MINISO Group Announces December Quarter 2021 Results

GUANGZHOU, China, March 3, 2022 /PRNewswire/ -- MINISO Group Holding Limited (NYSE: MNSO) ("MINISO", "MINISO Group" or the "Company"), a fast-growing global value retailer offering a variety of design-led lifestyle products, today announced its unaudited financial results for the second quarter of fiscal year 2022 ended December 31, 2021.

Financial Highlights for the Second Quarter of Fiscal Year 2022 ended December 31, 2021

• Revenue was RMB2,772.8 million (US$435.1 million), exceeding the high end of the Company's guidance range of RMB2,500 million to RMB2,700 million, representing an increase of 20.7% year over year and 4.5% quarter over quarter.
• Gross profit was RMB862.9 million (US$135.4 million), representing an increase of 34.2% year over year and 18.5% quarter over quarter. Gross margin was 31.1%, compared to 28.0% in the same period of 2020 and 27.4% in the previous quarter.
• Operating profit was RMB255.4 million (US$40.1 million), compared to RMB54.3 million in the same period of 2020 and RMB213.5 million in the previous quarter.
• Profit for the period was RMB184.1 million (US$28.9 million), compared to RMB20.8 million in the same period of 2020 and RMB154.5 million in the previous quarter.
• Adjusted net profit^[1] was RMB214.4 million (US$33.6 million), representing an increase of 155.4% year over year and 16.4% quarter over quarter. Adjusted net margin^[1] was 7.7%, compared to 3.7% in the same period of 2020 and 6.9% in the previous quarter.

Operational Highlights for the Second Quarter of Fiscal Year 2022 ended December 31, 2021

• Number of MINISO stores increased to 5,045 as of December 31, 2021, representing a quarterly net addition of 174 stores, compared to a quarterly net addition of 184 stores in the same period of 2020 and 122 stores in the previous quarter, respectively.
• Number of MINISO stores in China increased to 3,168 as of December 31, 2021, representing a quarterly net addition of 133 stores, compared to a quarterly net addition of 135 stores in the same period of 2020 and 96 stores in the previous quarter, respectively.
• Number of MINISO stores in overseas markets increased to 1,877 as of December 31, 2021, representing a quarterly net addition of 41 stores, compared to a quarterly net addition of 49 stores in same period of 2020 and 26 stores in the previous quarter, respectively.
• Number of TOP TOY's offline stores increased to 89 as of December 31, 2021, representing a quarterly net addition of 17 stores, compared to a quarterly net addition of 39 stores in the previous quarter.

The following table provides a breakdown of the number of MINISO and TOPTOY stores as well as their year-over-year and quarter-over-quarter changes of the relevant dates:

Mr. Guofu Ye, Founder, Chairman, and Chief Executive Officer of MINISO, commented, "We delivered another solid quarter and strengthened our leading position in industry. During calendar year 2021, we executed our strategy well, adding 615 stores to our global store network and increasing revenue by 34% year over year."

"Looking ahead in the post-pandemic era, we are more capable and highly confident in constantly delivering long-term values to consumers and investors with our constant offering of products that are more appealing, useful and playful." Mr. Ye continued.

Mr. Saiyin Zhang, Chief Financial Officer and Executive Vice President of MINISO, commented, "We are encouraged by our financial performance in both top line and bottom line in December quarter, adjusted net profit of MINISO reached RMB214 million, increased by 155% year over year, adjusted net margin recovered to 7.7%, compared to 3.7% in the same period in 2020."

"The latest waves of the pandemic in China are still evolving. We currently estimate that our sales will continue to be pressured by the lingering effects of the pandemic in the short term. However, we have reasonable faith in the rapid recovery of our business in China and overseas market in the second half of calendar year 2022, we will continue monitoring the pandemic recovery and rapidly adapt our expansion plan as necessary to embrace a full recovery." Mr. Zhang concluded.

Recent Developments

Impact of COVID-19

The resurgences of the COVID-19 pandemic continued to impact the Company's operations and results in the quarter ended December 31, 2021.

In China, sales growth continued to be challenged by multiple waves of pandemic from late October across the country. The Company estimates that the GMV loss from those influenced stores was comparable to the loss in the previous quarter. Going into the quarter ending March 31, 2022, the Company currently expects the effects of COVID-19 to persist and local governments' zero-tolerance policy to maintain relative strict public health measures in some cities. In overseas markets, 76 stores had not resumed operations as of December 31, 2021, compared to 157 such stores as of September 30, 2021. Although the Company has been observing marginal sales improvements in overseas markets in the past several quarters, it remains cautious in its outlook in terms of sales and store expansion.

Unaudited Financial Results for the Second Quarter of Fiscal Year 2022 ended December 31, 2021

Revenue was RMB2,772.8 million (US$435.1 million), representing an increase of 20.7% year over year, primarily driven by the growth of the Company's domestic operations and the recovery of its international operations.

Revenue generated from domestic operations was RMB2,055.5 million (US$322.6 million), increasing by 12.0% year over year. Revenue generated from domestic operations of the MINISO brand was RMB1,876.7 million (US$294.5 million), increasing by 6.4% year over year. Revenue generated from the TOP TOY brand was RMB131.1 million (US$20.6 million), compared to RMB2.6 million in the same period of 2020.

