by 6-month report shows a mixed bag of results and an acutely soft domestic market
Kuka Home, aka Jason Furniture (Hangzhou), one of China’s larger upholstered furniture makers, has told shareholders that it is preparing for two to three years of “battle,” according to filings with the Shanghai Stock Exchange.
Just a month after those filings were made, two of the executives leading the company’s North American sales effort, Matt Harrison and Joelle Kuhlman, packed up and left to join Man Wah subsidiary SoMo Home, formerly Southern Motion, for which Kuka Home is the largest unsecured creditor.
The pair’s departures followed by about three months the resignation of Kuka’s CFO, Gao Lin, who left June 29. He was replaced on the very same day by Liu Hailan. It also follows by about a month the departure from the company’s board of founding chairman Gu Jiangsheng, which leaves no founding family member still with the company.
Change is afoot.
The company stated in its half-year report posted Aug. 28 that it had launched a program in June called “three restructurings and two projects.” The restructurings are intended to lower the company’s break-even point, shrink or merge loss-generating businesses, cut product lines and trim headcount. And for the second half of this fiscal year, profitability and cash flow come first, the 180-page Chinese-language report states. (Claude translated the report to English.)
Harrison and Kuhlman, whose moves earlier this month to Man Wah were just a few days apart, each have assumed “executive consultancy” roles at SoMo Home. Job One will likely be to resolve a factory rent issue with Southern Motion’s primary landlord, real estate behemoth STORE Capital. Job Two is probably to stanch or stop operating losses by growing sales.
Man Wah acquired Southern Motion and Fusion Furniture from Gainline Capital Partners in December last year for $32 million, plus approximately $27 million in retired debt, pushing the price tag to approximately $59 million. Southern Motion re-branded as SoMo Home at the April market.
Precipitating the Southern bankruptcy filing in August was a $6.2 million claim for unpaid back rent for six of Southern’s eight production facilities, according to a statement from Man Wah. Making that rent claim is STORE Capital, a large American net-lease real estate investment trust, or REIT, based in Scottsdale, Arizona. Southern Motion signed a long-term lease in 2018 and faced an Aug. 31 eviction that the bankruptcy filing at least paused, according to Southern Motion’s filings.
Southern Motion’s bankruptcy filing lists Kuka Trade Co. as its largest unsecured creditor ($4.6 million). Kuka Home and Kuka Trade are the same company.
Cash flow
Returning to Kuka’s difficulties, let’s look under the hood. Net cash from operations fell 40% to approximately $98.3 million in the first half of the fiscal year ended June 30, down from about $162.6 million a year earlier, according to the filing. The company cited higher payments for goods and staff. Foreign exchange rates also took a toll, to the tune of $15.8 million, which was recorded under financial expenses in the income statement.
Operating cash was about 70% of net profit, against more than 100% a year earlier.
Revenue rose a hair (less than a percent) to approximately $1.47 billion, while net profit attributable to shareholders fell 9% to $138.2 million. With one-off items such as government subsidies excepted, net profit dropped 15% to $114.7 million. The “ouchie” in these numbers is domestic revenue. Sales in the Chinese market slumped 13% to about $680.3 million. And now sales leadership for North America, where there has been growth, has departed, for untitled consultant roles.
Harrison had been president of Kuka’s North American division since 2020. Kuhlman was a vice president of sales.
The softness at home comes at a time when margins abroad are sliding. Kuka Home reported gross margins internationally of 24%, which is down about two percentage points, compared to margins of more than 42% in China, which is actually up slightly. While Harrison and Kuhlman likely got handsome offers to jump ship, they likely also appreciated the risks to Kuka’s growth in North America, because the six-month report is rather blunt about these fundamentals.
Supply chain questions
Sales in North America did grow, but, the report warns “U.S. market delivery capability, supply-chain flexibility and the operating quality of some business units still face challenges.”
A 25% U.S. tariff on upholstered wood furniture has been eating into margin since late 2025, with a tariff increase to 30% deferred to January 2027. Kuka’s response has been to build outside China and the United States, but even that doesn’t escape the 25% tariff. Factories in Vietnam and Mexico will be joined by a budgeted $167 million facility in Indonesia that, as of June 30, was 14% completed, according to the company’s filing.
The challenges the six-month report marks establish the agenda for Kuang Guangxiong, who is beginning his third year as chairman of the company. In September 2024, Kuang replaced Gu, the founding chairman of the company, according to Chinese news source Jiemian News. Previously, Kuang was a finance manager for several divisions of Midea, a major Chinese multinational technology and home appliance manufacturer. Kuang is also a vice president of Kuka Home’s controlling shareholder, Yingfeng Group, and a director of Kuka Home.
Gu’s resignation from the board ends an era. In 2020, the Gu family sold approximately $1.1 billion in shares over four months, and in 2023, sold another $1.3 billion in shares to Yingfeng, according to Jiemian News. Thus, the family has been stepping back over a period of years, but it’s been anything but smoot. The Shanghai Stock Exchange filing states that two shareholders tied to the founding family, who hold about 14% of shares between them, had all of their shares frozen. Subsequently, the Gu family holding company, Hangzhou Deyejiajun, entered court-supervised restructuring in October 2025 after defaulting on debts, according to Chinese news source SINA.
A mixed bag
To return to Kuka’s balance sheet, cash from operations, a key metric of fiscal health, stood at about $513.3 million on June 30, up by fully a third compared to the end of last year, though $96.1 million was locked up in deposits. Also, the company owed $174.6 million in dividends mostly from last year that it declared but has not yet paid, the report states.
Filings also show that Yingfeng Group is helping out as short-term borrowing rises and advance payments from customers fall. Yingfeng subscribed to a share sale to raise $279 million in exchange for 104.3 million new shares, and $149.2 million of those funds were to be earmarked as working capital, according to a SINA report in August quoting company executives.
Yingfeng’s stock “lock” period is three years, meaning no sales for 36 months, a signal that the holding company is optimistic about Kuka’s long-term health and prospects. The sale will increase Yingfeng’s position to 37% ownership from 29%, according to the news site.
So, Kuka Home faces a difficult path forward both home and abroad, albeit for different reasons, and it is probably losing market share. The report states that overall Chinese furniture sales are down nearly 4% at retail, explaining at least part of Kuka’s own nearly 13% drop. (A month ago, MotoMotion’s own filing provided as context that the Chinese furniture industry has seen profits plummet more than 52% because of soft U.S. demand, the bite of tariffs and currency headwinds.) But, Yingfeng has underlined its confidence in the company, significantly growing its investment through new shares. And Kuka Home has fresh capital with which to work. Priorities include expanding metal frame production, R&D in smart home product research, AI and retail digital transformation, and digital enhancement of brand building, according to a separate, more recent filing.
Two caveats to all of this: All the numbers in the filings are in RMB, and Gemini is doing the currency exchange calculations here, so they are estimates. Gemini used exchange rates of 6.70 to 6.73 yuan to the dollar. Second, the six-month report includes the disclaimer that its figures are unaudited.
