MINISO Group Holding Limited Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Business Segment Performance: Q2 overall GMV grew by 21%, revenue grew by 23.1%, achieving the first positive same-store sales growth in 4 consecutive quarters. MINISO brand Q2 revenue was RMB 4.56 billion, grew by 20%; MINISO overseas revenue was RMB 1.94 billion, grew by 29%; TOP TOY Q2 revenue was RMB 400 million, grew by 87%.
• Large Store Strategy: As of end-June, MINISO has deployed 11 MINISO LAND stores nationwide, covering cities like Shanghai, Beijing, Guangzhou and Chengdu. 11 MINISO LAND stores achieved an average monthly efficiency of several million. TOP TOY opened stores in luxury malls like SPACE store in Nanjing Deji.
• IP Strategy: Identified potential pop toy artist IPs to build MINISO's pop toy artist IP landscape. Contracted 9 pop toy artists, and [Yu Yu Chan] IP product was successfully launched, marking a solid step in proprietary IP. Leveraged IP to enhance integrated marketing and operational capacity, with IP events driving traffic to stores.

Segment Performance

• MINISO mainland China: Q2 revenue grew by 13.6%. China's total retail sales of consumer goods grew by 5.4% during the same period, and online retail sales of physical goods grew by 6.3%. Achieved net addition of 30 MINISO stores in China, including 7 MINISO LANDs.
• MINISO overseas: Q2 achieved RMB 1.9 billion revenue, grew by 28.6%. U.S. revenue growth was more than 80%, with 37 net new stores added, and U.S. same-store sales achieved mid-single-digit positive growth in Q2.
• TOP TOY: Q2 achieved 87% Y-o-Y growth in revenue, with a net addition of 30 stores during Q2, reaching 293 in total. 283 are in China and 10 are in overseas markets. Same-store sales grew in low-single digit in Q2, with GP margin improved significantly.

Guidance

• Full year 2025, expect GMV more than RMB 38 billion and revenue more than RMB 21 billion.
• H2 revenue growth is expected to be further accelerated, with adjusted operating profit to have double-digit growth and adjusted operating margin to continue improving.
• Q3 MINISO mainland China same-store performance further accelerated compared with Q2, and year-to-date monthly MINISO same-store growth has already turned positive in H2.
• For 2025, adjusted operating net profit is expected to be RMB 3.65 billion to RMB 3.85 billion, up from RMB 3.4 billion in the same period of last year.

Risks

• Overseas markets may be affected by exchange rate fluctuations, local economic conditions, and intense competition.
• Tariff changes in the U.S. could potentially impact margins and sales if not properly managed.

Question and Answer

Q: Congratulations on the company for the performance exceed expectation. I have a question regarding the U.S. business. In Q2, I see sales go beyond expectation and the fees control has been quite managed well. You also mentioned about the large store and product adjustment. Is it possible for Jack to -- you to share with us? For your new team in U.S. market, what are those things we do right to have such good growth? What would be the key strategies in H2 in the U.S. market, especially for the profit margin, no matter for H2 or for the full year, what would be the profit for the self-operated -- directly operated stores in the U.S.?