Revenue generated from international operations was RMB717.3 million (US$112.6 million), representing an increase of 54.9% year over year, which reflects an improved recovery of sales in international markets.

Revenue per MINISO store, which is calculated by dividing the revenue of the MINISO brand by the average number of MINISO stores of the relevant period, was RMB523.2 thousand (US$82.1 thousand), representing a year-over-year increase of 3.9%. Revenue per MINISO store for the Company's domestic operations decreased by 7.4% year over year, reflecting the impact of the pandemic and the dilution effect of the newly added stores in lower-tier cities in China in this quarter, while revenue per MINISO store for our international operations increased by 43.7% year over year.

Cost of sales was RMB1,909.9 million (US$299.7 million), representing an increase of 15.4% year over year.

Gross profit was RMB862.9 million (US$135.4 million), representing an increase of 34.2% year over year.

Gross margin was 31.1%, compared to 28.0% in the same period of 2020. The year-over-year increase was primarily due to 1) revenue contribution of international operations increased from 20.1% in the same period of 2020 to 25.9% in this quarter, typically international operations have higher gross margin than domestic operations, and 2) our expanding co-branded IP product offering and its associated higher gross margin in this quarter.

Other income was RMB2.5 million (US$0.4 million), compared to RMB7.8 million in the same period of 2020. The year-over-year decrease was primarily due to a decrease in government grants received by the Company in this quarter.

Selling and distribution expenses were RMB384.8 million (US$60.4 million), representing an increase of 12.9% year over year. Excluding share-based compensation expenses, selling and distribution expenses were RMB370.7 million (US$58.2 million), representing an increase of 21.0% year over year. The year-over-year increase was primarily attributable to increased personnel-related expenses, licensing expenses and marketing expenses that were in line with the year-over-year revenue growth and brand awareness improvement for both MINISO and TOP TOY.

General and administrative expenses were RMB221.4 million (US$34.7 million), representing an increase of 17.1% year over year. Excluding share-based compensation expenses, general and administrative expenses were RMB214.7 million (US$33.7 million), representing an increase of 34.0% year over year. The year-over-year increase was primarily due to increased depreciation and amortization expenses of land use right related to the Company's headquarter building project, and to a lesser extent, increased personnel-related expense and professional service fees.

Other net income was RMB12.3 million (US$1.9 million), compared to other net loss of RMB55.1 million in the same period of 2020. The Company recorded other net loss in the same period of 2020 mainly due to an appreciation of Renminbi against U.S. dollar during that period, which resulted in foreign exchange losses. Increase in investment income also contributed to the change from net loss to net income in this quarter ended December 31, 2021.

Operating profit was RMB255.4 million (US$40.1 million), compared to RMB54.3 million in the same period of 2020.

Profit for the period was RMB184.1 million (US$28.9 million), compared to RMB20.8 million in the same period of 2020.

Adjusted net profit, which represents profit for the period excluding (i) equity-settled share-based payment expenses, and (ii) impairment loss on non-current assets, was RMB214.4 million (US$33.6 million), representing an increase of 155.4% year over year.

Adjusted net margin was 7.7%, compared to 3.7% in the same period of 2020.

Basic and diluted earnings per American Depositary Share ("ADS") were RMB0.60 (US$0.08) in the quarter ended December 31, 2021, compared to basic and diluted earnings per ADS of RMB0.08 in the same period of 2020. Each ADS represents four of the Company's Class A ordinary shares.

Adjusted basic and diluted earnings per ADS were RMB0.72 (US$0.12) in the quarter ended December 31, 2021, compared to adjusted basic and diluted earnings per ADS of RMB0.28 in the same period of 2020.

See the sections entitled "Non-IFRS Financial Measures" and "Reconciliation of Non-IFRS Financial Measures" in this press release for more information about adjusted net profit, adjusted net margin, and adjusted basic and diluted earnings per ADS.

As of December 31, 2021, the combined balance of the Company's cash, cash equivalents, restricted cash and other investments amounted to RMB5,367.1 million (US$842.2 million).

Business Outlook

For the third quarter of fiscal year 2022 ending March 31, 2022, the Company currently estimates its revenue to be between RMB2,400 million and RMB2,700 million, representing an increase of 7.7% to 21.1% year over year. This estimate represents management's current and preliminary views on the market and operational conditions as of the date of this press release, which does not factor in any of the potential future impacts caused by the COVID-19 pandemic and is subject to change.

Conference Call

The Company's management will hold an earnings conference call at 7:00 A.M. Eastern Time on Thursday, March 3, 2022 (8:00 P.M. Beijing Time on the same day) to discuss the financial results. The conference call can be accessed via the following zoom link or by dialing the following numbers:

Access 1

Zoom link:
https://dooyle.zoom.us/j/84860705976?pwd=ckh3OW1oeXkydzAwaXlHYnVYeEpBZz09
Meeting Number: 848 6070 5976
Meeting Passcode: 888666     

Access 2

Listeners may access the call by dialing the following numbers with the same meeting number and passcode with Access 1.

