(Yicai) April 22 -- Freshippo, the Chinese grocery chain owned by Alibaba Group Holdings, reportedly became profitable for the first time in the fiscal year that ended March 31.

The turnaround at Freshippo, also known as Hema Fresh, is inseparable from a series of reforms carried out by Chief Executive Yan Xiaolei, who was promoted from chief financial officer in March last year, technology and financial media outlet 36Kr reported on April 19, citing analysts.

According to the report, in a memo circulated inside the company at the end of last year she said it would concentrate on two store formats -- large stores to quickly replicate proven models, and Hema Neighbourhood supermarkets to deepen community services -- thereby leveraging their complementary strengths.

Shanghai‑based Freshippo was profitable for nine consecutive months last year, Yan also said in the memo, per the report.

Moreover, Freshippo went through a leadership shakeup in the past year, the report said. The business is now organized into four divisions -- offline operations, online operations, procurement, and logistics and supply chain -- with the head of each reporting directly to Yan.

Alibaba has never disclosed Freshippo's earnings, but according to the Hangzhou-based e-commerce giant’s financial report of May last year, Freshippo's gross merchandise value exceeded CNY59 billion (USD8.1 billion), with online transactions accounting for more than 63 percent of that.

Early last month, Freshippo internally circulated its strategic plan for the fiscal year 2025, continuing to focus on expanding the Freshippo format, with plans to open nearly 100 new stores and enter dozens of new cities, the report said.

Freshippo opened 72 new shops, bringing its total number of outlets to 430 to surpass Walmart China, Yan noted in the memo, adding that besides the Yangtze River Delta and Pearl River Delta regions, it has expanded into China’s second- and third-tier cities as well as northern areas. 

Freshippo will reach a GMV of CNY100 billion (USD13.7 billion) and become China's top retailer, she added.

Nevertheless, the business faces intense competition from Sam's Club, Aldi, and other foreign supermarkets, as well as domestic rivals such as Yonghui Superstores, Pangdonglai, Dingdong Maicai, and Meituan's Little Elephant Supermarket.

Editor: Martin Kadiev