About Sun Art Retail Group Limited
Sun Art is a leading retailer with hypermarket and omni-channel e-commerce businesses in China. Sun Art operates its business with hypermarkets, superstores and membership stores under “RT-Mart”, “RT-Super” and “M-Club”. As of 30 September 2025, Sun Art had a total of 462 hypermarkets, 32 superstores and seven membership stores in China with a total gross floor area (“GFA”) of approximately 13.40 million square meters, covering 205 cities across 29 provinces, autonomous regions and municipalities. The Group has always been committed to high quality-to-price ratio and the customer value of health and pleasure by providing high-quality shopping experience for customers with fresh and inexpensive commodities, comfortable and convenient environment, as well as lump-sum buying. The Group aims to become life service centers, a good neighbor of communities and a trustworthy shopping representative of customers.
As of 30 September 2025, DCP Capital Partners II, L.P. indirectly controls 79.15% of the issued share capital of Sun Art Retail Group Limited (the “Group”) and therefore has become the ultimate controlling shareholder of the Group.
Sun Art Retail Group will leverage its integrated online and offline expertise to explore growth opportunities in China’s retail sector, positioning itself as an innovation driver as well as industry leader and benchmark for retail excellence.
Three-Year Strategy & Business Performance
Three-Year Strategic Roadmap Overview
Over the next three years, the Group will build on a foundation of "Healthy Products, Enjoyable Experiences, and Caring Services" to develop a retail model that balances experience and efficiency for all customer segments within a three three-kilometer radius. This approach aims to meet the needs of both families and younger consumers, fully unleashing ope rational resilience and long long-term growth potential.
The Group will continue to strengthen its "Daily leadership with enhanced differentiation in fresh categories. By optimizing SKUs, reducing product homogenization, and accelerating assortment renewal, it will sharpen its category competitiveness. An efficient supply chain will be the key to improving product quality and price value. The Group’s "1+1 Dual private branbrand strategy will further solidify differentiated product offerings.
Through its multi-format portfolio — combining hypermarkets, superstores, front warehouses, and membership stores — the Group will have hypermarkets as its core while actively expanding super storestores and front warehouse operations to align with diverse consumer scenarios. The "One Store, One Plan Plan" initiative will advance store renovations, phase out underperforming locations, and catalyze the transition of stores into community lifestyle centers. The Group will also deepen member engagement through an upgraded service system to continuously strengthen loyalty.
To ensure effective execution of its Three-Year strategy, the Group has established a dedicated Transformation Management Office ("TMO") to oversee strategy implementation. The Group is also optimizing incentive structures to enhance team effectiveness, while developing younger leadership to build a more agile organization capable of responding to dynamic competitive pressures.
Business Progress and Highlights
National Sourcing Cuts Costs, Pork Leads Breakthrough
In September 2025, the Group officially launched a nationwide joint procurement program for self-operated pork. Adopting a "direct sourcing + focus on leading suppliers" model, the Group established deep collaboration mechanisms with upstream partners, ensured full traceability for safer and more consistent product quality, and strictly implemented an integrated management system covering four key areas: contract terms, pricing mechanisms, quality standards, and review mechanisms.
The nationwide joint procurement model and its integrated management system enabled volume-based price negotiations, effectively reducing procurement costs across all regions. Simultaneously, the Group implemented end-to-end solutions to improve efficiency, including continuous optimization of product hierarchy, standardized merchandising execution, refined consumption scenario development, and enhanced customer experience and value perception.
In September 2025, the self-operated pork category had nearly 20% year-on-year growth in sales volume, with gross profit margin increasing by approximately four percentage points and gross profit rising by over RMB4 million. From September to October 2025, cumulative gross profit growth exceeded RMB10 million year-on-year, demonstrating significantly enhanced category profitability. Moving forward, the Group will remain customer-centric, aligning with seasonal and festive occasions to better meet consumer needs and deliver greater customer value and commercial value. The Group aims to replicate the success of the pork joint procurement model by gradually expanding it to poultry, beef, and other categories, while continuously broadening the scope of national centralized procurement.
