Ladies and gentlemen, analysts, investors, good morning to you. On behalf of Sun Art Retail Group Limited, we Welcome you to the 2023 interim results announcement. This will be held physically as well as online. Last night, we have already sent you the PPT link and also an email for all those who have registered to participate in this meeting. If there is any need, would you please go to the company website and go to the Company Announcements part under Investors to share with the PPT and the contents. We have today with us, Mr. Lin Xiaohai, the CEO of the company, and the CFO, Desory Yiwen Wan. As well, Ms. Gu Xiaobei, Investment Relations Director. First of all, our CEO will be talking to us about the first half, a review. Desory will be talking to us about the financials, first of all.
Investors, analysts, good morning to you. I would just want to start off by giving you the financial highlights for the first half. The revenue for the first half of the year was 35,768 million RMB. While core business and same-store sales growth had been a negative 5.9%, gross profit is 8,889 million, which is a 12% drop from last year, and 24.9% for gross profit margin, which is the same as last year. The EBIT margin is 0.1%. Profit for the period, negative CNY 378 million . For the construction in certain parts, it is a strategic decision as well for some of the implementation of our strategies, including in inventory optimization. We have done a lot of work and achievements. Compared to the same period of last year, marketing expenses have not been as much.
For this year, we continue to normalize our marketing expenses and efforts. For all these components and factors, it had resulted in our financial results. As for hypermarkets, the income had dropped by 15% in the entire industry. For our core business in our same-store sales, it is actually better than the industry. In inventory for hypermarket, it is 1.4% growth. For coastal eastern region, we have increased by 4% in hypermarket. For the industry in coastal China, it is 50% of the whole, and it is better performing than the entire industry. Also experience. Offline experience center and our online fulfillment are all working very well. Also with our tenant mix restructuring and also with our rentals income, all these had increased. There are a number of efficiencies that have been raised.
Overall speaking, our financial strength is very strong and healthy indeed. Now, let us look at store expansion. We continue to expand our stores, and we have three openings of hypermarkets, seven supermarkets, one membership store, and at the same time, we have closed some of the stores that need to be optimized. At the same time, we continue to focus on our core brand advantage in the regions with multi-format. We have secured three hypermarket sites, 18 superstore sites, and we are covering 221 cities. We are also closing some of the non-viable stores. For Omni market traffic in the first half of the year, it is a positive growth. For offline, it is 1.6% growth. Online, it is 9% growth in traffic. Revenue drop is mainly because of ticket size.
From the trend, we see that for the first half, it is a negative 7.9% for our core business growth rate, and first quarter 3.5%, respectively in the first quarter and the second quarter. The decline in CPI of vegetables, fruits, and pork reduced the stocking up mentality, leading to a decline in ticket size. In the past year, because of the stocking up mentality, the ticket size had actually grown. As for rental income, it has stopped falling and stabilized, reaching CNY 1,543 million , which is a year-on-year increase of 1%. The tenant mix of our galleries had been optimized, and our 4% vacancy rate is the lowest in the industry. Gross profits and gross profit margin, as mentioned, with our contraction of the supply chain, which is one contributing factor, and this year with our normalized operation and marketing.
As you know, in the past period of time, the industry has been doing a price competition. Therefore, we have put in new efforts, which had hit a temporary basis, our gross profit and profit margin. SKU for stores is 25,000, which is a drop of 10% from last year. Also in the stocking for monthly, it is a 10% drop from stores inventory as well. For digital expenses, it is CNY 9,616 million in terms of overall expenses, which is a decrease of CNY 798 million year-on-year or -7.7%. But if we take away the supply chain factor, in fact, it is just 0.3% growth. In particular, personnel expenses compared to the same period last year is CNY 400 million drop, and it is 13.3% decrease overall. Therefore, for our personnel expenses, we have optimized by 0.2%.
For our working situation, from working capital days, CapEx, and net cash position, we are doing well. 58 days and 81 days respectively for inventory turnover and trade payable turnover days, which is stable. CapEx is CNY 440 million , as mentioned. This includes our offline experience center and multi-format investment in offline and online. This had resulted in certain hit to our net cash position, even though the net cash position is still very positive and healthy. It is a 2.8 year-on-year increase to CNY 20,893 million . With all the factors in play, this kind of a financial position and with our strategy going forward from quantity to substantial improvement, we are very confident that we will be able to continue to build out to medium to long-term. Next, we will have the CEO, Mr. Lin, to talk to us about the business as well as our strategies.
