The "hard luxury" test for Lao Pu Gold still circles back to the gold price.
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After the reversal in gold prices, those who once sent Lao Pu Gold to the throne are now exiting the stage.
In early July, Lao Pu Gold's stock price once fell to HK$342, a drawdown of more than 60% from the past year's high. The market is repricing not only the cyclical nature of the gold jewelry industry, but also the "high premium gold + luxury positioning" model itself.
Lao Pu Gold has always tried to use traditional craftsmanship, high-end malls, and an "Oriental luxury" narrative to elevate itself above ordinary gold shops and price-per-gram comparisons.
When gold prices rise, the gold logic is Lao Pu Gold’s strongest booster:
Gold provides the expectation of value preservation, the brand offers aesthetics, gifting, and identity value, and social platforms plus scalper agents amplify the buzz.
Consumers are willing to believe that what they buy is not just gold, but a higher-level consumer symbol.
But once gold prices fall back, the gold logic again becomes its most difficult constraint to escape.
Consumers recalculate the value of gold and brand premiums, agents reassess price differences and resale space, institutions reevaluate online business, same-store sales, and inventory turnover.
As long as "pure gold" remains the core material, it must repeatedly prove that its higher price is not an illusion created by favorable gold pricing, but real brand value capable of weathering the gold cycle.
This is exactly the Möbius loop that Lao Pu Gold cannot escape:
The more it tries to use brand narrative to break away from gold’s price per gram, the more it gets pulled back to gold itself by price fluctuations.
Hot, Never Apart From Gold
Contrary to popular opinion, the high price-per-gram, "hard luxury" positioned Lao Pu Gold, at its peak period, carried not just luxury consumption logic, but was also embedded with very real arbitrage and value-for-money logic.
In 2025, the weighted average price of gold at the Shanghai Gold Exchange rose 54.8%. Lao Pu Gold raised its terminal prices three times in February, August, and October, but the cumulative increase was about 45%.
During phases of unilateral gold price increases, Lao Pu’s price adjustment pace lagged behind market gold prices, passively reducing its premium compared to traditional gold shops. In 2025, Lao Pu’s gross margin declined by 3.8 percentage points to 37.6% for the year.
For consumers, when delayed price adjustments are combined with major promotions at high-end malls, credit card cashback, and member points, the actual price received at Lao Pu gets further lowered.
For this reason, those who buy high-priced traditional gold are never just diehards buying for "Oriental luxury". Enthusiasts queuing at the doors include wealthy luxury customers as well as a large number of agents and scalpers with folding stools contacting clients via WeChat.
Pu Yin International survey shows, agents at SKP stores account for about 40% of sales income, clearly higher than peer malls like Mixc, IFC, and Hang Lung that don’t run large-scale promotions/rebates.
An SKP agent told Wall Street News/Allweather Tech that before the Spring Festival, Lao Pu Gold’s SKP Beijing agents were very hot; not only individual customers, but many agents bought by the box. Transactions settled at about 87.5% of original price after customers gave up member points, and those points can be resold or cashed by scalpers later. "Everyone rushed to order because they were almost certain that Lao Pu would raise prices after the New Year."
This "buy to profit" mindset, spurred by price rise expectations and the Spring Festival/Valentine’s Day/SKP events, drove up first-quarter sales peaks.
In Q1, Lao Pu Gold is estimated to achieve sales of about 19 to 20 billion yuan, revenue of about 16.5 to 17.5 billion yuan, and net profit of about 3.6 to 3.8 billion yuan.
If we take the midpoint of Q1 sales guidance, about 19.5 billion yuan, this already accounts for 62% of the full year’s sales in 2025; net profit margin exceeds 20%, higher than the year’s average of 17–18%.
But once gold price is no longer rising unilaterally, Lao Pu’s high premium versus ordinary brands is exposed again to consumer price comparisons.
For ordinary consumers, Lao Pu can still represent aesthetics, gifting, and identity; but when it comes to resale/recycling, brand premium is hard to be fully recognized, and price-per-gram for gold remains the most direct reference.
Pu Yin International’s April report mentioned that an SKP mall expert expects Lao Pu Gold’s SKP same-store sales in April may fall 40–60% year-on-year.
Since SKP agents account for a high proportion, this decline can't be extrapolated to overall performance, but it at least reflects weakening price-sensitive demand among agents.
