Under the drive of overseas expansion, multiple indicators in Q4 have reached historic highs, with MNSO's stock price soaring by nearly 14%. | Earnings Report

With impressive performance in overseas expansion, MNSO achieved historical highs in key financial indicators such as revenue, net profit, and gross profit in the last quarter.

On Tuesday, March 12th, MNSO released its performance for the second fiscal quarter ending in December (Q4). The financial report revealed that thanks to the rapid growth of overseas business, the company's revenue in the last quarter reached 3.84 billion RMB, a year-on-year increase of 54%, setting a new record for quarterly revenue; the gross profit margin reached 43.1%, a year-on-year increase of 3.1 percentage points, also hitting a historical high; the adjusted net profit exceeded 660 million RMB for the first time (Non-IFRS), a 77% year-on-year increase, also marking a historical high.

By the end of the last quarter, the company had 2,487 overseas stores, with a net increase of 372 overseas stores in 2023, and the expansion rate is expected to be faster than domestic stores.

Looking at the full year of 2023, MNSO's revenue is expected to exceed 13.8 billion RMB, a nearly 40% year-on-year increase; the gross profit margin is projected to reach 41.2%, a 6.3 percentage point increase year-on-year; the adjusted net profit is estimated to reach 2.36 billion RMB, achieving a 110% year-on-year growth.

The company also announced a special cash dividend of $0.0725 per ordinary share, totaling approximately 650 million RMB, accounting for 50% of the adjusted net profit in the second half of last year.

As of the time of writing, MNSO's Hong Kong stock surged by nearly 14%.

Impressively, MNSO has set a new record for overseas single-quarter revenue, showcasing outstanding performance in its overseas expansion among many low-cost retail companies.

By the end of the last quarter, the company had a total of 6,413 global stores, including 3,926 domestic stores, with a net increase of 601 domestic stores in 2023; and 2,487 overseas stores, with a net increase of 372 overseas stores in 2023. MNSO expects to maintain a net increase of 350-450 domestic stores in 2024 and a net increase of 550-650 overseas stores.

In terms of revenue, in the last quarter, MNSO's domestic revenue reached 2.35 billion RMB, a 56% year-on-year increase, with the offline sales GMV of MNSO's domestic business growing by approximately 66% year-on-year. The overseas business revenue was nearly 1.5 billion RMB, a 51% year-on-year increase, once again breaking the record for overseas business single-quarter revenue. In regards to this quarter's performance, Mr. Ye Guofu, CEO of MNSO, stated:

"We have concluded the extraordinary journey of 2023 with another strong quarter. All key performance indicators, including revenue, gross profit margin, and net profit, have once again reached historic highs. Revenue increased by 54% year-on-year to 3.84 billion RMB, with growth accelerating compared to the first three quarters of 2023, mainly driven by a 32% increase in same-store sales in China and a 19% increase in overseas same-store sales. Revenue from overseas directly operated markets has grown by over 80% for three consecutive quarters, contributing more than half of the overseas business revenue for the first time in the December quarter.

In 2023, our global store network saw a net addition of over 1,000 stores, marking our fastest pace of store openings to date. Despite potential short-term uncertainties in global business expansion, we remain optimistic about the long-term prospects of MNSO's globalization and are committed to diversifying operational risks in overseas markets. As shared during our Investor Day, our current goal is to open a net of 900-1,100 new stores annually from 2024 to 2028, while maintaining a compound annual growth rate of revenue of no less than 20%. This optimism stems from our long-term confidence in China's economic development, the unchanged original intention of offline retail industry, and the perseverance in global layout. Moving forward, we will continue to focus on our long-term strategic goals, creating happiness for global consumers and becoming the world's leading IP design retail group."

Becoming a Global "Super Brand"

Last quarter, MNSO's flagship store in the UK officially opened in London's prestigious shopping district, Oxford Street, covering nearly 3,000 square feet. With pink as the main theme and incorporating elements of British cities in its design, it is MNSO's largest store in the UK to date, breaking the European store record on its opening day.

While MNSO is known for its affordability domestically, its overseas stores often stand alongside luxury brand stores. Not only on Oxford Street in London, but also in iconic overseas shopping districts like Times Square in New York, you can find large, stylish MNSO flagship stores.

Mr. Ye Guofu once said:

"Only super flagship stores can showcase the strength of a brand, and large stores create great performance."

These overseas flagship stores typically have an area of over 278 square meters, offering over 2,500 SKUs, with a focus on well-known IP collaborations such as Disney and Sanrio. Although the prices are similar to those in China, due to exchange rate factors, the actual selling prices are three times or even higher than those in China.

The success of MNSO's international expansion is not only due to seizing the opportunity of earlier market recovery overseas than domestically but also leveraging the advantages of the supply chain and IP resources to provide cost-effective, fun, and interesting products. The company stated in its financial report that MNSO introduces approximately 930 SKUs across all channels each month, offering consumers a wide range of around 9,500 core SKUs in eleven categories, including home furnishings, small electronics, textiles, bags and accessories, beauty tools, and toys. By reducing costs through large-scale procurement and increasing profit margins through joint products, the company further unleashes the potential of "interest consumption."