Q4 2021 MINISO Group Holding Ltd Earnings Call
Recorded a revenue renminbi 236 billion.
Up 57% year over year accounting for 95 persons.
The revenue.
Meanwhile, as business recorded a revenue of renminbi 110.
136 person year over year.
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Many stall faced a tough operating environment in June quarter, and the rest spread of that don't how governments.
<unk>, a new round of pandemic, Guangdong province, and some other overseas markets.
In China.
From measures taken by the government the spread of the pandemic.
<unk>.
In Guangdong and completely controlled by early July.
As a result domestic operations of municipal brand recorded a revenue renminbi 183 billion up 39% year over year.
Revenue from international operations in the quarter.
Revenue.
One 6 million up 179 Christmas year, although the overall situation was better than that over the same period interest into Q4 International operations. Some of our overseas subsidiaries such as those in India experienced a revenue decline sequentially in this quarter.
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Ill distributor countries on the other hand experienced a revenue revenue increased sequentially despite lower than expectation.
Keith.
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In China, we've added 107 million units during this quarter compared to a now decrease of two stores and a net addition of.
38 stores during the same period in 2019, respectively.
And carbon development for us and we should keep crowded to support our retail partners you Bob.
By the end of June we had 800.
Others increased by 80% year over year.
With each partner, adding three points.
First of all on average flat year over year.
Despite resurgence is endemic in China too.
Bring short term pressure, however, municipal long term bookings or in China remains unchanged.
Example, as we continue to unlock new opportunities in China low tier cities.
50% new stores perform this mark this quarter.
Many cities and our latest.
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To further develop.
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We opened 35, new stores in overseas markets on net basis this quarter.
For the first one rich well located in euro.
It's always been so open three stores consecutively April.
<unk> lives of consumers from breeding outside the stores for a long time.
This is the latest example resource and ensure success European markets as record and represented five Italy.
And it's been so Luke.
We look forward to continue to serve European customers with unisource relaxing shopping environment onshore from spirits.
Anders three odd markets in this side easily.
Our entry into 98 overseas markets.
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During this quarter the average number of suspensions in overseas markets was about 300 compared to two hunger in the previous quarter.
Mainly due to this Brad of the Delta this quarter.
Other hand suspended stores at a quarterly low of 200 and on at the end of June.
One from 208, a quarter ago. However, the recent resurgence is endemic since July.
<unk> continued to impact international patients.
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Hello, everyone.
We have adopted several measures to assist our overseas partners in tackling the new challenges caused by the pandemic resurgence.
First of all we have connected them to local channels, such as supermarket online channels to boost sales clearly inventory and GAAP cashback or.
For example.
In Morocco, and challenge set up last fall.
In the Philippines recovered with supermarkets.
Our specialized team has enabled operations about 50 in overseas markets to move part of industrial its online by providing useful suggestions.
Secondly, we launched a new business process management system, this quarter, which house distributors better integrate the whole business process.
Send a lot that standardized visual loss interests.
This system has helped improve overall efficiency and SaaS.
Section of distributors.
By allowing the use of crowded choose such as lateral crowded for payments with help relieve apart of distributors cash flow pressure.
Last but not the latest where continued how distributor distributor partners controlled our cost areas, such as improving average employee output and negotiating more favorable wins.
Actions.
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As we pointed out on our last call municipal has COVID-19 with many strong partners is overseas markets, who have strengths and cash position shahada background and bargaining power now more resilient through the uncertainties caused by the pandemic.
We remain confident about <unk> long term prospects in overseas markets loss trends and supply chain products written knowhow and the business model remain outstanding.
We'll continue to cooperate with overseas partners to overcome the challenges together.
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<unk> business E Commerce revenue was around renminbi $200 million up 130% year over year.
Mainly attributable to the June 18th midyear shopping basketball and total online business, including E. Commerce in Ocho contributed 12 persons our total revenue.
As of June 30 members, who have made at least one purchase during the past 12 months or about 33 million.
Our 49% year over year and 10% sequentially.
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We cooperated we continue to expand our IP library and this quarter has seen great success in our cooperations with top Ips such as toys story.
MBA and minions with IP shows up 17, nine persons and fixing our christened over that same period.
In 2019 separately.
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And in addition, we plan to leverage Minnesota Global will now work to introduce more popular products such as buying bonds overseas markets.
