Chanson's Profits Rise, But EPS Plummets Amidst US Struggles

URUMQI, China – April 20, 2026 – Chanson International Holding (Nasdaq: CHSN) announced its fiscal year 2025 financial results, presenting a complex and divergent narrative for the international bakery chain. While the company celebrated a 14.2% increase in gross profit and expanded margins, a closer look reveals stagnant overall revenue, mounting operational costs, and a staggering 99% collapse in earnings per share that has left investors questioning the true financial health of the company.

For the fiscal year ending December 31, 2025, Chanson reported total revenue of $18.3 million, a marginal 0.2% increase from the prior year. Gross profit climbed to $8.2 million, pushing the gross margin to an impressive 45.0% from 39.5% in 2024. However, this top-line improvement was overshadowed by a sharp decline in net income to $0.2 million, down from $0.8 million in the previous year.

"In fiscal year 2025, we delivered revenue of approximately $18.3 million and improved profitability," said Mr. Gang Li, Chairman and CEO, in the company's press release. He attributed the performance to marketing, cost control, and improved inventory management. Yet, the headline numbers mask deep operational shifts and financial maneuvers that define the company's current state.

The EPS Enigma: A Story of Shares and Splits

The most alarming figure for shareholders is the dramatic fall in basic and diluted earnings per share (EPS), which plummeted from $3.68 in 2024 to just $0.03 in 2025. This precipitous drop is not solely a reflection of operational performance but a direct consequence of significant changes to the company's share structure.

The primary driver was a massive increase in the weighted average number of shares outstanding, which ballooned from approximately 205,000 to over 5.3 million year-over-year. This dilution stems from two key corporate actions. First, the company executed a 1-for-80 reverse stock split on August 18, 2025, a move often employed by companies to boost their stock price to meet Nasdaq's minimum bid price requirement. While this action consolidates shares, it requires historical EPS figures to be restated for comparability.

Second, and more impactful to the share count, Chanson engaged in significant capital raising. The company's financial statements show net cash from financing activities soared to $39.1 million in 2025, largely from the issuance of new equity securities. These new shares, sold to fund operations and expansion, spread the company's modest net income across a much larger share base, mathematically crushing the per-share earnings metric. For investors, this raises critical questions about shareholder value and the true cost of the company's financing strategies.

A Tale of Two Markets

Chanson's 2025 performance reveals a stark contrast between its operations in China and the United States. The company's strategy appears to be yielding different results in each region, painting a picture of growth and adaptation in one market while facing significant headwinds in the other.

In China, where Chanson operates 63 stores, revenue grew by a modest 1.3% to $16.4 million. This growth was not driven by its core bakery products, which saw sales dip 1.1% amid a "challenging economic environment" and cautious consumer spending. Instead, the success came from a strategic pivot towards seasonal products. Revenue from this "other products" category surged by an impressive 52.8% to $1.5 million, an achievement the company credits to its new Product Planning and Promotion Department. However, this success was tempered by a 35.2% decline in beverage revenue, a casualty of intense price competition from new coffee chains entering the Xinjiang region.

Meanwhile, the American market proved to be a significant drag on performance. Revenue from the three U.S. stores in New York City fell by 8.4% to $1.9 million. The decline was driven by a staggering 50.4% collapse in bakery product sales and a 47.6% drop in eat-in services. These figures are a direct result of store closures and suspensions; the Chanson 3rd Ave location suspended all operations in January 2025, and the 23rd Street location suspended its bakery business in April 2025, citing intense local competition.

There was a small bright spot in the U.S. operations, as beverage revenue increased by 17.6% to $1.5 million. This was attributed to the launch of new cocktail products and performance-enhancing measures like extended hours at the remaining Chanson Broadway location, leading to more private event bookings.

The Soaring Cost of Growth

While gross margins improved, Chanson's path to profitability was obstructed by a substantial increase in operating expenses, which climbed by over 31% to $10.1 million. This surge in costs effectively erased the gains made in gross profit, leading to a loss from operations of $1.9 million.

Selling expenses bore the brunt of the increase, rising 31.6% to $6.3 million. This was primarily attributed to the costs associated with expansion in China, where the company opened nine new stores during the fiscal year. Higher rental expenses, renovation costs, and increased salaries for new sales staff were the main components of this increase.

General and administrative expenses also jumped 29.6% to $3.8 million. This was driven by two significant factors: a $0.5 million allowance for credit losses and a rise in audit, legal, and professional service fees related to the company's equity issuances during the year. These expenses highlight that the cost of raising capital and managing financial risks is becoming a more significant factor in Chanson's bottom line. The dual pressures of funding expansion in one market while managing decline in another are clearly straining the company's operational efficiency and challenging the sustainability of its current growth model.