Analysts, good morning to you. This morning, I would want to share with you some of the progress that we have made since the beginning of the year in the four strategies. One of which is the first proprietary product that we have come up with, and we have a 100-member strong team to promote this. We have already over 100 such products which have been introduced to the market. There would be 300 blind testing of our consumers for each of these threshold products. For our OEMs, we have a very stringent mechanism. In their production, they have to be very high level in their quality assurance. Also in our marketing, we are putting all efforts to promote these products of ours.
These products will have to be tasty. There is yellow shoe and also a nut, which will be taste-tested by our customers. They will be very consistent in their price and also in their quality. The raw materials are all sourced from the fields, from the source, and they are of the highest quality. This is very crucial to our positioning. In October, from zero to one, we have made the breakthrough, and this is already 1% of our overall sales for these products. For our processed products, we continue to put in the baked goods and also in cooked foods categories. We will be putting these categories into our own products and brand names. We are working with nationwide partners, and we will be developing further products in that regard.
In the last month of our financial year, we would want to grow this to 10% of our overall sales for these differentiated products and brands of ours. This is a path which is the most important path for our future growth, and this is a foundation to all our strategies. The second strategy is our offline experience centers. For our hypermarkets, there is a particular characteristic, that is they are very large. On the other hand, for those who are families with children or retirement silver hair groups, it is a necessity for going shopping. We put this as our competitive strength. In our past two years or so, we have continually raised the environment in our shops, in our stores, in the services and experiences offline. For RT-Mart,
in our stores, there is the CNY 1 ice cream and also playgrounds for the children, and they are very happy, the children, so the parents can be more free in doing their shopping. There are over 300 stores at the RT-Mart, our hypermarkets, where there are a number of places focusing on these differentiated activities. They are providing a new experience, which is very physical for the customers, where they can taste and feel and touch the products. We have a lot of services as well. For example, in fruit and cutting of fruit, and also in the cutting and preparing of seafood and fish, et cetera. We continue to provide all these as services, and we raise these as our competitive edge.
This is for some simple matters, which are done repeatedly and done well, such as cutting up the pork and preparing the fish, et cetera. That is a kind of neighborly experience and service for our customers. Therefore, the traffic had increased in the Double Eleven just passed. The traffic had increased significantly, and this traffic had brought on the gallery business in stabilizing and strengthening gallery, and there is a rebound from the base of last year. As the gallery traffic increase and revenue increase, we will be transforming from just retail and consumer goods to restaurant and services. It is a lot more attractive offline. Our motto is that if you love life, you come have a stroll in our hypermarket, in RT-Mart, so as to raise the value of their visits.
And at the same time, we continue to steadily develop our online multi-channel. In last year's very challenging and competitive market situation, we have an increase of high single digit in our orders. And this year, even though there has been a slight drop in terms of our ticket size, but overall, we are doing very well in terms of our multi-channel development online. Our NPS is 85. It continues to grow, and the comeback rate is 46% for our customers. So the experience definitely is good. And also, we are extending our service from 8:00 A.M. We have made it earlier for our delivery to 7:30 A.M. start. And for the southern regions, it is extended to 11:00 P.M., delivery from 11:30. Now, in the past, it was 3 km in terms of radius of delivery. It is now 5 km radius.
In the more rural areas, it is 7 km radius. So this is two hours-plus maximum for delivery to the home. So this is in terms of spatial extension. And also, we are extending into new omnichannels as well. This year for RT-Mart, it will be our main channel. We will be strengthening the digitalization and also membership so that the landing on our RT-Mart APP will be even strengthened. The growth profit margin and also the repeat customers are all being raised at the APP. So we will continue to put in efforts into APP. We will also be paying more attention to third-party platforms. We are putting in efforts to integrate third-party platforms, which will bring on further growth for us. So we are developing very healthily online and offline. Online is over 2% EBITDA growth.