The first the staff, we have achieved encouraging results in southeast Asia and Middle East.
In this quarter for example.
First five days in Singapore sales offline bulks accounted for more than 20 persons of total store sales.
We will test more market.
In Latin America, My basic view.
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In Q1.
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Now top toy fair.
First of all channel expansion on track during this quarter, our POI open.
Core stores, bringing its total score registry by the end of June, including six Dreamworks stores and seven <unk> stores.
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Just last weekend, our toy Museum co branded by top toys, and Shenzhen Wuhan <unk> celebrated its grand opening bringing top tourist stores to a grand total.
And recorded total sales more than one minute you disbursed day.
We're also preparing for top toys first our toy mirror executions with China International Community College basketball and control the early October.
<unk> Saddam's grow me to ask condition or improve our brands such as <unk> and will be great opportunity for us to both promote top toy and accumulate the relevant experience.
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Secondly, <unk> business model is improving.
Its rapid expansion in this quarter <unk> revenue increased by more than 180 persons sequentially up toy.
We are in early stage on capacity building and brand promotion and this gross margin level as huge room to improve.
Going forward, we expect that top toys gross margin growing crude.
Operating leverage will be gradually release, driven by the expansion of its scale and the majority of proprietary IP.
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Globally, we continue to upgrade our product structure aspect.
Of course propulsion products, including six of its pro QUADRA Ip's now account for more than 5%.
The last piece is.
With higher gross margins than those of third party products.
Our proprietary Ip's launched just three months ago are gradually caught on in the market.
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Move on to fiscal year 'twenty.
One despite the continuous impacts on global retail industry caused by the pandemic.
We still recorded a positive growth.
Revenue reached RMB nine 7 billion.
<unk> revenue was RMB 7.2.
Two 9 billion.
Up 21% year over year, and <unk> revenue was RMB, one 7 billion.
<unk> did not.
9% year over year.
And this year, we continued our overseas expansion, adding an additional 100 design wins of course overseas market and entering our 98 overseas market. Despite the great uncertainty caused either.
We also continue to seize the market potentials in China's largest cities.
60%.
406, new units those draws in China located in this market segment.
Additionally, we successfully completed our initial public offering.
Viewed our App strategy and launched top toys.
I am moving towards our vision of becoming a leading global new retail apparel.
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Looking ahead into the fiscal year 2022, we remain committed to pursuing the following strategies. Firstly, we will continue to expand and upgrade also now.
Our business model.
Secondly, we're continuing to focus on product and supply chain as well.
Introduction of more popular products to fully leverage our strengths.
Product design and cost control.
Also continued to execute our IP strategy and expand our IP library.
Utilize the brand awareness and appeal.
Yes.
Thirdly, we will continue to depend consumer engagement and drive that Omnichannel experience. We're also improve our ability to operate private traffic through unit programs DTC capabilities launching products exclusive online and improving our recommendation algorithm.
Firstly, we will continue to closely monitor the pandemic developments and adjust our business plans dynamically by.
By continuing to corporate overseas partners in various aspects.
Help them save energy future development.
Finally, we will continue to leverage our strengths and core capabilities to explore new business opportunities.
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Okay Thats helpful.
This concludes my prepared remarks, I'll now turn the call across several financial.
Thank you.
I will start my remarks with a review over the June quarter financial result, and provide additional color regarding the September quarter, but he didn't notice how we will be referring to non <unk> measures.
Excluding share based compensation expenses.
Revenue was two point of <unk> 7 billion RMB increased by 15, 9% in the year over year, and 11% quarter over quarter and above the mid point over the Companys guidance range of two point us to revealing RMB two <unk> two 5 billion RMB.
The year over year increase was primarily driven by the growth over the companys domestic operations and the recovery of international operations.
Revenue generated from the Companys domestic operation was 195 billion RMB increased by 43% year over year.
Revenue generated from domestic operation or meaningful brand.
It was one <unk>.
<unk> three billing RMB increased by 17, 9% year over year, mainly driven by a year over year increase over 14% in average.
Average of Stockholm and year over year. It goes over 23% in average revenue per store in China.
Revenue generated from company in the international operations.
526 meeting RMB increased by 117, 9% a year over year, reflecting recovery of company in the international operation from the same period over 2020.
