"King of Recycling" Hits the Brakes: Behind Dual Revenue and Profit Growth, Why Did Store Expansion Suddenly Stall?

At a critical point where the circular economy shifts from a scale competition to an efficiency race, Aihuishou is enjoying profit margins while being forced to slam the brakes on aggressive expansion. Behind this strategic shift is a profound questioning of the entire second-hand industry development model.

On March 11, 2026, Wanwu Xinsheng Group announced its FY2025 Q4 and full-year results, with annual revenue surpassing 21 billion yuan, achieving GAAP full-year profitability for the first time, and setting multiple profit records.

However, despite impressive financials, offline expansion has sharply slowed, store targets are less than half achieved, and Q4 saw zero new stores added. Coupled with high service complaints and a single revenue structure, the growth logic of this second-hand recycling leader faces severe challenges.

Goals Cut in Half

In its 2024 financial report, Wanwu Xinsheng proudly announced plans to add 800 stores in 2025, aiming for a total of 5,000 stores within three years, while simultaneously expanding on-site service staff to build a heavy-asset offline network as an industry barrier. At that time, the industry was in an upward cycle driven by national subsidies, and the company was confident in offline fulfillment network construction, viewing stores as multiple channels for traffic, delivery, and branding.

But cold reality told a different story. By the end of 2024, Wanwu Xinsheng had 1,861 offline stores; by the end of 2025, the number was 2,195, with a net increase of only 334 stores for the year—only 41% of the target. Quarterly data shows a dramatic slowdown: Q1 added 25 stores, Q2 surged to 206, Q3 dropped to 103, and Q4’s store count remained unchanged from Q3, with zero new stores in that quarter—almost halting expansion.

From rapid growth to sudden halt, Aihuishou’s offline strategy has clearly shifted. The company states that store numbers should align with online traffic, maintaining the long-term goal of 5,000 stores but adjusting opening pace flexibly based on business rhythm. In 2026, the focus shifts to improving quality in high-tier cities and expanding franchisees in lower-tier cities, using a light-asset model to deepen penetration, while emphasizing per-store profitability and no longer blindly pursuing store count.

The slowdown isn’t accidental. The second-hand recycling industry has moved from scale competition to efficiency competition. Longer phone upgrade cycles and more rational consumer behavior pressure profitability of individual stores, and heavy-asset expansion no longer benefits from scale economies. Blindly opening stores broadens management scope, raises operational costs, and instead of continuing to invest in inefficient outlets, companies are shrinking their footprint to improve operational quality—an inevitable shift from capital-driven to operation-driven growth.

Lingering Concerns

Financially, Wanwu Xinsheng delivered its best performance since listing in 2025. Total revenue reached 21.05 billion yuan, up 28.9%; non-GAAP operating profit was 560 million yuan, up 35.5%; and for the first time, GAAP net profit was positive, with annual operating profit of 460 million yuan and net profit of 340 million yuan. Q4 was especially strong, with revenue of 6.25 billion yuan, up 29% year-over-year; non-GAAP net profit hit a record 140 million yuan, showing a clear trend of profit improvement.

Business scale expanded in tandem, with 41.7 million items traded throughout the year—an 18.1% increase. Multi-category recycling became a new growth driver, with Q4 GMV from imaging equipment, bags, watches, gold, and other non-3C categories surging 125.7% year-over-year. B2C retail and consignment businesses grew rapidly, with Pinduoduo’s GMV up 253%, boosting platform activity. By year-end, the group’s cash and short-term funds totaled 2.19 billion yuan, providing ample liquidity for strategic adjustments.

Beneath the prosperity, the overly single revenue structure is increasingly apparent. The group’s business is divided into 1P self-operated and 3P platform services. In 2025, self-operated revenue was 19.38 billion yuan, accounting for 92.1%, consistently above 90% each quarter; platform service revenue was only 1.67 billion yuan, up 12.4%, but less than 8% of total. Heavy reliance on self-operated recycling, refurbishment, and resale—an asset-heavy model—coupled with slow platform transformation, weakens risk resistance.

Core categories are similarly dependent, with 3C electronics dominating transactions. Longer upgrade cycles directly impact demand elasticity. The self-operated model requires large capital investments in inventory and offline networks; market fluctuations quickly pressure inventory turnover and cash flow. Profit growth depends on scale rather than process optimization and efficiency—making this growth path unsustainable long-term.

High Complaints and Trust Erosion

The root cause of the expansion slowdown is the collapse of service quality caused by rapid store opening. Offline stores, as the core heavy-asset component, should serve as trust anchors and experience carriers, but aggressive expansion has led to inadequate staff training, inconsistent management standards, and frequent service issues, continuously damaging brand reputation.

Third-party complaint platforms show nearly 25,000 complaints related to Aihuishou, mainly about malicious price压, inconsistent inspection standards, privacy concerns, and illegal device拆机. Users report large gaps between online estimated prices and in-store transaction prices, with staff exploiting information asymmetry to lower device valuations; some stores have拆机 without user consent or incomplete data wiping, raising privacy fears.

The company responds that online prices are estimates, with final prices based on physical inspection, following unified standards and reverse quality checks, strictly prohibiting illegal压价. Stores offer secondary privacy data wiping services to ensure user data security. However, frequent complaints and negative user experiences reveal a serious mismatch between expansion speed and service capacity.

Second-hand recycling is a non-standard, highly process-driven service industry. Transparency in pricing and standardization of services are core competitiveness. Blind expansion lengthens management chains, undermining service consistency and leading to high complaint rates. User trust is vital; ongoing service disputes not only hurt individual store revenue but also erode long-term brand value. This is a key reason why the company has had to pause expansion and shift focus to operational optimization.

While revenue hits new highs, the rapid halt in expansion and the coexistence of profit improvement with service shortcomings reflect the industry’s transformation. Aihuishou’s 2025 financial report exemplifies the shift in the second-hand circular economy.

The previous logic of relying on heavy-asset expansion to seize market share is gradually failing. The industry is bidding farewell to scale competition and entering a phase focused on cash flow, operational efficiency, and user trust.

Aihuishou’s strategic contraction is both a return to rationality and a necessity. The long-term goal of 5,000 stores remains, but balancing expansion speed with service quality, optimizing revenue structures between self-operated and platform services, and solving the standardization challenges of non-standard services will determine future growth potential.

Source: Chunhua Finance

Disclaimer: This article is for informational sharing only and does not constitute investment advice. Anyone making investment decisions based on this content bears the risks themselves.