHUA Sports’ book value of accounts receivable was 359 million yuan, accounting for 29.30% of current assets. Even more noteworthy is that the balance of accounts receivable had already exceeded the company’s net profit attributable to shareholders for the period by more than 4 times, with a large amount of funds tied up on the customer side.

“High accounts receivable will significantly reduce the company’s capital utilization efficiency and affect operating cash flow.” Certified public accountant Li Qing told Interface News, “SHUA’s downstream includes fitness clubs and distributors. Cash flow in the fitness industry itself is relatively tight, and government-related receivables have a longer collection cycle. Under this dual structure, bad debt risk and liquidity pressure are amplified in parallel.”

Rising in tandem with accounts receivable is also the company’s inventory. At the end of 2025, SHUA Sports’ book value of inventory was 269 million yuan, accounting for 13.21% of total assets at the end of the period, up 14.29% from the end of the prior year. The company stated that its inventory aging is mainly within 1 year, that overall aging is relatively short, and that it adopts a production model combining make-to-order “based on sales” with inventory-based elements.

But against the backdrop of slowing industry demand and intensifying price wars, high inventory itself is a risk. “Fitness equipment is experience-oriented, large-item, and has relatively fast iterations. Once new products are launched and models fall behind, or if downstream channels work through inventory, the company’s inventory is likely to become obsolete stock, and ultimately it can only accrue losses from write-downs.” Li Qing said, “Now overall industry demand is weak, and SHUA’s inventory is still growing against the trend. Going forward, profitability pressure will increase.”

In addition, government subsidies have been “cut at the waist,” and non-recurring gains and losses have shrunk significantly, making SHUA Sports’ profit structure not optimistic. In 2024, government subsidies within non-recurring gains and losses were 18.97 million yuan; in 2025, they fell to 5.63 million yuan, down 70.33% year over year.

With threefold pressure stacked together—high accounts receivable, inventory growth, and a sharp drop in government subsidies—SHUA Sports’ financial “safety cushion” is being worn down further and further.

Store expansion: a “total about-face”

If financial data reveals operating pressure, then a 180-degree turn in store strategy directly exposes the failure of SHUA Sports’ prior strategy.

In 2024, SHUA Sports said, “The number of SHUA fitness service outlets is close to 50. In 2025, we will enter a phase of rapid store opening, and the number of stores is expected to reach 170”; “We will adopt a coexistence model of traditional fitness outlets and new fitness outlets, promote both self-operated and franchised store expansion, set benchmarks, and build a replicable city model,” and it also set long-term targets in the market—“to achieve 5,000 stores by 2030.” At an investor communication meeting in April 2025, the company still emphasized: continuous store expansion, improving the “equipment sales + fitness services + enterprise services” model, and building a replicable model.

Data source: company announcements, Interface News research department

Just one year later, these thoroughly “reversed.” SHUA Sports clearly proposed “making progress while ensuring stability; proactively adjusting the number of opening fitness chain stores; moderately slowing the store-opening pace; focusing on improving store quality; and optimizing the operating structure.”

By the end of 2025, SHUA Sports had only 26 directly operated stores in its fitness chain and 34 franchised stores, for a total of 60 stores. Compared with the previous target of 170 stores, the completion rate was less than 35%.

Data source: company announcements, Interface News research department

“From running full-speed to an emergency stop, it shows the company’s earlier store model simply doesn’t work.” Zhao Yukun told Interface News, “Fitness services are asset-heavy, operation-heavy, and have a long payback period. SHUA itself is an equipment manufacturer, lacking offline service operation genes. In a context where the industry penetration rate has topped out and fitness clubs generally operate at a loss, blindly expanding stores will only mean opening more while losing more.”

From “rapid expansion” to “moderately slowing down,” from “170 stores” to “60 stores,” from “a blueprint of 5,000 stores” to no longer mentioning it—SHUA Sports’ store strategy has turned dramatically. At its core, it is a forced correction of the industry cycle, the company’s own capabilities, and its profitability model.

Capital operations of share buybacks and cash extraction

More unsettling for investors than the performance and strategy is the “contradictory operation” being carried out simultaneously: the actual controller’s selling down shares and the company’s buyback.

As of February 6, the company’s controlling shareholder SHUA Investment reduced its stake by 2%, and the actual controller, chairman and CEO Zhang Weijian reduced his stake by 0.5%; the actual controller Zhang Jinping reduced his stake by 0.5%. In total, the three parties cashed out 135 million yuan. Before the sell-down, SHUA Investment held 65.24%, Zhang Weijian held 4.10%, and Zhang Jinping held 3.47%. After completion, SHUA Investment held 63.24%, Zhang Weijian held 3.6%, and Zhang Jinping held 2.97%, still remaining the company’s actual controlling party.

On one side, the actual controller sells down shares on a large scale and cashes out; on the other, the listed company initiates a share buyback.

SHUA Sports originally planned to buy back shares for 20 million to 40 million yuan during the period from March 2025 to March 2026, sending a signal to the market of “maintaining the share price and being optimistic about the company’s prospects.” As of February 10, the company’s actual buyback amount was 20 million yuan, precisely touching the lower bound of the announcement range.

Data source: Wind, Interface News research department

“Because the actual controller sells down at a high level, the company’s buyback only does the ‘minimum package.’ This kind of combination is often interpreted in A-shares as ‘covering the sell-down while stabilizing the share price,’ which is very unfriendly to small and medium investors.” Zhao Yukun said, “With the buyback ceiling at 40 million and the floor at 20 million, the company ultimately only bought back 20 million. This suggests either the company’s cash flow is tight, or it lacks confidence in the share price and the future—so it is merely taking a posture.”

What deserves even more attention is the timeline. SHUA Sports’ net profit fell in 2025 and the stores were not meeting expectations, yet the actual controller chose to complete the sell-down before earnings were released and before the market had fully digested the information—locking in gains precisely. Meanwhile, the listed company completed the buyback by “crossing the line.” It both fulfilled the disclosure obligations and preserved cash to the greatest extent possible.

Between one sell-down and one buyback, SHUA Sports’ logic for capital operations becomes crystal clear.

Operating pressure, strategic wavering, and questionable capital moves have not prevented SHUA Sports’ valuation from rising steadily. Currently, the company’s price-to-earnings ratio (PE) is as high as 92 times, the highest level in the last five years. By sharp contrast, in 2025 the company’s net profit fell 1.24% year over year, and industry growth slowed to the 10%-15% range, with a significant decline in future growth certainty.

“Even putting a 92x PE in a high-growth track it is still overpriced; placing it in a traditional manufacturing track where penetration has topped out, competition is intense, and net profit is declining is clearly an overvaluation.” Li Qing told Interface News, “The valuation the market is giving is entirely borrowing from the past brand premium and the pandemic dividend, and it does not reflect the reality that the industry has entered a stock-level fight and that profitability is under persistent pressure.”

Data source: Wind, Interface News research department

“A fall in net profit and a historically high valuation are the typical prelude to a double-whammy under Daves,” Li Qing added.

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