From quarter over quarter perspective revenue from the company's domestic operations increased by 9% driven by a sequential growth over 60% in many of those offline sales in China and sequential growth of over 15% in e-commerce to be in this Q2.
June 18th mid year shopping festival.
Revenue from international operation increased by 19% sequentially.
According to National Bureau, Overstep his stake in China <unk>.
In the first half over 2021.
Retail sales over Super market convenience store Department store and a special store increased by average over 22% compared to the same purion XE 'twenty 'twenty, and then 7% compared to the same period of 2019.
Although the assembly area meaningful growth sales increased by 54% and 8% of separately answer than the industrial average.
And it was achieved against the background of the pandemic as resurgence in Guangdong Province.
We should last a full yearly fee.
50 days Europeans are today, the estimated loss in <unk> was all about safety meeting RMB.
Gross profit.
Was 613, nine meaning RMB increased by 68% year over year, and 2% quarter over quarter.
Gross margin was 25.8% as compared to 24 point to 4% a year ago, and a 28 point of 1% a quarter ago.
The year over year increase of gross margin was primarily due to an increase in revenue contribution from the company in the international operations, which is typically has a higher gross margin than the companys domestic operations.
Revenue from international operations accounted for 21% over the Companys total revenue compared to 12% in same period in 2020.
The quarter over quarter decrease was mainly attributed to increase the profit promos.
Promotional activity during the June 18th the meter year shopping festival and the second inventory clearance in 13 cities not aimed at food henkel the negative impact caused by the re re occurrence over the pandemic in Guangdong Province.
Saturday and distribution because <unk> was 200 and this takes the full me RMB increased by 15% in the year over year, but decreased by 4% quarter over quarter.
The year over year increase was primarily attributed attributable to increased personnel related expense and marketing expense as with the year over year revenue growth and the brand awareness improvement of both municipal and the pulp toys.
The quarter over quarter decrease was primarily attributable to rental.
Action will adhere to COVID-19 in certain international markets.
G&A expense.
188 medium be increased by 15, 9% year over year, and 20% quarter over quarter.
The year over year increase was primarily due to firstly increase the AME plus a narrow will actually the expense and the expense for our new initiative was the such as a top toy and the second we took the necessary measures to reduce our general and administrative expense to tanker.
The change caused by the pandemic during the same period of 2020 without a low comparison base all these expense.
So quarter over quarter increase was primarily due to increased increased professional service fee.
Turning to our profitability.
Operating profit was 180, a mini RMB compared to almost <unk> over 2020 and profit over 161 million RMB in the prior rest of quarter.
The year over year improvement in operating profit was primarily due to our business recovery.
Both in China and overseas market.
The quarter over quarter improvement was due to the reduction in Orange exchange loss and the upgrading of the reversal in this quarter.
Adjusted net profit was 145 medium be increased by 200, and a 42% year over year and flat quarter over quarter adjust.
Adjusted net margin was 5.9% compared to about 2.7% a year ago, and a 6.7% a quarter ago.
Adjusted basic and diluted earning per ads were both 48 cents RMB in this quarter compared to <unk> <unk>, a year ago, and 52 cents RMB a quarter ago.
Turning to our balance sheet as all with June 32021, the combine the balance of the company's cash cash equivalents restricted cash and other investments.
6.88 billion RMB compared to 2.86 billion RMB a year ago.
Turning to working capital turnover of inventories and trade receivables remain flat or sequentially.
The board of director has approved a dividend of about 300, meaning RMB and I want to Texas, It's a chance to share the company's capital allocation strategy here.
When designing the total amount over the dividend we.
We have we can see the level of profitability that we have achieved in fact.
Fiscal year 2020, and could have achieved in fiscal year 2021 without a pandemic.
Our capital allocation strategy in the new in the future.
<unk>.
Prioritize new growth opportunities such as the new strategic in East, Tennessee, and the new store expansion.
We will also remain committed to bring return to shareholder through and TC pages EBIT into payments.
Looking ahead into <unk> quarter over 2021 we expect our total revenue to be between two point of full.
Two point to four five billing RMB ended 2.6 to five.
Feeling RMB, which would represent.
Increase of 18% to 28% year over year.
The latest the resurgence of the pandemic from Nanjing in China has spread to several province, and there is still evolving.
The company currently estimates.
It is sales.
We will continue to be pressure by the lingering effects of the pandemic and in short time.