So it is no longer margin dilution business, but actually it is a margin contributor for online business. At the same time, we are going multi-format, as mentioned. We have opened in April in Guangzhou, the first M-Club store. We now have 60,000 paying clubs, and together with our card ownership members, it is over 90,000. We are very confident that we will have over 100,000 card-owning members and 70,000 paying members. And this exceeded our expectations. So for the performance and also for our Sales as well as our profit, it is very much in line or exceeding our expectation. So this is a good format, this M-Club store. And there will be two more stores opening, one in Changzhou, the other in Nanjing, by January of the year. And the club membership has also grown as expected.
With these two new M-Club store opening, this will be in our new positioning, that we are characteristic and unique in our format for M- Club stores. With our supply chain management, we will be moving to third-tier cities as well. And also, we will continue to follow this logic to provide more localized service, so as to provide localized products to satisfy the consumers in the neighborhood and in the localities.
Thank you, Lin and Desory, for the presentation. Next, we will have our Q&A session. For those who are here attending the meeting, would you raise your hand if you have any questions? And please introduce yourself, your name, and your organization before you ask your question. The first question, please.
Management, greetings. Luo Chen of Merrill Lynch, China Consumer Analyst. Couple of questions. Just now in the presentation, you have talked about the performance and some of the strategies. In May of this year, Mr. Lin had been very honest in your sharing, and this sharing is more honest than ever I've seen in the capital markets from a management of a company. There is a lot of pressure in the market, in the industry, and also in the GDP. Some are very pessimistic about the hypermarkets.
There are a lot of digitalization and also some of the strategies that are adopted in the market and in the industry. It is impactful. For some of the strategies for mid to long-term, they seem to be very visionary. But on the other hand, for some of the short-term strategies, it is coming under pressure because of the market, because of the industry.
My question is, for the short-term, what are some of the measures that you can take so that in the second half of the year, there will be more stabilizing of the performance in sales, in profits compared to the first half? This is to ask you about the second half in the indices. For example, some of your expectations as compared to the industry. The second question is linked to the first one, and that is, the capital market is very impatient now, and for short-term performance of companies, according to the stock price, there are certain lack of positive expectation. From a shareholder, do you think you can do something for shareholders? In the PPT from Desory, we see that the cash position is rising even though some of the other indices are negative. In dividends, do you have certain consideration?
In the past year, policy had been sharing of the profits. But in the next few years, perhaps in the next short period of time, we do not have clarity about profits. Can you reward the shareholders somehow?
Well, thank you for the questions. It is true that in the beginning of the year, we have already realized the challenges for this year. Yes, indeed, I have been very honest. I think to be honest first is important. We have to face up to challenges and problems. That is the basis of our operation. Our team is also very practical. We look at the three to five years core strategy going forward, and therefore, we have invested into our long-term strategy of our self-owned brands. This year, there is a breakthrough from zero to one.
For this year, the contribution from this two overall profits and revenues is low. But overall, let's say 3 years from now, I think our competitiveness from our own self-owned brands will be a high barrier capability of ours. It is not open or doable for anybody. Also with our investment in the new format, and that is the M -lub store, that is our membership store. This is also at the highest level in the industry. We are developing that at the highest level of the industry with this new format of ours. It is possible that in the hypermarket, from 25 years ago, we won from behind. Coming to the leadership of the industry. We are very expectant that that will happen again. This is a long-term strategy of ours.
Now, just now, Mr. Luo Chen, you have said very clearly and very accurately, as management of the company, we have to look at the long-term as well as the short-term. In H1, we see that it is a negative single-digit drop in terms of our performance, but for our core business, even though it is performing well, it is also in a very challenging market. We have to build up the confidence among our investors and for our company to bring in more dynamism and energy. For our first half's work, in the second half, these points will become lines and become services. In the financial report, we only had 100 SKUs of our proprietary brands, and now we have 197, and by the end of the financial year, we will have about 300.
The categories of the products, we are already in the top 5% in terms of these products. Growing from small to big in terms of sales for our self-owned products, they become a competitive edge of ours. Give you an example. Beef, for instance. This category, if you see for some of the offline stores or superstores, they sell pork, not beef. Even they sell beef, it is local beef, China beef. We have already changed that. Chilled beef is all Australian beef, and we see that there is a doubling of revenue as well as profit for that category. In the next half, we will be extending it to not only coastal China, but the entire nation. We are restructuring the mix of our products as well.