Private Brand Strategy Upgraded with "1+1 Dual Brand Matrix" Implementation
The Group is strengthening its private brand offerings by leveraging hypermarket-based nationwide supply chain resources to build end-to-end quality control systems and price competitiveness from the source.
The "Super Save" series focuses on value-for-money, connecting directly with manufacturers to eliminate intermediaries and brand premiums. While adhering to national and higher quality standards, it builds core competitiveness around daily essentials, market best-sellers, and extreme cost-effectiveness. The "RT-Mart Select" series meets consumer demand for "high quality at affordable prices, balancing health and taste." It emphasizes health trends, regional flavors, and authoritative certifications, translating healthy eating from concept to practical application.
During the reporting period, the dual brands launched over 500 SKUs spanning more than 50 categories, achieving sales growth of over 50% compared to the same period of the last fiscal year. In September 2025, the dual brands contributed over 2% of total revenue. Moving forward, the Group will continue to deepen the "1+1 Dual Brand Strategy", using their differentiated positioning to create synergies that cover diverse consumer needs — from daily necessities to premium quality upgrades — while steadily increasing their share in overall performance.
End-to-End Logistics Optimization Enhances Supply Chain Resilience
The Group has implemented systematic optimization across its warehousing and logistics network. This initiative aims to provide stores and suppliers with efficient, low-cost fulfillment support while improving on-time delivery rates and supplier satisfaction. The optimized system also enhances inventory turnover and effectively reduces return-to-warehouse and product return rates, thereby strengthening overall supply chain resilience.
By consolidating national warehousing resources, the Group has established a core network of 13 dry warehouses and 25 cold chain facilities, while simultaneously reducing the number of stores’ external warehouses. The adoption of competitive bidding for dry and cold chain services has introduced leading logistics providers, with projected cumulative cost savings exceeding RMB100 million over the coming years.
Development at Its Core
Advancing store transformations
During the reporting period, the Group completed full-store remodels at 3 East China stores, achieving double-digit foot traffic growth, and department-level upgrades in fresh & prepared food (“3R”)Note sections at 3 South China stores, driving over 20% category sales growth. The Group will accelerate this program with plans to remodel over 30 stores this fiscal year, targeting 200+ store transformations by the next fiscal year.
Remodeled stores focus on product differentiation through new item introductions, underperforming SKU rationalization, and expanded private brand penetration. The Group has upgraded 3R sections through partnerships with local heritage brands.
The store layout redesign prioritizes a highly shoppable environment: converting long-span shelves to shorter-span ones, removing forced traffic routes, and lowering shelving for improved sightlines. The seasonal promotion zones and featured item areas were created to achieve “one step, one scene” with products “made fresh, sold fresh” to generate a vibrant market atmosphere. Tasting stations enhance customer interaction and engagement. Future stores will optimize at 6,000–7,500 sqm — a more efficient match for the curated 15,000 SKUs — while expanding gallery spaces to strengthen community lifestyle center positioning.
Accelerating new store openings
During the reporting period, the Group launched 3 new hypermarkets. The Kunshan Chaoyang and Anhui Wuwei stores, which opened in September 2025, have fully adopted the store remodeling approach in their layout planning, traffic flow design, and merchandise selection, establishing them as benchmark stores for the new generation of hypermarkets. Those two new stores have both achieved a sales contribution of over 30% from their fresh and 3R sections, significantly exceeding company-wide average.
Deploying front warehouse network
During the reporting period, the Group officially launched its front warehouse initiative. Using a low-cost setup model, the project leverages the hypermarket's unified inventory and digital operations to enable efficient nearby delivery and capture new online customers.
As of September 2025, the Group had established front warehouses in five locations: Shanghai, Jiangyin, Shenyang, Jinan, and Qingyuan. The average size per facility is approximately 500 square meters, with average daily sales of around RMB50,000. The front warehouses utilize hypermarket resources to develop assortment plans based on local customer demand, achieving either single or multiple daily deliveries. Over the next three years, the Group plans to increase the proportion of online sales to 40%-50% of total revenue.
Note: The term "3R" refers to "Ready to Cook, Ready to Eat, Ready to Heat." Products in the prepared foods section include delicatessen, bakery, and dim-sum.