Which will lead to.
Reduction or reduce their traffic or even the temporary closure of the company's store.
We will continue to focus on those elements over there being this is not under our control such as the product innovation inventory management operating efficiency and the Omi channel strategy to drive us errors and protect our margins.
This concludes our prepared remarks ultra day, operator, we are now ready to take questions. Thank you.
Okay.
We will now begin the question and answer session.
Question today comes from the line of from Michelle Cheng from Goldman Sachs.
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Well I mean as a commodity that long.
I, just Wanna nickel Linky no one type of campaign.
Two questions for management, one is could you please share the quota today churn off of pumps, China and.
It feels like an important international market situation and secondarily for what's hot toys.
You mentioned that the gross margin upside will come from the better part of mix. So can you share with us the IP development Dan.
He has no strategy is going forward. Thank you.
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Okay.
Okay. Thank.
Thank you for your question Michelle.
In terms of influence.
The mass business. So this round of pandemic again at around July <unk>, Although we have taken active measures such as to increase our online promotions and other strategies to deal with it is somehow impacted all of our business.
No.
First our track recently.
One is across the board.
<unk> tier cities or tier once it is the estimated loss in Germany.
In Florida, forceful about 10% of its daily normalized level.
Tier two of impact is asking it to be.
More than 20% for tier three is below 10%.
And.
<unk>.
We currently estimate.
Estimate that the overall impact.
We generally use about.
50% for our domestic business.
And.
In terms of province or regions. The most of the impact is or provinces, such as junk suite.
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It's about 32 for the person.
It's very normalized.
Level and we are currently asking that.
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Is diminishing.
No the strict control baidu.
Governments and the overall impact.
Munition too as the pandemic was gradually brought under control.
Based on the past experience in China.
It usually takes about 45 days to control the whole situation and we believe at this time that yeah.
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Hi.
In terms of the recoveries in overseas markets in the June quarter, the overall recovery rates.
About 60.
65%.
<unk> same period.
And the recovery rates was about.
55% paper.
60 persons may prison.
Respectively.
Ms of region.
<unk> market our largest market.
Our about.
40% of overseas force.
Has lagged behind it appears that over recovered readout during June quarter was about.
A 35% to 40% profit Craig Kobe level items.
<unk> 19, or Latin America, our second largest.
So is about about.
Kristin our store sale the recovery rates was about.
60%.
And on other hand, we have seen strength in other markets such as it always in North Africa.
In Europe too.
<unk> <unk>.
And North Africa.
The recovered interest about 70%.
It was about 77%.
And.
These two areas so.
Strong growth in Germany.
Or.
In North Africa, and crisp about.
Institute presented compelling incurred 19 euro at all increased.
77%.
But these two areas again.
Emerging market.
Yes.
Temporary.
Or not.
Yeah.
And in terms of countries, we look at the top 10.
Countries in terms of sales.
Mexico recovered around.
70% from the same period.
Alrighty.
Our Asian countries, including all of our sub.
Subsidiary.
Countries, such as Indonesia.
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Persons.
My personal perspective, respectively.
<unk>.
No.
Maybe.
Countries such as Saudi.
Arabia, which saw.
No.
The 4% increase over the same period.
19.
He is a real soul.
One person, thank Bruce and the Morocco, which saw no okay.
Thanks, Chris.
Interesting.
The number of stores, but overall.
As I mentioned just now.
The recovery is.
<unk> low 80%.
Yes.
Yes.
Yeah.
How long he didn't know Martha.
If I'm in a wheelchair Multan, Dan you have shorter lived than beyond that right now.
You said in a totally dinner.
They had to do with the monthly.
A cogent.
I would probably tend to your June shoulder, the toga and wouldn't be as Joe was land.
10 minutes, you'll have one minute.
It gives them with you and you just go through that.
Ill children as young Baghdad.
<unk> saw that Etame.
<unk> centre in semi that appeal.
Don't you know kind of puzzled us.
Tayo kind of course, you end up having to pass the shuttle.
Okay.
Bye bye.
So that's happening.
Shortly if I'm in please.
These non-GAAP public.
Oh, Yeah, because then GAAP jaco.
Julia is RMB eval.
But what I found yet.
Yes.
Yeah on that yet.
Well it does it just adds that you want some idea you know which would suggest that you don't need to do.