Now for the experience center offline, let's say for a Show Bar, it is 200 customers a day, and that is minimal. On the other hand, if it brings on 200 extra traffic to the stores, our Show Bars, and if it is 100 stores, then that kind of accumulation of attracting traffic, it will be a huge traffic. That will be the cutting of the seafood or the fish, the playgrounds for children, and all these attractions, bringing in these points to line to service, as I have mentioned, attraction of traffic. Also for our ticket size, as mentioned, the traffic quantity had increased, but the ticket size had dropped. We have analyzed, it is not because of per piece price dropping. It is rather the opposite, but rather each ticket price had dropped by one product.
For our big categories with highest penetration, we will continue to strengthen those in the second half, while for our stores, SKUs are lowering, but our categories are increasing so as to satisfy more of the demand of our customers, so that ticket size will increase, and second-half ticket size will definitely increase compared to first half. Now, a third point is about profits. For the profits in the first half, there had been one-off investments, for example, for inventory, destocking, optimizing of inventory. As the business was receding, our inventory had not increased. In the second half, it will further decrease inventory. There is inventory run-out investment, one-off. Also in the last year, first half, we have not put in any marketing expenses to speak of. That has returned. This is another one-off impact as well. These are one-off, it will disappear.
In the second half, there will be an increase and improvement compared to first half in profits. Fourth point is cost. Personnel costs, for example, the savings far exceed their expectations. Personnel expenses has a momentum to it. For example, as our business and performance and revenue increases, personnel expenses at the same time will not grow in tandem because we have done that trimming. In the second half, all in all, for our core business performance, it will go back to high single-digit growth. Our fourth quarter, especially for the end of year for our RT-Mart in particular, customers do favor hypermarkets. The exponential growth there is going to be very optimistic. Particularly for the fourth quarter, it is possible that we will have double-digit growth and net profit as well.
The second half will be far better in performance than the first half. This is our short-term view for you. While we are doing all this, at the same time, we will be focusing on our long-term strategy as well. We are running a marathon as well. For ROI, for our investors in the past two years, Sun Art in the net profit, even though we have not been making a very beautiful performance in our profits in the past two years, but we have been respecting our shareholders. We have been rewarding our shareholders where we can to our maximum of our capability. We will be sharing our profits with shareholders. Overall speaking, if this year our overall performance is more or less the same as last year, our reward to our shareholders will not be lower than that of last year.
Thank you.
I am Wei Paul, Citi. I have two questions. One is a more macro question. The M-Club store, for instance. I think for our infrastructure, for our formats, I think this is very hopeful, the M-Club stores. I think the membership stores, to me, I think is very optimistic. This is a point of differentiation. My question to you, for this kind of model, what do you think are the prospects in China? Also, you mentioned just now that you are exploring different business models, et cetera. Now, if this is successful, what is your speed of extension? That is to say, if there is a transformation for the company, this is a great story of yours. How do you see it? In the past, the industry had tried different modes and you have also tried RT-Marts and smaller stores, et cetera.
So in your operation, what is your insight in this? That is a macro market. A second question is about our profits and the gross profit is very important in the first half because of certain adjustments. As you have mentioned, there have been one-off impacts and you said the second half will be more optimistic. So for the medium to longer term, without these one-off factors, what do you think? Will there be an increase in terms of gross margin compared to the past?
Well, thank you, Wei Paul, for your questions. First of all, for the channel of M-Club Store. In the past 3 years, there had been a preparation and there had been an explosion in the industry. A number of companies have tried but have not been successful in the local markets.
Now, after we have come up with this M-Club store, we see that this is a high-threshold, high-barrier operation. 800 car park spaces and the huge store size, and it is really a remodeling of some CNY 70 million -CNY 80 million in terms of just remodeling the store. So we look at the industry. Anybody with this kind of capability of size of investment, there is basically none. None around the industry. Our number one to number four stores are all remodeled on our existing stores, and we have certain insights and special skills and special sauce in doing so. So we are the best performing in this area among all the retailers in the nation. If you want to build a property as big as this, now in the market, it is almost impossible. These are very well-located stores in the respective cities.
