Goldman Sachs: Jason Furniture’s overseas growth slows in the third quarter as improved gross margin fails to prevent profit decline

Where did third-quarter results fall short?

In the third quarter of 2026, the company reported revenue of 4.853 billion yuan and net profit of 461 million yuan, down 7% and 11% year over year, respectively, and 8% and 14% below Goldman Sachs’ expectations. Goldman believes the company still outperformed peers and that results may exceed market expectations.
Domestic weakness was broadly in line with expectations. The main reason revenue fell short of Goldman Sachs’ expectations was slower overseas growth, which declined from approximately 20% in the second quarter to low single digits in the third quarter. Management said the company had proactively adjusted its overseas strategy to prioritize business quality over simply expanding scale.

Third-quarter gross margin rose 0.9 percentage points year over year, exceeding Goldman Sachs’ expectations, while most peers faced significant gross margin pressure. Management attributed the improvement primarily to a better product mix, with some contribution from improved manufacturing efficiency.
However, lower revenue led to operating deleverage, and foreign exchange losses also contributed to a net margin below Goldman Sachs’ expectations. Management expects product mix and supply chain efficiency initiatives to keep gross margin stable or drive modest expansion going forward.

Domestic demand remains weak. Management said the company performed relatively better than peers but still fell short of its own expectations. It hopes to gain share by improving supply chain efficiency and meeting demand for rapid delivery, for example by reducing sofa delivery times from more than 30 days to 15 days.
Management said the overseas strategy adjustment was largely complete and expects overseas revenue to account for a greater share in the future. Growth prospects for cross-border e-commerce are relatively clear; the company is investing in personnel and infrastructure and placing greater emphasis on Europe beyond its core US market.
By product, the core sofa category remained broadly stable, and the company hopes to increase the share of motion sofas. Mattresses face fiercer competition because they are more standardized, and the company is developing differentiated products. Customized furniture also faces growth pressure; the company has reduced SKUs and shifted toward higher price points.

After factoring in the latest results, Goldman Sachs cut its 2026–2028 earnings per share forecasts by approximately 3%–4%. The bank now expects revenue to decline 1.7% year over year in 2026 and grow 3.6% in 2027, compared with its previous forecasts for growth of 1.2% and 4.0%, respectively.
Goldman Sachs lowered its 12-month target price from 28 yuan to 27 yuan and maintained its Neutral rating. The new target is based on an exit price-to-earnings multiple of 13 times forecast 2028 earnings per share, discounted to 2027 at a cost of equity of 9.8%.
Management expects the cash dividend payout ratio to remain broadly at 50%–60% in the future, while taking potential capital expenditure needs into account.