Cool.
The short of it.
No.
If I'm in your income.
Which and peaceful yoga as of Q module is targeting a political season.
Megan as appeal.
So the so Paulo totally champion in SMA.
Hum.
Charles Wuxi, <unk> Golar tundra xeljanz.
Little juggle sung.
So as you can send us S P.
Can you maybe educate children so publicly champion in assembly.
So that they don't that means you'd be amazed at the Sarnia during.
During the civil Italy, so she.
Let me share with you.
And Tom good to talk to John.
So I've been at.
If you tell me I don't know if I'm honest the ASO with Wheeler.
We land down yet.
Let's see life here sure.
I will just answer consistent finally tonight.
Number two you don't get Hot Sunday in Mali, which as you guys know more chat chat Pam this is essentially flat.
Nanchang put up and this isn't just fill us Julia will move to Etame Sandy Julian Segal did you talk about how you deal with tissue, but we're still that.
Called out I will tell you that you have on timing thoughts her mother Shephelah seen that also at scale of course is that.
Political.
Well again thoughts are and I won't go to Alan are you doing.
In dental Molly Johan.
Yeah.
Therefore, your second customer Michelle on top toy in terms of sales per store.
Now our Dreamworks stores.
Sure.
We're not talking about <unk>.
Hospital that we have now beyond that we have more than 40 connections now so.
The average performance is quite stable with Dreamworks monthly so stabilized out.
$2 million and or collections force.
Stabilized after Mindy.
600, K overall average sales per our poorest toys, but more of them.
900 K.
In terms of product.
So far we have already reached about 200 suppliers and develop more of them.
<unk> 3300 Skus.
Popular.
Products and nearly 500, a thing I think so at all.
About <unk>.
80% of sales right now.
<unk> contributed by it's Tal.
No.
Thank you Chris.
Person fast centers and as we shared before a point now has eight categories and more than 100 since the sub categories.
And in terms of consumption or consumers.
Sure.
Figures first is ASP.
So.
Average ticket ticket size or.
Our top toy relative higher.
100 <unk>.
Dreamworks can be as high as 200.
And the second is a.
Toys like Minnesota has strong holiday back.
And.
For example, this year, we had six public holidays first half accounting for 60 person.
But its revenue contribution during the day.
Plastics holidays for about 30%.
In the fall of <unk> now we have six ask you use this gross margin.
About.
60%.
Average revenue of our proprietary ask here is all times that whole top toys.
Average.
And during this quarter, we also launched our fan shop function unit program that is.
Huge success for example, we launched three new <unk> every months with each of their sales people. The average top toys and they tend to raise is extreme.
Hi, extremely fast that can be sold out within 10 minutes after launch.
So.
All in all we are.
We estimate that our proprietary products, including our proprietary Ip's co branding Ips and <unk>.
Previously of Ip's will account for 22, 5%. So tries to use one year and a 32, 40% two years.
Merchandise gross margin, but top toy.
At 43%.
Sure.
Less than 40% six months ago, mainly due to increased revenue contribution from proprietary products and our improved bargaining power.
Suppliers because.
A person yoy, all our third party products such as toys.
Boys action figures and.
Yes.
<unk> purchased two small quantities.
But in the second half this would change the percentage of the large orders increase so will.
Merchandise gross margin thank.
Thank you.
The next question comes from the line of Lucy Yu from Bank of America line is open. Please go ahead.
Wait.
Yes.
Well somebody Lucy.
I went to <unk>.
So it sounds like as you all mentioned that conducted the eating a condensate and what are you guys still halfway tissue that she's had Shin <unk> no.
Joe Joseph <unk>, Wuxi up with them and that's either hopefully that's all to Indonesia soon.
In guidance from the onshore colleagues.
Hey, Gordon AEP, Atlanta, Hotshot published as I said, you that she does on the potash.
Mahan insulation that they hit the P&L.
And if you could kind of coordinated enough I guess, Sean touched on ultra ultra the keto, you'll do it all by the foundries in Asia can you just touch on the shot to the BD brutal because no one should kind of off and so that should I not sure. Its so much Chicago until they saw Shashank chipboard digital chips, yeah, well means that should also help with wanted to get up towards that.
Do you want your shelf without ego and Chi Joseph senior tie the Jakafi that Sean you'll Nielsen Mcqueen, Oh my goodness.