Citi’s June report also points out that Lao Pu Gold’s performance on Tmall "618" was below expectations, possibly due to high premium causing loss of price-sensitive clients.
They estimate that after the February 2026 price hike and softening gold price, Lao Pu’s premium over traditional gold jewelry merchants has exceeded 55%, higher than ~30% pre-2024 and ~10% in 2025.
This change is also reflected in institutional expectations for Q2: JPMorgan assumes Lao Pu Gold’s same-store sales YoY range in Q2 2026 is -60% to +10%.
Based on its H1 forecast model, Lao Pu's Q2 sales are about 1.9 to 5.5 billion yuan, net profit about 0.4 to 1.1 billion yuan, obviously lower than Q1.
After sales slow, the relationships between gold price, premiums, agents, inventory, and price adjustment mechanisms will formally enter reverse validation.
Price Increases: Privilege or Necessity?
Lao Pu Gold previously gave the market luxury confidence largely due to its confidence to “continuously raise prices” during favorable periods.
Management previously mentioned in earnings calls that the company adjusts prices 2–3 times annually, hoping to keep gross margin at 40–43%.
Ordinary gold jewelry brands raising prices is usually seen as a passive transfer of raw material costs; Lao Pu’s price hikes are interpreted in capital markets as active brand pricing power.
But this is not only brand narrative—it is also a survival necessity. Lao Pu must rely on price increases because its heavy asset model has very low tolerance for error and needs thicker gross margins for a buffer.
Traditional gold jewelry companies manage gold price volatility through gold leasing, futures, and hedging to mitigate impact, separating business risk from gold price swings.
Lao Pu Gold took a different route. Founder Xu Gaoming made clear during 2025 earnings that the company does not hedge.
This choice is logical: Lao Pu sells fixed-price, high-premium traditional gold products, not ordinary jewelry sold by weight and fee. Over-hedging fluctuations with financial tools would increase hedging costs and weaken the narrative of "absorbing gold price volatility through brand premium."
For management, as long as there’s a 40% gross margin safety cushion, gold price volatility can be absorbed by product pricing, procurement rhythm, and brand premium, without outsourcing exposure to financial tools like traditional gold retailers.
But this safety cushion always needs sustained cash flow to maintain.
Looking over the cycle, from 2023 to 2025, Lao Pu’s net cash flow from operations has been negative due to "inventory reserve."
Also, the direct operation model naturally has stronger capital occupation traits. Opening a high-end store requires massive gold products for display and inventory.
Profits aren’t fully translated to free cash flow, but constantly converted to high-value procurement, store displays, and channel inventory as assets.
By end of 2025, its inventory surged to 16 billion yuan. Lao Pu Gold’s bank loans jumped from 1.4 to 6.3 billion yuan, and it raised about HK$5.4 billion through two Hong Kong placements to maintain cash flow.
In Q1 2026, Lao Pu Gold expects sales of 19–20 billion yuan, seemingly digesting inventory at last year’s end.
However, the processing cycle for traditional gold ranges from 25 to 90 days; to maintain sales, Lao Pu needs to restock at peak prices during sales peaks.
This means that while cash returns, it likely also builds a batch of higher cost new inventory.
Entering Q2, gold price fell off a cliff, combined with weaker-than-expected Tmall 618, SKP agent weakness, and this high-priced new inventory hit a window of slowing demand.
In accounting, gold price declines don’t immediately reprice all inventory to market in profit/loss; only when net realizable value is below cost must provisions be made. Lao Pu’s fixed-price system and high gross margin provide some buffer.
But in actual operations, high-priced procurement has already raised inventory costs.
Even if declines don’t immediately create losses on the books, they compress gross margins in later sales. As demand weakens, Lao Pu faces rising difficulty in passing costs through further price hikes.
The full direct-model lacks franchise channels as a safety net; once sales stall, high-priced inventory occupies capital, slows turnover, and reversely eats into gross margins and profit flexibility.
Based on past cases, Lao Pu’s semi-annual price adjustment theoretically comes around August.
Thus, whether price increase is Lao Pu’s long-term privilege as a high-end brand or a necessary maneuver to balance operational pressure of its heavy asset model is about to face a real market test.
