Can Laopu Gold escape the gold sector?

The stock price of Laopu Gold has dropped by more than 60%, while the price of gold has only fallen by about 20%.

Laopu Gold has started offering discounts. A few months ago, Laopu was still promoting the "luxury narrative independent of the gold price".

We analyzed in a previous article that Laopu Gold will face significant challenges this year. Even with the fixed - price model, when the gold price drops significantly, it will be in a dilemma. Offering discounts will hurt its brand image, while not offering discounts will hurt its bottom line.

Comparatively speaking, the bottom line is more important. Since last month, Laopu has been offering continuous discounts.

Laopu Gold needs to maintain its performance. During the gold bull market, Laopu Gold's price - to - earnings ratio once exceeded 50 times. Now it is less than 12 times, similar to Chow Tai Fook.

The stock price of Laopu Gold has dropped by more than 60% from last year's peak. However, the gold price has only fallen by about 20% from the peak at the beginning of this year to the present.

Over - optimization for remarkable results

Not long ago, a research report from UBS made the outside world realize that there are actually only two participants in the so - called ancient - style gold market: Laopu Gold and other brands.

The saying of the "Four Sisters of Ancient - Style Gold" has popularized several ancient - style brands such as Linchao and Junpei. However, through channel research, UBS found that the total sales volume of these major follower brands in 2025 is only about 4% of Laopu Gold's in the same period.

Putting the two figures of 60% and 4% together, the former represents the problems Laopu is currently facing, while the latter represents its success. In fact, there is only one reason behind this, which is that Laopu's brand growth strategy in the previous two years was too successful, and the market gave it too high a premium.

The starting point of this round of gold price increase is generally considered to be the beginning of 2024, reaching its peak at the beginning of this year. The international gold price has increased by about 1.7 - 1.8 times. This more than two - year period and nearly double increase is the brand growth window for ancient - style gold.

The most important reason for Laopu Gold's significant decline is that its original price - to - earnings ratio was too high. Although several ancient - style gold brands have emerged in the past two years, the figure of 4% is sufficient to prove that only Laopu Gold has seized this round of gold price increase window.

In March this year, Laopu Gold gave a one - sentence explanation in a very brief profit forecast: Continuous optimization, innovation, and iteration have ensured the continuous high - growth of online and offline revenues.

In building the first ancient - style gold brand, Laopu Gold's strategy is the most radical. It is not only continuous optimization, but even "over - optimization".

In terms of production capacity, some investors have complained that although Laopu positions itself as a luxury brand, its rapid expansion has diluted its scarcity.

Laopu's production capacity is sufficient to support last year's annual revenue of 27.3 billion. It relies on more than 40% of outsourced processing and semi - mechanized production of some products. This may deviate from the positioning of "ancient - style handmade goldware", but pure manual production cannot create a national - level brand.

The most scarce brand is Linchao, which only has two stores. Customers have to draw lots before paying a deposit to buy products. They have to wait several months to a year for the delivery after paying the balance. Its exquisite craftsmanship has gained popularity, but its production capacity cannot keep up. After all, the number of national - level intangible cultural heritage craftsmen is limited, and its self - owned production capacity has a natural upper limit.

In terms of pricing, Laopu's current gross profit margin has reached 40%, mainly due to its radical price - increase strategy in the past two years. Laopu Gold's "fixed - price" model and frequent price adjustments (the price of some single products has increased by up to 30% in a single adjustment) have established a luxury narrative independent of the gold attribute.

This radical pricing method, although it will result in a loss of some revenue during the downward period of the gold price, has indeed rapidly enhanced the brand's positioning.

This over - optimization strategy can be said to have consumed the window period, but it has also established the Laopu brand. Or rather, in the Chinese consumer market, "going all out can achieve remarkable results" is always effective.

From growth stock to value stock

A research report issued by UBS last week believes that overall, Laopu Gold doesn't have many problems because this brand has become the absolute leading brand in the market.

There are actually no decent competitors in this market. The concern about the intensifying competition in the ancient - style gold market is actually due to the small scale of all competitors at present. Currently, Laopu Gold doesn't face much competitive pressure.