Okay.
It sounds on Japan. The watch is actually Josh do you want it.
Did it get lucky to rule out and it should kind of hard data, which I'll talk to.
<unk> should be up either to sell it just from Cortlandt.
And then Bob. Thank you, it's Andrew Janelle It sounds about guidance that Jake I'm already did appear for downtown.
Those shops are one <unk> achieved with Joseph Joe Yeah, just that you should kind of why.
And most of it kick off guard also on SEDAR, social hashi over here should I eternally Michele no kind of halfway you'll you schedule a quote on that yeah. She Archie keytruda. So when you tie that into what kind of holiday buying ads should pant onto the ship.
You are right Alex.
No it wasn't by Asia.
So considering.
Considering that COVID-19 is going to be lasting for at least the relative.
Relative longer time, so how should we think about the development in both domestic market market as well as overseas market, especially in terms of marketing.
And channel development.
And also in terms of new.
Hey tell format development is there any update that could be shared with us.
And the second question is on the modules.
Margin declined all contracted a little bit.
Q on Q basis, so could we break that down into promotional activities and inventory clearance. So how much of the.
The margin contraction is due to.
Each characteristic.
And then going into the next quarter, which is September quarter, how should we think about the margin trend. Thank you.
So what I put on you know once you lap that.
Sure.
He changed at all or should I see that you're more elements of maturity to Ingrid to work when the drivers once you get all the job Legwarmer.
Hey, Carlos here of course, you can see energy with Shanghai year with its own order if they don't either John that you that you do them again in Shanghai <unk>.
Enckelman shallow of Abner Shah ruble that aren't don't kill out where to go for two.
The continental.
And then when Covid Shan, sometimes you Coca Cola, one which will become important when you call it neutral.
Many months.
You can concentrate for the final aggregate unquiet info as order will not earn any tiny MTV Joanna took a car.
Sean I'll turn you into a shoulder to that so not here.
Why are they the R. E. R. R E overcome now how will that and goodbye.
The island, Georgia territory sort of changed at all with Makena in insurance, where you seem to agree with no change at all due to answer that you're looking at you. So you're almost near Ottawa you watch all of our leases you're firing up a woman.
These will say ASO Ajay Shah.
No I think that's almost entirely EMEA quantile LTE angle. If they don't bother you gave me a lot of people wish Andrew bore the horizontal enquired will trade on me at <unk> children want them and they will be able to trade show at least that's what it was.
Well, maybe one athletes for human attrition that you ran the Jewish General Youll voyage washer show changes all of your feed how can comment he goes through his law Bureau whole milk. When you paid hunter, we won't bore fruit harvest Humira do you won't see <unk>, John the Hajj familiars, either show, where it would be harder to do it don't carry I negotiated Yoshi omnichannel.
If they don't go out of the user error or Michelle now to Chicago down, we'll Miss you as a way of life.
She began her jewelry bureaus I shall banyard, all Hashana Gunby, Java, and yet three ish, all I know that seasonally Italian GAAP at Indiana.
The U F N b.
The Eagle.
This is Steven and.
Address your first questions on channel expansion.
Yeah.
For our online business, we have experienced a rapid growth.
During the past two years.
Now it's around revenue contribution is about 12%, but if you look at the past wallet two years.
The <unk> gross.
Will those more than 100%.
No.
As an important part of our Omnichannel strategy will adapt.
Invest into online continuously building our own.
Your business did you see.
E Commerce and so on.
Uh huh.
Is that your cost ecosystem has changed.
Little bit.
A lot in the past year or two such as live streaming going quite a show and we are also.
Ladies owing on this thing.
We're not burning cash pile option B SB shout.
In our past call and instead will cease of profit oil and the housing.
To develop our online visits.
So it has been and so it will be.
For example.
We are more focused on.
Digitization here.
To reach and activate our users a more low cost but more inflation.
Sure.
But she'll come in.
Magellan millennials, yes, Shanghai.
Sure Missoula, Nordea can digest, you'll hear from Joe <unk>.
Hum.
But social.
And we see this as a.
Jack here and in terms of our customers about our new business.
S.
No as we showed that.
Our vision is to become a global.
New retail platform so.
Yeah definitely has some thoughts.
And some internal.
Integration and so on.
We did not think that this is why in time to shell and we are definitely.
