MINISO Group Holding Limited (MNSO) Earnings

Management highlights

- Core Business Performance * Q2 2025 delivered overall revenue and adjusted EPS that exceeded market expectations, with the first positive same-store sales growth since Q4 2024, accelerating from Q1 growth. * Domestic same-store sales improved continuously in Q2: after a narrowed decline in Q1, domestic same-store sales turned positive year-to-date through August 20, 2025, and full-year positive growth is confirmed. Overseas same-store sales decline narrowed to a low-single digit, with Europe and North America achieving mid-high single-digit growth in Q2. * Inventory management improved significantly: the group's inventory cycle shortened to 93 days as of end-June, down from 102 days last quarter, driven by SKU structural control, whole-lifecycle product labeling, and differentiated sourcing strategies. Operating cash flow in H1 2025 was 10.1 billion yuan, with 7.5 billion yuan generated in Q2, and cash reserves remained stable at 74.7 billion yuan. - Channel Upgrade: Large-format Store (MinisoLand) Strategy * As of end-June 2025, 11 large-format MinisoLand flagship stores have been opened in core Chinese cities (Shanghai, Beijing, Guangzhou, Chengdu, Nanjing), with average per-store annualized sales reaching 400 million yuan. Top-performing stores have exceeded 100 million yuan in sales within nine months of opening. Large-format stores deliver higher per-store efficiency and profit margins than standard stores, and serve as test beds for new, limited-edition products before rollout to standard stores. * As of Q2 2025, large-format stores account for 5% of domestic store count, contribute a disproportionate share of domestic sales, and the contribution share continues to rise. The group has developed a multi-format store portfolio to fit different market environments, moving beyond reliance on small-format stores. * Overseas (especially the U.S.), new large-format stores deliver 1.5x the store count of older formats and nearly 30% higher efficiency, meeting the needs of consumers of all ages and becoming a destination for American family fashion lifestyle shopping. * Full-year 2025 plans call for a net increase of 100-150 domestic stores, concentrated in large-format and flagship formats, while the count of standard stores will continue to decline. Overseas plans to add more than 500 full-year stores, with the share of direct-owned stores revised down from 40% to 35% to allocate capital more efficiently.

Guidance

- Q3 2025 revenue is expected to grow 25% to 28% year-over-year, representing a meaningful acceleration from first half growth. Adjusted net margin is expected to continue improving. - Full-year 2025 group revenue is expected to grow more than 25% year-over-year, an upward revision from the prior guidance of more than 22.8% growth. - Full-year 2025 adjusted net profit is guided between 36.5 billion yuan and 38.5 billion yuan. - TopToy full-year 2025 revenue growth is expected to reach 70% to 80% year-over-year, with a net increase of 50-60 stores. - Domestic full-year 2025 same-store sales are confirmed to achieve positive year-over-year growth. - The group will maintain a policy of returning 50% of adjusted annual net profit to shareholders via dividends, and will continue dynamic share repurchases.

Segment performance

1. Overall Group: Q2 2025 total revenue reached 49.7 billion yuan, up 23% year-over-year; first half 2025 total revenue reached 93.9 billion yuan, up 21% year-over-year. Adjusted Q2 net profit was 6.9 billion yuan, with an adjusted net margin of 13.9%. Gross margin was 44.3% in Q2, up 0.4% year-over-year. 2. Mingchao Youping: Q2 2025 revenue was 45.6 billion yuan, up 20% year-over-year, accounting for 91.75% of total group revenue. Domestic revenue was 26.2 billion yuan, up 14% year-over-year (52.7% of total group revenue); overseas revenue was 19.4 billion yuan, up 29% year-over-year (39.03% of total group revenue). As of H1 2025, 5% of domestic large-format stores contributed a disproportionate share of total domestic sales, with the share growing. 3. TopToy: Q2 2025 revenue was 4 billion yuan, up 87% year-over-year, accounting for 8.05% of total group revenue. It maintained high-speed growth that exceeded prior guidance, and its gross margin improved significantly year-over-year in Q2. Regional revenue contribution (H1 2025): Domestic China accounted for 62% of total group revenue (down from 65% in 2024 H1); overseas markets accounted for 38% of total group revenue (up from 35% in 2024 H1).

Risks & headwinds

- Latin American markets saw a year-over-year revenue decline in H1 2025, driven by local partner inventory adjustments and significant exchange rate fluctuations in Mexico that impacted import costs, though underlying GMV growth remains positive. - Small markets like Hong Kong face headwinds from reduced local customer traffic due to cross-border travel to mainland China and high retail rents, though their contribution to total revenue is very small. - Ongoing U.S. tariff policy creates cost pressure, though the group has implemented mitigations to limit profit impact. - Lower-margin new domestic businesses (warehouse, e-commerce) put some downward pressure on overall group profit margin, though the impact is currently controllable. - The shift to higher direct-owned store contribution overseas temporarily reduces near-term profit margin, though this impact is expected to weaken in H2 2025 as sales scale.

Analyst Q&A

• Q: What operational changes has the U.S. business implemented, what is the H2 2025 focus, what is the 2025 store opening target, and when will profit improve?

  A: The U.S. business has shifted focus from store count growth to opening high-quality large-format stores, added a professional localized operations and logistics management team, and adjusted the expansion pace. The 2025 target is 80 new stores, far lower than last year, but all new stores will be large-format which deliver higher efficiency than older formats. U.S. same-store sales turned positive in Q2 after first half pressure, and growth is expected to accelerate in Q3; door-level profit margin in H1 was flat year-over-year, with improvement expected as scale grows.

• Q: What is the updated strategy for self-operated artist IP, what are current and target sales contributions, and why did the company shift from only working with large global IPs?

  A: The company has adopted a dual IP strategy, adding a focus on signing and developing domestic Chinese self-operated artist IP alongside existing international licensed IP. Currently 9 artist IPs have been signed, with the first flagship IP UOJANG expected to generate 40 million yuan in sales this year and over 1 billion yuan next year. Acquired IP Luoming grew from 100 million yuan in global sales last year to an expected 250 million yuan this year. The shift leverages the fast growth of China's domestic IP market, builds on the company's unique full-channel platform capability to develop small emerging artists at low cost, and aligns with the trend of rising Chinese cultural IP demand.

• Q: Which overseas markets are outperforming/underperforming expectations this year, and what measures are taken for underperforming markets?

  A: The U.S., Canada, and Australia are outperforming, with Canada delivering triple-digit sales growth and Australia seeing strong performance after a strategic reset. Latin America is underperforming due to local partner inventory adjustments and exchange rate volatility, but inventory adjustments are now complete and underlying GMV is growing. Small markets like Hong Kong face headwinds from low customer traffic and high rents but make minimal total revenue contribution. Overall, the overseas trend is upward and accelerating into Q3.

• Q: How has the U.S. adjusted to new tariff policies, and what impact have tariffs had on profit and sales?

  A: Tariffs have not had a material impact on U.S. profit. The company pre-built inventory ahead of tariff changes, shifted to a higher share of local sourcing/production in the U.S. to adapt to local consumer demand, and implemented reasonable tax planning to offset cost pressures.