Distance from Top Luxury, More Than Time
Capital markets are willing to reinterpret Lao Pu Gold as "Oriental luxury" for good reason.
Visually, in service and in its fixed price system, it has become adept at aligning with hard luxury: its stores in core high-end mall locations, next to brands like LV and Gucci.
But this appearance is inseparable from the mall’s very real interest structure. Lao Pu’s trump cards are gold’s high per-customer transaction, traditional gold’s high margins, and single-store output boosted by premium gifting and agent demand.
Back in 2023, before Lao Pu’s social media breakout, the Beijing SKP store annual sales already reached 335 million yuan, with per square meter revenue over 5 million; it remained the sales champion during April’s store anniversary this year.
A mall letting Lao Pu sit beside luxury brands doesn’t mean fully recognizing its luxury status; more realistically, in periods of high growth, Lao Pu helps the mall achieve per square performance and KPI.
In the past year, Lao Pu accelerated expansion: planned to open 10 stores, net increase of 9, and upgraded/expanded 9 stores in its existing network.
Store performance can buy physical location, but location can't buy luxury order. Luxury is never created simply by "standing next to someone."
Rather than just stressing "traditional gold" narrative, Lao Pu has used items like butterflies, rose windows, and vajra pestles to initially build distinguishing brand symbolism and a basis in popular culture.
But popular culture symbols and luxury symbols are not the same. The former is “viral,” aiming to break through circles in short time and become the broadest common denominator for mass aesthetics; the logic of hard luxury symbols is exactly the opposite.
As Pierre Bourdieu argues in "Distinction," taste is more than personal preference; it categorizes, and also categorizes those who possess that taste.
In luxury brands, top luxury doesn’t seek infinite integration with mass aesthetics, but uses price, channel, scarcity, and aesthetic rules to create and maintain identifiable identity separation.
Hermès remains strong during a luxury slowdown in part because demand is constantly greater than supply, core products like Birkin have waiting lists, and the brand avoids aggressive price hikes, maintaining "high perceived value."
Here, waiting, allocation, and controlling availability are not obstacles but part of the brand’s identity separation: the act of purchase itself shapes identity.
Traditional luxury brands dare to make customers wait not just because the brand history is longer but because their costs are more controllable and less easily recognized by consumers.
Regardless of how scarce leather, cashmere, or down is emphasized, their cost can't be precisely matched by consumers to a transparent real-time market price, and brands have higher gross margins to absorb production, inventory, and channel costs.
But for Lao Pu Gold, as long as "pure gold" is the core material, consumers can easily remove the filter and compare brand premium with spot gold price.
Although it strives to detach from gold-cost pricing, overall gross margin peaks at around 40%, far lower than the 70% customary in luxury goods.
"Its profit structure determines that sales can’t be too heavy," says Tang Xiaotang, fashion industry analyst with No Agency, to Allweather Tech: Lao Pu Gold can hardly, like mature luxury brands, undertake large stores, major launches, fashion shows, and frequent celebrity endorsements at high cost over the long term.
High-cost material also makes it difficult for Lao Pu to maintain hunger through production controls and waiting, like mature luxury brands. Once store sales slow, high-priced inventory reversely squeezes cash flow, forcing Lao Pu to constantly launch new products for new battlefronts.
From online channels and official new product info, Lao Pu Gold has sped up product launches this year, with more crosses, diamonds, etc. appearing, and some products trying more complex materials and symbols.
"Since Lao Pu emphasizes luxury positioning publicly, it’s hard for them to openly announce price cuts," Tang Xiaotang says. "But in practice, Lao Pu is increasing discounts, lowering new product prices, to release price space in disguise."
Tmall flagship shows Lao Pu’s new "Cross No.3" medium diamond pendant (about 15.2g gold) at a per gram price of 2594 yuan; "Cross No.1" medium diamond pendant (about 14.0g) at 2638 yuan; classic "Rose Window No.1" medium diamond pendant (about 14.0g) at 2789 yuan per gram.
Lao Pu Gold can’t retreat to the red ocean of ordinary gold shops, nor be as calm and restrained as mature luxury in headwinds. They can only keep moving upward, trying to reduce consumer sensitivity to price-per-gram with more complex materials and symbols.
In the next two or three quarters, gross margin, inventory turnover, and cash flow will give a more cool-headed answer to this local “hard luxury” stress test.
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