The property location or property ownership is our very big competitive edge. Also basically, it is completely differentiated from other super stores or supermarkets. So we have even a special team to focus on the localities, and we have already built that. These are dedicated teams. So we have the organization, we have the structure for it. Also for number of members, this is a basis for this kind of operation. The stability of revenue from it is important as well. So for May, for instance, we see the stability of the membership growth, then it is a show of success of this operation mode. Also because there is huge potentials for this kind of mode of operation, therefore, in the fourth quarter, they will break even in cash flow.
For single store, M-Club store, if we break even on cash flow, then we will be very optimistic about this kind of format. As mentioned just now, the number two to four stores are already in fitting out stage. So in three years, we will have 15 such stores opened, excluding this year. So five years, we hope to pick up speed even, opening more stores. The 15 stores which are already in our plans, most of them, some 12 of them are remodeled on our existing stores. We already have some three new locations which are cooperations with the local governments and the local parties. We highly expect that this kind of format will be another profit driver for us. We use 3 years to overtake our competitors in their 25 years of experience, and we will repeat that experience.
We will focus on second-tier, third-tier cities as well, where we have over 20 stores. Then we will come back to the first-tier cities to open such stores. We will be focusing on second-tier and third-tier cities for now. Wei Paul, for your question, compared to Canada, American markets, there is Costco. From population consumption power, I think for China, with more segregation of the middle markets, that is the middle class, with the emergence of that, I am highly optimistic about this format. As for gross profit, your second question. As I have mentioned, if we are to exclude other competitors from this format, we will have to lower our gross margin. No one in the industry, I would say, has big enough a market share to completely exclude other competitors, because it is very fragmented in terms of market share.
This is our strategy as well. The gross margin may have to be adjusted as well. But at the same time, we are putting in our proprietary brands with higher quality and higher quality of raw materials as well. It is higher quality of raw materials to sell at more or less the same price, so as to grow our market share. If our market share can increase to, let us say, 10%, it is a one point in gross margin increase. In the next few years, in growing our gross margin 0.5%, we are highly confident that we will be able to achieve that. Next question.
Yes. Jefferies, Ap. I have a question concerning the other retail channels. We have also developed RT-Super and others, and I know that there are certain changes in the mid. For our RT-Super and also for other format of stores, mini stores, what are our strategies? Also for M- Club. Do we have a separate sourcing team? Did you say that just now? If so, how does it differentiate from our hypermarkets? Is there any synergy or integration with our hypermarkets? How do we see our back end? In the hypermarkets, for example, can we lower our operation cost for these stores there? Have you considered that point?
When I talked about the M- Clubs, the barrier of entry is very high. The remodeling is some CNY 17 million, CNY 18 million. But for our RT-Super, it is very low. Remodeling is but less than CNY 10 million . There are a lot of entrants into the super stores channel. In the RT-Supers, we have not differentiated with our competitors. It is difficult to do so.
But on the other hand, we will continue to develop our RT-Supers, because it will be able to increase our coverage in some of the core areas. Let us say in Jiangsu Province, we have over 100 RT-Marts. But if you want to open more RT-Marts, these hypermarkets, we will not have the space to do so. What we have done is to establish RT-Supers, the super stores, to cover these regions. We have supply chain advantage, we have organization advantage, and we also have brand name advantage. It is over 30% in the market share of certain localities in certain cities. For the super stores, it is to increase our coverage in terms of the density of our coverage. But for the smaller stores, the coverage in radius is the same as the bigger stores.
Next year, it will be some 30%. As mentioned, the future for super stores, it will be based on the radius of our online, so as to fully cover, totally cover our users, our consumers. That is the purpose of our super stores. For M-Clubs, we have dedicated operation for the sourcing team, for instance. On the other hand, for our back end, for our mid IT and platforms, they are sharing with our Sun Art operations. It doesn't mean that there is no cooperation with hypermarket. For example, our proprietary brands teams, they support hypermarkets as well as M- Club stores. It is some 20%-30% of our M-Club stores. This is for our proprietary brand names.