Moreover, although the brands catching up can launch similar styles, for example, the Eight - Treasures Compass and Vajra Pestle have become popular styles in the category, and many brands offer them. However, these popular design elements have established a relatively strong connection with Laopu.

As for the expansion speed, UBS believes that Laopu Gold still has significant room for store expansion. Currently, its coverage in high - end shopping malls in the Greater China region is still lower than that of international luxury brands. For example, Cartier, Tiffany, etc. have all been deployed in more than 40 core shopping malls, while Laopu Gold only covers about 23.

If we comprehensively look at the research reports in the past period, the overall view of institutions is that Laopu Gold's narrative is changing, from a growth stock to a value stock.

In the past month, due to being oversold during the decline of the gold price, most institutions have given a buy rating. However, they have also lowered their profit forecasts. Citigroup has lowered its revenue forecast for Laopu Gold from 2026 to 2028 by 6% to 7%.

A relatively core challenge is that Laopu has attracted many price - sensitive customers in the past. In the past two years, they placed orders with the idea that "the gold price has been rising, so buying won't result in a loss".

A research report from Citigroup last week believes that these types of customers are the most numerous in the two major channels of SKP and Tmall. They choose to leave after the gold price drops. The research report estimates that these two major channels used to account for about 30% of the total sales, and now it has dropped to about 20%.

And the core customers that Laopu firmly believes in are those who are not price - sensitive. In the past two years, Laopu has always emphasized that it has "intercepted" customers from luxury brands, and the number is increasing.

Laopu stated in its annual report: According to the research data from Frost & Sullivan, the average overlap rate between Laopu Gold consumers and consumers of the top five international luxury brands such as Louis Vuitton, Hermès, Cartier, Bulgari, and Tiffany has increased from 77.3% in July 2025 to 82.4% in March 2026.

On social platforms, it is also easy to observe the voices of these customers. "Just ask if you want to buy Laopu if you make money. I think Laopu is still very attractive to those who can afford it. Customers who are more price - sensitive or follow the trend may disappear temporarily."

The key is how to serve these core customers well.

The real problem

Laopu Gold has always had a relatively "passive" attitude towards the change in the gold price.

In March this year, Xu Gaoming, the founder of the company, responded to this question by saying, "Gold prices cannot continue to fall this year. If the price drops, it is only a short - term market condition, and there is no basis for a long - term unilateral decline."

He emphasized again that Laopu will never hedge against gold prices. At the same time, this year's plans for inventory and store expansion remain unchanged.

The gold price does have an impact on Laopu's sales. In a circulated communication summary in May this year, Laopu Gold admitted that the gold price correction "will indeed affect consumers' sentiment" and considered it a reasonable reaction.

However, more importantly, it is about how to maintain its core customers. In addition to the service comparable to luxury brands, the products themselves are also very important.

A customer who bought a three - piece set from Laopu Gold before getting married the year before last said that she would go into the store every time she passed by in the past two years, but she didn't make another purchase because there were no more styles that amazed her.

This aesthetic fatigue is somewhat common. A research report from CSC last year stated that through observation on social platforms, the team found that consumers' enthusiasm for Laopu Gold "has dropped from 'booming' in 2024 to 'rational' in 2025". However, the capital market won't accept rationality as an answer.

In addition to offering discounts, Laopu Gold's long - term strategy to "hedge" against the gold price is to dilute the gold attribute of its products.

It is rumored that in a recent communication with investors, Laopu Gold stated that its new product strategy has the following points: 1. Increase the proportion of diamonds/enamel inlay to dilute the gold attribute (such as the Mandala and Seven - Son Gourd series); 2. Have a higher premium for the price per gram of gold; 3. Integrate Chinese culture with global elements (such as cross pendants).

This strategy actually implicitly admits that the pure ancient - style gold craftsmanship is not sufficient to support such a high premium, and it needs to add diamonds, enamel, and an "international style" to enhance it.

However, the core difference between Laopu Gold and established luxury brands is the ancient - style gold craftsmanship, not diamonds. Diamonds won't bring differentiation.

In essence, this is because the growth of the brand's intrinsic value is slower than the change in the market environment, which is also a problem commonly faced by many consumer brands in various categories.

This article is from the WeChat official account "20 She" (ID: quancaijing_20she), author: Wang Xiaoling, published by 36Kr with authorization.