Behind Kid King’s 60% Net Profit Surge: Purchased Hair Care Business Accounts for Half of Profits

```

Breaking through ten billion in revenue and a sixty percent surge in net profit, Kids King’s 2025 financial report looks dazzling enough.

In 2025, the company achieved operating income of 10.273 billion yuan, up 10.03% year-on-year; net profit attributable to shareholders reached 298 million yuan, a substantial year-on-year increase of 64.21%.

But against the backdrop of declining birth rates, the overall demand in the mother and baby industry is weakening. Kids King’s annual mother and baby goods revenue was 8.671 billion yuan, up only 6.28% year-on-year; mother and baby services revenue was 259 million yuan, down 5.94% year-on-year.

The operating efficiency of directly-operated outlets also declined, with average revenue per Kids King directly-operated store down 5.47% year-on-year, and Leyou’s directly-operated stores down 11.09%.

Faced with the reality of slowing growth, Kids King has gradually formed a “three expansions” strategy in recent years: expanding categories, expanding formats, and expanding tracks.

In the past year, in terms of expanding categories, Kids King’s own brands and exclusive custom products achieved revenue of 1.24 billion yuan, a year-on-year increase of 79.33%. In expanding formats, the company accelerated penetration via a franchise model, with the number of franchise stores reaching 173 by the end of the year.

By comparison, “expanding tracks” is expected to play a bigger role.

In July 2025, Kids King acquired a 65% stake in the scalp care brand Silky Bio for a price of 1.65 billion yuan, marking an important move into the new consumer services track.

By the end of 2025, Silky Bio’s total number of technology hair care stores was 2,617, and its revenue in the half-year period after consolidation approached 380 million yuan.

From a short-term financial perspective, this transaction quickly showed a “boosting profit” effect, contributing about 147 million yuan in profit, which is nearly half of the company’s annual net profit attributable to shareholders; Leyou International’s profit contribution fell to about 40%.

Regarding integration, the company launched synergetic operation of membership systems in the second half of 2025, and plans to introduce scalp care zones in large stores to promote cross-selling.

In the future, Silky Bio will extend upstream to core raw materials in its product end, focus on channel layouts in East China, Central China, Hong Kong, and Southeast Asia markets, and continue to strengthen franchise system management in operations.

Cross-border moves are not without cost.

By the end of 2025, Kids King’s goodwill jumped from 782 million yuan to 1.932 billion yuan, with Silky Bio contributing about 1.025 billion yuan, raising potential impairment risk.

The highly franchise-dependent model also brings uncertainty for subsequent integration.

Over 93% of Silky Bio stores are franchises, making it significantly more difficult to unify service standards and operational quality. The company admits in its annual report that the franchise system may face risks of inconsistent management standards and uneven operational quality.

Apart from external acquisitions, Kids King is also increasing investment in “tech variables”.

The company continues to promote AI applications in retail, currently building over 1,500 user tags and more than 700 intelligent models. In 2025, GMV contributed by DTC automated precision marketing accounted for more than 26% of the brand’s monthly mother and baby product GMV on average.

By the end of 2025, Kids King’s registered membership scale had exceeded 98 million, providing a traffic base for its expansion into multiple formats and categories.

On the capital and strategic front, the company clearly stated it will continue to look for high-quality supply chains, brands, IPs, and AI hardware targets based on the needs of mother and baby, parent-child families, and women groups.

The path has already been laid out, but whether a new story to break the growth ceiling can truly take shape remains to be seen.

Risk Warning and DisclaimerThe market is risky, investment needs caution. This article does not constitute personal investment advice and has not considered any individual user’s specific investment objectives, financial situation, or needs. Users should consider whether the opinions, viewpoints, or conclusions in this article suit their particular circumstances. You are responsible for any investment made based on this article. ```