In developing our merchandise, because so far we only have only one M- Club store, it doesn't satisfy the MOQ for our back office. Where the quantity is larger, we will be putting some of the products to hypermarkets and also to the non-same city stores so as to start our M- Club stores and also to share in terms of synergy with our hypermarkets. We will be balancing the resources as well as personnel for hypermarkets and M- Club stores, so as to kickstart our growth in the M- Club extension.
Yiran of Bernstein Consumer. Concerning the economics of M-Club, can you give us finer details, please? For M C-lub stores, the operation model is that we want the gross profit to be between 10%-12%. It is 23%-25% for hypermarket. It is a wholesale profit margin. What is controlled and not controlled?
We want to control it to 10%-12% in gross profit margin to sustain our operation cost. In our revenue, it is RMB 260 per member. If you have 100,000 members, you would know the revenue from that. We have opened just for half a year. We are still a distance away from 10%-12% gross profit margin. For revenue of membership, it is aligned with our expectations. For the next few months, we would want to increase our gross profit margin. It is 10%-12% in terms of our gross margin target.
Any other questions? If there are no further questions from the meeting room, the questions online, please raise your questions. CICC, Shi Bi. Please ask your question.
Good morning. Thank you for this opportunity. Shi Bi of CICC with two questions. First question, we see for the retail industry, there is a strategy for SKU. There is more emphasis and there are new strategies. For Sun Art, in terms of SKU iteration, will it be faster than before? Also, how would it help with our raising of the level of our product? Second question, for strategic adjustments, we have contracted our 2B business. For the first half, for 2B business, how much had it contracted, by how much? By how much is it a part of our overall revenue, and how do you see the medium to long-term development? Thank you. These two questions, please.
Thank you for your questions. First of all, indeed, for hypermarket, it was a channel type of retailer. We basically had been collecting the tolls, if you will, for this channel. But now we are co-creating value. That is to say it will be a merchandise-driven retailer. That is the reason why we have put in a lot of efforts into our proprietary products and our own source products. In the past, products at hypermarkets were really consignment sales. Basically, we collected rents, lease revenue, basically.
But now for RT-Mart, all the fruit is 50% proprietary and vegetables is 100% proprietary, and we will continue to grow our proprietary products part. In terms of our development, our proprietary will increase, and also in our product iteration, it will also be heightened as well. Digitalization in the past was about fulfillment, really. In the first half of the financial year, we have a few new software. First of all, the software in terms of front-end and back-end stores are separated.
Back-end is a lot more digitalized, and in the future, we will have digitalized space as well in the front end of the store. Also digitalization of categories as well. In the allocation of our stores according to the customer need, there will be very accurate and refined calibration of our categorization. Also de-stocking. If you look at the 8-5-3 strategy, that is the stocking of our inventory, 20% off, 50% off, and then 70% off, 8-5-3 discount strategy. Only with these stocking can we have new products come in, and therefore, in the first half, our SKU had dropped by 10, and it will continue to decrease in terms of SKU. Now, the categories would increase. The sales for each category would increase. The iteration for categories would increase, and also for our proprietary products as well. Second question about 2B.
First of all, hypermarket emphasizes 2B. Those quality users, quality buyers. Well, there were these smaller mom-and-pop shops supply, and that has increased, because last year, these small mom-and-pop shops were closed. Now this year, it's increased. Further, for businesses close and welfare shopping, and also business that is 2B, card sales, that had been increasing in the first half of the year. The businesses really recognize hypermarket, our RT-Mart. It is positive. This kind of 2B business will still be emphasized. But there are some which are about sharing of inventory. When people buy the products, they do not know it comes from RT-Mart. So there is no user specificity. For these, where the gross profit margin is low and no specificity to RT-Mart, we will be cutting down on those.
For our 5.6 negative just now, you saw the numbers just now. We have another 2%-3% from this source, 2B. This is our strategy for 2B business.
Christine of UBS.
Greetings. Can you hear me?
Yes, we can.
I have three questions. Excuse me. The first question is about what investors very much are concerned about our near-term profits. You mentioned 1%-1.5% profit for 2026 guidance. Desory, may I ask whether this is for the short-term or the medium to long-term profit guidance? Do you have any updates, please? Related to this question is about cost. Personnel expenses and costs, as mentioned, it is relatively so high as a part of revenue. Going forward, in the next one to two years, what is the decrease for personnel costs? Do you have some very specific measures to share with us? So these two questions first. If the management can answer these two questions, I will ask the next two questions.