Access 3

Listeners can also access the meeting through the Company's investor relations website at http://ir.miniso.com/.

A replay will be available approximately two hours after the conclusion of the live event at the Company's investor relations website at http://ir.miniso.com/.

About MINISO Group

MINISO Group is a fast-growing global value retailer offering a variety of design-led lifestyle products. The Company serves consumers primarily through its large network of MINISO stores, and promotes a relaxing, treasure-hunting and engaging shopping experience full of delightful surprises that appeals to all demographics. Aesthetically pleasing design, quality and affordability are at the core of every product in MINISO's wide product portfolio, and the Company continually and frequently rolls out products with these qualities. Since the opening of its first store in China in 2013, the Company has built its flagship brand "MINISO" as a globally recognized retail brand and established a massive store network worldwide. For more information, please visit https://ir.miniso.com/.

Exchange Rate

The U.S. dollar (US$) amounts disclosed in this press release, except for those transaction amounts that were actually settled in U.S. dollars, are presented solely for the convenience of the readers. The conversion of Renminbi (RMB) into US$ in this press release is based on the exchange rate set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System as of December 30, 2021, which was RMB6.3726 to US$1.0000. The percentages stated in this press release are calculated based on the RMB amounts.

Non-IFRS Financial Measures

In evaluating the business, MINISO considers and uses adjusted net profit, adjusted net margin, adjusted basic and diluted earnings per share and adjusted basic and diluted earnings per ADS as supplemental measures to review and assess its operating performance. The presentation of these non-IFRS financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with IFRS. MINISO defines adjusted net profit as profit for the period excluding (i) fair value changes of redeemable shares with other preferential rights, (ii) equity-settled share-based payment expenses, and (iii) impairment loss on non-current assets. MINISO calculates adjusted net margin by dividing adjusted net profit by revenue for the same period. MINISO computes adjusted basic and diluted net earnings per ADS by dividing the adjusted net profit attributable to the equity shareholders of the Company by the number of ADSs represented by the number of ordinary shares used in the basic and diluted earnings per share calculation on an IFRS basis and retrospectively adjusting for the effect of the issuance of Series A preferred shares by the Company that are deemed to have been converted into ordinary shares since July 1, 2019. MINISO computes adjusted basic and diluted net earnings per share in the same way it calculates adjusted basic and diluted net earnings per ADS, except that it uses the number of ordinary shares used in the basic and diluted earnings per share calculation on an IFRS basis as the denominator instead of the number of ADSs represented by these ordinary shares.

MINISO presents these non-IFRS financial measures because they are used by the management to evaluate its operating performance and formulate business plans. These non-IFRS financial measures enable the management to assess its operating results without considering the impacts of the aforementioned non-cash and other adjustment items that MINISO does not consider to be indicative of its operating performance in the future. Accordingly, MINISO believes that the use of these non-IFRS financial measures provides useful information to investors and others in understanding and evaluating its operating results in the same manner as the management and board of directors.

These non-IFRS financial measures are not defined under IFRS and are not presented in accordance with IFRS. These non-IFRS financial measures have limitations as analytical tools. One of the key limitations of using these non-IFRS financial measures is that they do not reflect all items of income and expense that affect MINISO's operations. Further, these non-IFRS financial measures may differ from the non-IFRS information used by other companies, including peer companies, and therefore their comparability may be limited.

These non-IFRS financial measures should not be considered in isolation or construed as alternatives to profit/(loss), net profit/(loss) margin, basic and diluted earnings/(loss) per share and basic and diluted earnings/(loss) per ADS, as applicable, or any other measures of performance or as indicators of MINISO's operating performance. Investors are encouraged to review MINISO's historical non-IFRS financial measures in light of the most directly comparable IFRS measures, as shown below. The non-IFRS financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting the usefulness of such measures when analyzing MINISO's data comparatively. MINISO encourages you to review its financial information in its entirety and not rely on a single financial measure.

For more information on the non-IFRS financial measures, please see the table captioned "Reconciliation of Non-IFRS Financial Measures" set forth at the end of this press release.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "is/are likely to," "potential," "continue" or other similar expressions. Among other things, the guidance for the fiscal year 2022's third quarter ending March 31, 2022 and quotations from management in this announcement, as well as MINISO's strategic and operational plans, contain forward-looking statements. MINISO may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about MINISO's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: MINISO's mission, goals and strategies; future business development, financial conditions and results of operations; the expected growth of the retail market and the market of branded variety retail of lifestyle products in China and globally; expectations regarding demand for and market acceptance of MINISO's products; expectations regarding MINISO's relationships with consumers, suppliers, MINISO Retail Partners, local distributors, and other business partners; competition in the industry; proposed use of proceeds; and relevant government policies and regulations relating to MINISO's business and the industry. Further information regarding these and other risks is included in MINISO's filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and MINISO undertakes no obligation to update any forward-looking statement, except as required under applicable law.

Investor Relations Contact:

Raine Hu, Mengru Wang
MINISO Group Holding Limited
Email: ir@miniso.com 
Phone: +86 (20) 36228788 Ext.8039

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