Laopu Gold experienced a deceleration in both revenue and profit expansion during the first half of the year, falling short of analyst expectations as declining bullion prices weakened Chinese consumers' interest in its jewelry offerings.

For the six-month period ending in June, the company's revenue climbed 60% to 19.8 billion yuan ($2.9 billion), according to its earnings release. This figure trailed the 20.9 billion yuan that analysts had projected and marked a sharp contrast to the 251% surge recorded in the same period last year. Net income advanced 88% to 4.27 billion yuan, below the roughly 5 billion yuan forecast by analysts and a significant slowdown from the more than 280% growth rate seen a year earlier.

The company nearly doubled its interim dividend, proposing a payout of 18.02 yuan per share, up from 9.59 yuan in the prior year.

The marked slowdown highlights Laopu Gold's vulnerability to fluctuations in gold price cycles and underscores a critical obstacle for its premium branding strategy: the company has yet to convince consumers to accept product markups that substantially exceed the intrinsic worth of the metal. In contrast to conventional gold merchants, Laopu Gold applies fixed retail pricing across all items—an approach that has led to steep price premiums following the retreat in bullion values and the company's repeated price increases.

Even though reducing prices carries the risk of undermining its upscale image, Laopu Gold has introduced initiatives to stimulate demand, including more aggressive promotional campaigns to drive sales. During the Chinese Valentine's Day event—typically one of the country's peak luxury shopping periods—shoppers on Alibaba's Tmall platform received discounts of up to 20% on selected Laopu Gold products.

While these tactics boosted sales volumes, they also elevated operational costs. Selling and distribution expenses surged 50% to 2.2 billion yuan in the first half. Nevertheless, the gross profit margin improved to 41.3%, up from 38.1% a year earlier, aided by low-cost inventory carried over from the previous year and strategic price adjustments.

Laopu Gold released preliminary first-half earnings on July 27, triggering a 24% drop in its Hong Kong-listed shares the following day. Analysts at Morgan Stanley noted in an Aug. 10 report that stabilizing gold prices could provide near-term support for the stock, as demand for fixed-price products has shown sequential improvement.