For our core business, that does not include our supply chain business. For our core business, compared to the same period of last year revenue, it is definitely a growth. On that basis, for our H2 net profit, it will be definitely better than the last year, same period. We will put in all our efforts to make good the gap of our H1. Even though there is market pressure, we will be putting in all our efforts to fill that gap. Just now, there was an investor question about the whole year. In terms of supply chain contraction, it is -6% to -7%, and that's for . This year, it is 3%. Overall, it is 6% to 7% in terms of impact from .
For mid to long-term, for 1% to 1.5% for 2026 profit, it is the same. We hold it the same. As mentioned just now, for three years, we will be opening M-Club stores, 15 or more of these. We are quickly accumulating the capability to do so. Three years, we will also be having 50 superstores. For this year, there will be 15 increase in the Delta region superstores, and there will be more M- Club stores, as mentioned just now. So for the new growth curve, it will be coming from these M -Club stores and superstores. That will be our second growth curve. As for our hypermarket, in optimizing our categories and also in increasing our ticket size for hypermarket, there will be 1% to 2% year-on-year growth. For three-year CAGR, it will be mid-single digit growth on top line.
As for gross profit, as mentioned by Mr. Lin just now, with our differentiation of products, gross margin will be 0.5% growth year-on-year. Also for expenses and cost, for personnel expenses, we have more breakthroughs and more plans. So 0.2% year-on-year growth, and within three years it will be back down to 10% overall. For 1% to 1.5% profit till 2026, we are unchanged. Now for personnel expenses, we have some deep discussions. In order to raise the productivity of personnel, there are a couple of prerequisites. First of all, standardization of products. In the hypermarkets in the past, there were no bar codes, for example. There's a lot of consumption of human resources. Now with our new buildup of our products, we also have standardized products as well, and that's been completed. As we standardize, we will be able to do digitalization.
With things going digitalized and online, the refilling will be more accurate. Also with computerization, there will be less human needs and more productivity. Only with digitalization and standardization can we use more tools. Example for you, now for our products, they come in frame by frame. In the future, they will be coming into these wheeled cages. These wheeled cages will be increasing our efficiency and productivity. Our SPT software, for example, as we have more stores, these caged products with wheels will be pushed right up to the racks. It will be a lot more efficient for our personnel as well.
Thank you so much for your detailed response. I have two more questions about operation. First question about the network of stores optimization. Just now, it has been mentioned for hypermarkets in your core eastern coastal region, it is 50%, I heard. Is it 50%? Outside of your core areas, you do not have any economies of scale, I would say, for your operation. For the next one to two years, what do you think would be the closing of the loss-making stores? What is your specific plan? In that process, will there be one-off expenses which will emerge? That is about operation. Another question. Just now you mentioned for your proprietary products and branded products, it is from zero to one development.
In your M-Club stores or your hypermarkets or supermarkets, there will be some sharing and integration or synergy, right? For your hypermarkets and M-Club stores, from our consumers' profiles, they are very different. My question is, how can you say that there will be sharing of products or sharing or synergy? How do you see the consumer profiles for your M-Club stores and your hypermarkets? What is the sharing? Is there any conflict, please? Can you explain?
First of all, on optimization for our core markets, we will continue to increase in speed of our stores in the delta region of the Pearl River Delta and also eastern coastal region. We will continue to expand our business. For some of these localities with few stores, we will have plans because for hypermarkets, for a lot of the cities, even though they are not performing very well, they are still the best performing in those cities. We contribute a lot to employment rate in these cities and prosperity of the cities.
Also for our contracts, there is a lot of bonding with the market. It will be more difficult to extract ourselves from those markets because of all these other values they bring us. For the closings of stores, the expenses, we already have some detailed plan. Will there be impact? Yes, there will be some impact for closing of stores, but it will be sustainable for our company. For our core areas growth, the revenue from that, I hope, will be able to cover our exit expenses. Second question, PB. For our PB team, it is a synergy of our PB between the hypermarkets and our M-Club stores. For M-Club, we have a brand, M. For hypermarket is. The names are different, and the packaging are different.
