Zhejiang Aokang Shoes Co Ltd

China's leather shoe industry continues to contract. Leading company Aokang International has posted losses for four consecutive years from 2022 to 2025, with cumulative losses exceeding 900 million yuan, and its nationwide physical store count has fallen by nearly 800 over the past four years. According to the China Leather Industry Association, national leather shoe output dropped from about 4.62 billion pairs in 2015 to 3.54 billion pairs in 2020, and the Huajing Industry Research Institute forecasts a further decline to 1.7 billion pairs by 2026, a contraction of more than 60% over the decade. Leather shoes' share of the finished footwear market also plunged from 41.7% in 2015 to 15.3% in 2025. By the end of the first half of 2026, Aokang International's physical store total had fallen to 1,757, a net decrease of 79 stores in six months. Revenue for the period was 769 million yuan, down 28.88% year on year, and net profit attributable to the parent company was 17.57 million yuan. Although this ended four straight years of losses, net profit after deducting non-recurring items remained a loss of 6.61 million yuan. Red Dragonfly posted a net loss attributable to the parent company of 70.34 million yuan in 2024, with the loss widening to 140 million yuan in 2025, and closed 181 stores for the year. Fuguiniao, once known as China's genuine leather shoe king, declared bankruptcy in 2019 and was delisted from the Hong Kong Stock Exchange. Under pressure, Aokang International is advancing its positioning as a more comfortable footwear expert and cutting expenses, with selling expenses down 32.82% year on year in the first half of 2026. Red Dragonfly has signed Chen Feiyu as a brand ambassador, launched intangible cultural heritage collaboration collections, and applied an AI design system, achieving a net profit attributable to the parent company of 8.95 million yuan in the first half of 2026 and returning to profitability.

Aokang International released its 2026 interim report, with net profit attributable to the parent company reaching 17.5743 million yuan during the reporting period. Total operating revenue was 769 million yuan, a decrease of 312 million yuan from the same period last year, down 28.88% year-on-year. Net cash inflow from operating activities was 167 million yuan. The latest asset-liability ratio stood at 21.77%, gross margin was 44.43%, down 2.46 percentage points from the previous quarter, ROE was 0.74%, and diluted earnings per share was 0.04 yuan.