Zhang Xiaoquan, one of China’s oldest and most prestigious brands, is facing a crisis as its net profit has fallen for two consecutive years and its stock price has plummeted by 60%. The company’s major shareholders are under immense pressure, with the pledge rate of their shares reaching 99.9%. Furthermore, the two actual controllers of Zhang Xiaoquan have been restricted by the court, signaling further trouble for the company.
The once-thriving brand, which has been in business for over 400 years, reported a decline in operating income in 2023 compared to the previous year. The net profit attributable to shareholders also dropped significantly, raising concerns among investors and market analysts. The decline in performance can be attributed to a series of factors, including a brand crisis that began in 2022 when a customer raised concerns about the quality of Zhang Xiaoquan’s knives.
Despite attempts to recover from the negative publicity, the company’s financial woes have only deepened. Sales expenses have been on the rise, further impacting the company’s bottom line. Zhang Xiaoquan’s stock price has also taken a hit, dropping by over 60% since its listing in 2021.
The situation has become even more precarious with the court’s decision to restrict the two actual controllers of the company, Zhang Guobiao and Zhang Zhangsheng, due to a loan contract dispute involving one of their affiliated companies. With nearly all of the major shareholders’ shares pledged as collateral, Zhang Xiaoquan is struggling to regain its footing in the market.
As Zhang Xiaoquan grapples with these challenges, investors and industry experts are closely watching to see how the company plans to turn its business around. The management team will need to implement strategic measures to address the financial pressures and restore confidence in the brand. The future of Zhang Xiaoquan hangs in the balance as it navigates through this turbulent period.