Net profit plunges 26%, 400 stores forced to exit — 'sleep leader' DeRUCCI (慕思) clings to Huawei (华为). What is it panicking about?

Financial shock

It has been reported that mattress and sleep-products leader DeRUCCI (慕思) suffered a 26% drop in net profit and has been forced to close roughly 400 retail outlets as foot traffic and margins deteriorate. The numbers signal more than a one-off slowdown; they point to over‑reliance on an expansive offline store network in a Chinese consumer market that is cooling and becoming more competitive. How do you fix falling sales when your brand lives on the shop floor?

Why Huawei?

Industry chatter says DeRUCCI is leaning on Huawei (华为) — reportedly seeking technology, retail and supply‑chain support to stabilise sales and rebuild margins. For Western readers: Huawei is not just a telecoms giant but an ecosystem player in cloud, smart home devices and enterprise services across China. Partnering with Huawei could mean access to smart‑mattress integration, in‑store digitalisation or distribution channels. It has been reported that DeRUCCI hopes association with Huawei’s trusted brand will reassure cautious consumers.

Huawei’s muscle — and unusual workforce practices

Huawei’s 2025 annual report shows why other firms might want to hitch a ride: group revenue reached 8809亿元人民币 and net profit 680亿元人民币, while R&D spending surged to 1923亿元人民币 — about 21.8% of revenue. Chair Meng Wanzhou said operations were “steady” amid global pressures. It has also been reported — by bloggers and former employees — that Huawei uses employment mechanisms like an N+1 severance on voluntary departures and a practice of resetting tenure after eight years to avoid automatic long‑term contracts; some ex‑employees claim retained ESOP arrangements can produce lasting dividends. Those internal incentives help Huawei retain talent as it doubles down on self‑reliance under US trade restrictions and sanctions.

Outlook

DeRUCCI’s pivot is pragmatic but risky. A tech partner can provide tools and credibility, but it won’t cure structural issues such as overcapacity and changing consumer tastes overnight. Can a tie‑up with a cash‑rich, R&D‑heavy Huawei act as life support — or is it merely a short‑term bandage for a retail problem that needs deeper strategy? For now, investors and shoppers will be watching whether technology and branding alone can revive an ailing sleep empire.