A: For U.S. business improvement, it may come from the following factors. First of all, we continue to improve the quality of the stores, only open large stores and leveraging our multi-category advantage. Secondly, we're going to have a centralized store opening. Around 2 weeks ago, in Austin, Texas, we opened 3 stores together, which actually released the brand perception. So first of all, we opened large stores. And secondly, we will be concentrated in one region to open more stores rather than have fragmented store openings as what we did past. Thirdly, we're also working on the trendy toys, for example, for Sanrio and Disney. And in the past, we also have the blind box and the figures, which are also showing great momentum of the growth. And fourthly, we also have the localized team for MINISO, our U.S. CEO is a localized figure with more than 20 years working experience in retail market. We started to become our U.S. CEO starting from last year. So large store, concentrated new store opening and product power improvement and localized team would be the 4 key pillar to help us to improve our U.S. operations. Looking into H2 of this year, our key is to continue to build our same-store improvement. We now have enough store account. We have to make sure the store performance or each store performance need to be improved. But still, we need to have the right product, especially for 20 toys. We opened the large stores. Each store covers 600 to 800 square meters. We use 100 of that square meters to become the trendy store dedicated area in order to continue to engage the young people to come to our stores and making sure our stores become more appealing in the local market. Our second strategy is the holiday strategy, especially during the weekend and holidays, we make sure we have the right and comprehensive product and operations. Thirdly, we need to have the refined operation and also right scheduling of the logistics. We actually identified the localized team and very professional. They are good at refined operation. So those are the 3 strategies we have in the U.S. We believe in the next 6 months, we're going to continue with those strategies. In H2, I have to mention to all of you, the trendy toy has been growing very fast in U.S. We have every confidence that in the near future, we're going to have the new sales target, especially coming from the [indiscernible] and the plush product. For U.S., the net addition we have for this year would be 80, 8-0, much lower than what we have last year, but we hope we can continue to improve the quality and efficiency of the larger stores. Some of the new store efficiency is much higher than the existing stores. So that's the reason. The upper limit of the new store has been further elevated, where for new store opening strategies, we'd like to have concentrated all the regional stores. For example, in Texas, we have 3 stores being opened at the same time then to help to polish our brand perception. It's also good for marketing. And all of a sudden, it can make sure the brand have explosive exposure in one region. Regarding the U.S. market, I will ask Eason to walk you through the same-store performance.

Q: My first question that is regarding mainland China business. Same-store performance in mainland China has already been improved. I would like to know what would be the driver for the same-store performance improvement in mainland China? Is it because of the volume? Or is it because of the APS? And my second question, I do notice MINISO also have some O2O. For example, in taobao.com, I also see your stores. So for your same-store performance improvement, is it because it's benefited from the e-commerce platform promotionals? Is it because you actually launched more activations on O2O channel? This is my first question. My second question regarding the overseas business. Is it possible for the management team to help me to break down the sales contribution from each region? For example, U.S., Europe and Asia, what about the sales contribution to the total sales? Then what would be our future growth strategy? As the company has already mentioned about U.S., we are also quite interested to know other parts of the overseas market. My third question is regarding TOP TOY. I really would like to know your overseas TOP TOY growth. How many overseas stores do we have? What would be our strategy there? Because TOP TOY is also for trendy toys. If the overseas market MINISO and TOP TOY, the 2 brands, how we're going to differentiate the 2 in the overseas market?

A: For mainland China same-store performance improvement, I think we do have a very special initiative. We have an initiative called the Chief Growth Officer that has been responsible for the store performance growth. We actually have the product center to take the lead, leveraging this special task force to well-connect product, operations, digital center and also our stores and product have seamless operations to improve our operation. And secondly, we also improved the product as product and commercial and operation has been well connected. Our execution efficiency has been further improved. Now we have a special taskforce in charge of that. It's already go beyond the departments. So the popular products could be shipped to the store as quickly as possible. Secondly, we do have the popular hits dedicated area. For some of our stores, they will also be optimized from small to large by improving the GFA with more products on the shelf, and we will also be able to have a popular hits area. My third point, we actually leverage the traffic advantage in festival seasons. We find out the traffic during the holidays has been particularly high, especially for family trips. The mom and the kids can all purchase what they like within MINISO. This is indeed the thing we did. So first of all, we have a well-connected mechanism for product and operation. And also, we continue to optimize our product. That's the reason we will be able to improve our mainland China same-store performance in H1 of this year. Regarding the overseas sales contribution breakdown, we have business in more than 100 countries and regions worldwide. For TOP TOY overseas growth, it's still going to be more than 100 net store additions, focusing on high-quality growth. For differentiation between MINISO and TOP TOY in overseas market, TOP TOY is a professional trendy toy brand targeting the primer market, while MINISO is an all-in-one store covering both lifestyle and trendy products with a more user-friendly price.