Michelle Moore win.
When we have some major government.
Joining me for the <unk> shallow woman <unk> turning into the Q2 to assure a malaria oishi shutdown due to other reality of annual misconduct, that's how large or smaller easily <unk> the oil bar.
<unk> is actually easier and easier for them to acquire Shannon I understand Joe.
Joanna jewelry IMU condemnation Sui Holman will issue, but fit only only shionogi go quarterly you're going to do right. So it's all issues, which I'll talk about the ultra element.
Your <unk> in Shanghai.
What's your kind of shocked that you do Saturday to.
Sunday familiar you guys put in the Utah Asher to help them finish out that you are sort of tailwind to reach I'm working the lesions with Joseph Tung and encounters you assemble the degree even though they all Milton Goldman D. On the data that I hope I'm not sure what how long does the rules cancel Illinois called it all apart.
<unk> you Michelle.
Yes.
We either Yugo GMO.
So I'm wondering you could I know you will know that you may have a quick tack on the G E.
I'm kind of Armenia pseudo Cortland.
One is a feed Hong Kong, China got the country are you at all on that yes.
We all know you've got Korea town shoes that fit Antoine.
The old school sweetheart of Homer Badri CAGR, knowing until you don't coupon.
Okay sure. So are we through most of the <unk> the town Hall on the T J <unk>.
Molly economy can be sending you a shall we call. It <unk> that you can contact.
Hi, Lisa in terms of the Ark restaurants.
GP margin in this quarter as we are.
<unk> tourism.
Resulted.
Sequential decline versus the midyear sugar and shopping basket were.
We have increased our promotions to maintain our market share and the second is.
Due to the pandemic and Guangdong and.
Have made some inventory clearance to tackle.
Challenges so overall these.
Two reasons.
Half decrease crystal our GP margin.
About one 5%.
And if we look at the next quarter the September quarter or no.
Commerce.
We do not see.
Any influence.
This side because.
There were no major bromine task force during this quarter.
But for the second that the pandemic.
Things.
Late July.
The pandemic from managing a spread.
Many provinces in China so.
Reacting to that.
Experience.
It's going to be completely control.
At least 45 days and so in short term we see.
We see some gross.
Gross margin pressure here.
And we will.
<unk>.
Continue to do some inventory clearance.
To tackle the.
So we asked me about.
The GP margin for the September quarter, maybe it will improve sequentially from this quarter.
They are lower than our normalized now.
The past several quarters. Thank you.
Okay. Thank you. The next question comes from Terry Wang from Citi. Please go ahead.
Okay.
He is on how it comes out.
No it's not.
Okay.
He should tell me anything on it.
Just can you go into our Guangzhou sure Ali.
Hanging out let's say in.
10 years after that.
Truth of July I know, how well they tend to not see how because of the Shanghai market are shifting our Mount Holly Hunt.
And he is telling me that their hand on the house.
A woman went down this enhancement P&A say final Julia.
I'll now within that as well.
Okay.
I'd like to know about the changes in category structure of meaningful things.
He is the one end.
With the propulsion of each category, such as food plan, Bob Copeland, and good and Xtra, and which category will be highlighted in the future.
We were not able to see the option is sort of assembly.
Is the <unk> shandy.
<unk> looses assumed on Joe.
Sadly not on our balance sheet and Johan <unk>.
Sure Jorge.
So ammonia Aegean to achieve timely Chisholm.
But that balance sheet.
In the Sally beyond tallies.
I'll answer your Covid, she who can eat.
What's your thought on this.
Instead of LNG will have a materially lower content.
As a shareholder you're hedging for budget.
W. Tami, yeah, GSL amid challenging summer.
So ammonia shoulder debut unequal yet so there's a lot of our religion.
So the last time, you told us so.
Hey, Jerry this is Jack Thank you for your question.
In terms of your customers' product now.
The revenue contribution of our 11 half rates are relative evenly distributed Andrew relative stable.
During the past two years.
Categories, such as toys and snacks have grown rapidly for example ourselves are poised now account for about seven 9% and sales of snack.
Chemical about eight 9%.
Another category personal shell, whereas the star of the first half of this one is no.
Revenue shall now reached about 10% compared to 7%.
A year ago consented.
If we look at the category structure.
No.
The 11 categories the structure they are relatively stable.
Stable and.
We do not see big change.
