Goldman Sachs: Fujian Wanchen Food: Store openings accelerate and same-store sales remain stable as Goldman Sachs cuts earnings forecasts

Has the rapid pace of store openings affected existing stores’ performance?

Management said approximately 10 thousand stores opened in the first three quarters of 2026, with third-quarter openings nearly matching the first-half total. Third-quarter gross merchandise value (GMV) rose 49% year over year, consistent with the revenue growth trend.
Although stores opened during the year already account for 30%–40% of the entire network, management said same-store sales growth remained stable in the third quarter and met company expectations. Same-store performance and investment payback periods at mature stores also showed no obvious pressure.
Franchisees remain willing to expand. Management said capital invested in stores opened this year can typically be recouped within 1.5–2 years. The company expects to continue opening stores rapidly in the fourth quarter and to end the year with more than 30 thousand stores, although winter weather in the north could lengthen fit-out schedules.

Management said the third-quarter gross margin was 13.0%, up 1 percentage point year over year and slightly higher quarter over quarter. The core net margin excluding government grants also improved slightly year over year.
At the same time, the third-quarter expense ratio rose, mainly due to spending on frontline operations staff and talent reserves, store-opening incentives, travel and regional offices, as well as marketing investments in summer campaigns and private-label brands. Management said the intensity of subsidies per store did not increase year over year.
Goldman Sachs believes these expenses help support higher-quality expansion and that the concentrated store-opening-related expenses could normalize next year. Nevertheless, the bank cut its 2026–2028 earnings forecasts by 2%–8% because of a lower gross-margin forecast for the edible mushroom business and slightly higher selling and administrative expense ratios.
The edible mushroom business’s third-quarter gross margin recovered from its second-quarter low, and its loss narrowed quarter over quarter. Management expects further improvement in the fourth quarter.

The company is using digital tools and third-party data to improve site selection and adjusting local product assortments as it expands into Shandong, Henan and lower-tier markets. Frontline staff are also providing franchisees with more help with ordering, merchandising and improving the customer experience.
The private-label assortment is moving from 60–70 SKUs in the first half of 2026 toward 100. Chilled and frozen products contributed approximately 4% of GMV at pilot stores in the first half. Management plans to expand gradually from several thousand pilot stores this year and aims for a nationwide rollout starting in 2027.
Registered members reached 290 million at the end of the third quarter, up from 190 million at the end of 2025. Monthly active users reached tens of millions, with more than 3 purchases per month. Management believes product differentiation and membership management can help increase repeat purchases and per-store output.

Goldman Sachs adjusted each of its 2026–2028 revenue forecasts by less than 1%, leaving its assumptions for store numbers and average sales per store broadly unchanged. It lowered its earnings forecasts based on its gross-margin and expense assumptions.
The bank maintained its Buy rating and lowered its 12-month target price from 314 yuan to 275 yuan, citing lower earnings forecasts and the increase in share count and dilution of earnings per share from the employee shareholding plan.
Management expects further room to improve supply-chain scale, digitalization and operating efficiency, but plans to share most of the additional efficiency gains with consumers and franchisees instead of seeking to maximize short-term margins.