The size of packages is 2-3 x, so in terms of size differentiation. Also, for the gross margin is also different. Gross margin for M stores is less than 20%, but 30%-40% for hypermarket. For some of the products, there are synergies. But wait till we have five M-Club stores. When we have that many stores, we will be coming up with M-Club store-specific, unique products. There are some sharing with hypermarkets in terms of products. But in terms of fresh products, there is no sharing of M-Club stores with hyper stores. For fresh produce, there is no sharing as well. This is a very good balance. As we increase the number of M-Club stores, there will be more synergy with hypermarkets.
Online question, Morgan Stanley, David Fang.
Thank you for the opportunity. Bibi of Morgan Stanley. Two questions. First question, if you can share after October, and with the Mid-Autumn Festival and November, can you talk about the sale situation and also about your members' sales? You mentioned high single-digit revenue growth. Can you talk about whether this is 2B, 2C, or if you can give us final analysis.
First of all, in September and October, Mid-Autumn Festival and Golden Week, they were crossing September and October, and they were enjoined with each other. For September and October, we look at it together. It is a mid-single-digit increase compared to same period of last year. Overall speaking, for Q1 and Q2, it has narrowed. For November, 11.11 had just closed. Our performance was very good. The growth was 1.2% all channel. Offline was 6% growth, and traffic had brought on a lot of growth. It was traffic over 4,000 increase.
For November, it will be a low single-digit drop. For the trend, it is the gap, the drop, there is a decrease had been slashed. Year over year, we are stabilized. Q3, it is a net growth. Compared to last year, December, January, February, there was less traffic last year, and there will be a lot more opportunities this year. For Q4, we are very confident. Second question concerning what was it? Right. For the channels. B2C, first of all, for the entire year, it will be a high single digit or low teen growth. Ele.me, we are working very well with them. First half, it is 15%-17% of B2C channel mix. Taoxianda, it is a single-digit growth, and it is because of last year's high base.
For Taoxianda, we will give it more time because for the icon in Taobao, it has become Taobao Maicai instead. For the cooperation with that, we are still their core partner. We will wait still till there is a better optimization of their overall system within their own system and on their own website. There will be more cooperation opportunities. Their B2C growth, there will be more add-ons. Overall speaking, for B2C business, for our company and our total channel for this year, it will be 20%-25% for this year. For B2B, Q2, it has narrowed.
The drop has narrowed. Last year, with a very high base, B2B, we are at a flat situation with last year. Q4, there will be growth. Traffic-wise, there will definitely be growth in the fourth quarter. In total, for Q3, we want it to be stable. Q4, positive growth, so that our core business compared to last year would be a net growth.
There are no further questions. Anyone from the meeting room, any other questions?
For our three-year plan, 1%-1.5% net profit margin, is it at net level, ex-tax to after-tax, or EBIT level? For tax, we have a significant tax payment. Do we have any tax planning so that our overall areas in terms of their tax, we can integrate them, so that for some of our tax credit from loss, can we enjoy that to the maximum? Also for our next three years' CapEx, please. For tax, yes. You have been concerned about that. For the first half, profit tax number is based on two things. First of all, for some areas, we are loss-making, some we are profitable. The effective tax rate is already lower than our 25% normal tax rate. For the first half, the company had done a lot of tax planning.
We continue to do so. That, together with what we have mentioned just now, for more areas, we are optimizing our allocation, closing loss-making stores, and the tax optimization will also be used. For tax planning overall for our year and for our mid to long term, it is all within our planning. This 1% - 1.5% includes the tax optimization and tax planning part. CapEx. CapEx. Every year, it is about CNY 2 billion. Going forward, it will be CNY 2 billion -CNY 3 billion. Why is CapEx maintained as we open more stores? Because we have been optimizing our stores. For super stores, for example, opening a new store, it can be CNY 1 million or CNY 2 million, plus or minus. We have accumulated a lot of skills as well in opening new stores.
Thank you for your questions. We close the meeting here. Please do experience and shop at our M-Club stores. We have a small present to give you as you go out of the room. Please share this with your friends and people around you. Thank you.