In the future, but we do think that though.
This option is.
In some asset categories, such as art voice.
And such as toys and snacks, you one year ago in the future. We do nothing would do think that.
The culture and the creative products have their markets.
Young people love it.
And.
No. This is the same for personal care products and.
And for IP products, which we are very good at.
As we shared earlier in my prepared remarks sales of RG products increased.
59% compared to the same period.
In 2019.
And the accounting for 25 prisoners of ourselves. Thank you.
Right.
Hum.
Rather unclear.
And then T mall condition.
I sure wish I don't want to give a banker and they really go when he has mcgalley's answer sheets limo and Shanghai Watch Jean Thank you with AMOLED panel in Washington, and Kansas City, which managing Allianz Global 19, Kashan synthetic conduits wonka women come down and I think that actually that you can achieve.
Finish your question.
Okay I'll translate for myself.
At that time from heightened international and I just have one question about a move away from business and could you. Please share the tiring to revenue mix also smarter <unk> directly operated distribution franchise and also could you. Please give us more color on that.
I still think that there isn't a chance to entice thanks.
Okay Rebecca.
Great.
No.
Tradition, there, how actually Ingo central without the Tam pulford on the job he thought Asher, who will do about Lulu or Tony how much of.
Atlanta Surety Emily Hood of a BD viruses are essentially or Unbilled, a union shop on Youtube.
So you should reach out on H, one N a QR dream Guedalla shareholder muted by mid century attributes you'd Wanna Retard housing chartering without a showroom, which I don't know if I have not.
Sure.
That's when we also had your shoulder jello lateral can do that without a shadow of the cheaper dream without revenue.
That is on the follow the Gila kind of RDR Union of Chan Chile JV.
We are in Egypt.
Curious how down up Amyris, Archie Antonia already earning in the short run about movie Joe He RDR two.
Do you have enough wafer the RT chiller and chiller by Blue tree Israel.
And you're Gonna show that Euro however that distributor distributor tissue on the highway distributor shut down or if they don't do that either.
How about when you entered the shallow your thought that it needs to rebuild a beautiful attached to that this review that you did have the JV with Kemper the time be profit Hong Kong I've got that deal for the raw images for the Hot natural you hear the commentary the wisely. So yesterday was only Thiago hi, Rich I'll say and then the only reason it doesn't know needle higher repeat on charter so it won't really comments, usually a year or so.
Non-GAAP attitude by the idea that you can.
Could it be other Charlotte these reveal that triggers a fit phase III. They don't all come in Ecopetrol with <unk> here I'm going to wind down would you or the junket outflow than usual jungle highlighted figured that geography, how many months.
Hi, Rodrigo. Thank you for your question this is Steven.
No.
In terms of January.
Our distributor markets.
Already account for <unk>.
60% to 70%.
Similar.
Sure all are.
<unk> sports and a subsidiary of countries accounted for now.
Another.
30% to 40%.
And the note before before the COVID-19.
Such as in.
The second quarter of 2019.
Jamie.
Our subsidiary companies.
Our share was about <unk>.
In person.
But in the in this quarter in the June quarter of <unk>.
One because.
Cost of the Delta variants, Jeremy our subsidiary countries accounted for 1% and in terms of revenue.
This quarter.
That.
Yes.
<unk> 17, 30, so the attempted Kristen <unk> from distributor countries in.
And in terms of merchandise delivery amounts of distributor order.
In the first seven months.
Total shipment order.
30% to 40%.
To the same period.
Thank you.
And increased about 60 crystals compared to the same period.
<unk>.
And as you mentioned.
Our overseas distributors.
As CEO of shell.
Prepared remarks.
Yes.
We have offered.
<unk> strong overseas partners.
Our oldest markets and if I remember right.
The CR 10 that means the concentration range.
Top 10 distributors.
Our international operations has been stabilized at 60% during the past few years so.
These no.
Major distributors.
They have strengths.
Our cash position in shareholding structure and bargaining power so.
Is that the.
More resilient.
At all that difficult to clients.
And this is also true that all of the major market.
Stable. Thank you.
Okay.
Okay. Thank you everyone. Thank you once again for joining our conference call. Today. So if you have further questions. Please do not hesitate to contact me or any source investor relations team.
Our contact information can be found on today's press release. So we will see you next quarter have a nice day bye bye.