Q3 2022 MINISO Group Holding Ltd Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to a meaningful Group Holdings Limited earnings conference call for the <unk>.
Third quarter of fiscal year 2022.
Ending March 31 2022.
At this time all participants are in a listen only mode. After management's prepared remarks, we will conduct a question and answer session. Please note. This event is being recorded now I'd like to hand, the conference over to your host Speaker today Aether Aether, Zhang director of capital markets.
Please go ahead.
Thank you Hello, everyone and thank you all for joining us.
We have announced our quarterly financial results earlier today.
Earnings release is now available on our Investor Relations website, IR <unk> com.
Joining us today are our founder and CEO , Mr. Jack yet.
And the CFO Mr. Stephen John .
We will continue I would like to refer you to the Safe Harbor statements earnings press release, which also applies to this call as we will be making forward looking statements.
Please also note that we'll discuss non <unk> measures today, which we have explained and reconciled to the most comparable measures reported under the international financial reporting standards in the company's earnings release and filings.
SEC reserve.
I'll now turn the call over to Mr. Yes. Please go ahead.
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Thank you Hello, everyone and welcome to meaningful groups March quarter. Since attended two earnings conference call.
The March quarter, the pandemic once again gripped, China as major cities, including Shenzhen, and Shanghai consecutively adopting strict lockdown control measures since February .
The domestic retail industry was challenged in a stroke by the most stringent restrictive measures taken by local governments and incentives.
According to our estimates nationwide footprints to our main source stores decreased by about 2%.
A 14% or 34%.
Year over year basis from January to March respectively.
Due to the strict control measures by local governments.
Despite the ongoing challenges of the pandemic.
Delivered another solid quarter with.
Revenue Richard at MB 2.34 billion.
Up 5% year over year.
<unk> revenue increased by nearly four times year over year.
At our Minnesota offline business delivered positive year over year growth.
Again demonstrated the resilience of our business model.
Hello Hello.
Thank you to you guys.
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This has also led to an agent administered NGL seasons.
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So as we have emphasized in our earnings conference call over the past few quarters. The pandemic will weigh on consumer demands and thus our near term results. However, our business model has demonstrated its great resilience and the flexibility on the extreme.
Marketing governments over the past two years.
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<unk> leadership position has been further consolidated.
Market share in global branded morale to retail market has increased from five 2% in 2019 to six 7% in 2010 to one <unk>.
During the same time, our market share in China. It's also increased from 10, 9% to 11, 4%.
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I'm pleased to see several positive trends in our business and that may share with you.
Firstly in China will continue to execute Minnesota brand upgrade as plan.
By integrating the concept of interest based consumption into product development.
Our newly launched products, which feature appealing useful and powerful.
At a higher gross margin compel Louise I'll have traditional lifestyle products as a result gross margin for this quarter rich.
0.2% after.
Up 210 basis points.
Year over year, and we are pleased to see this trend of year over year increase in gross margin continued in April .
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Secondly benefit from the pandemic control in many overseas countries and regions, Minnesota overseas business continued to recover revenue from March quarter was RMB.
$520 million up 17% year over year, our globalized operation provided us more space and flexibility on future gross compared to peer companies.
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Globally.
Global retail industry is challenged by cost pressure.
10 countries, including the U S are entering one of the highest inflation in for decades.
Retailers are challenged by ongoing pressures and cost and inventory.
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To tackle the global inflation, we will continue to leverage our core capabilities in supply chain and ensure the value proposition all Minnesota products globally.
Specifically.
Our.
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Meanwhile, we are capable to maintain housing level inventory turnover days bulk Wi Fi municipal how return to around 60 to 70 days, which is.
Industry, leading and the relative normalized level.
Pre pandemic.
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In March quarter in China revenue of municipal brand was renminbi 169 billion.
Rich offline stores recorded revenue of Renminbi 1.56 billion up slightly year over year.
E Commerce business recorded a revenue of renminbi 115 minutes and how steep margin profile.
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<unk> added 29 store stores on a net basis during March quarter in China.
<unk> 244 stores a year ago.
Typically our store opening in China has just now the team is March quarter is the lowest season due to the loan vacation on Chinese lunar new year intended tended to another drag all new installed and then once the pandemic.
In coming quarters or 10 to 22.
Josh the pace of store openings in China dynamically.
Adding to the developmental pandemic control and reduce operational risks of meaningful retail partners.
So in general merchandise.
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In our earnings call last quarter, we introduced the road map of the strategic upgrade forming so Brad.
Some updates.
In March quarter, we have accomplished the refreshment and substantially all of meaningful source in China as planned.
This refreshment features means of new slogan.
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Continue to execute our IP strategy as well as gross margin of new IP products improved by low single digits year over year.
Coming quarters, we're also dynamically adjust our marketing patents acquired into the situation with Chinese casino market and pursue healthy ROI.
Thank you.
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Hey, John .
In Q2.
Can you help us I'm admittedly.
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So a huge chunk.
Some of it is the attention on the shorter Cumulus Bill based on Lucha niches.
Many so is strategically committed to dependent consumer engagement and driving repurchases by providing improved omnichannel experience to them.
As you know we have been actively exploring various possibilities for the membership operations.
Last September we launched a union pay membership of graph.
And has achieved preliminary progress.
Members now.
Only NIM to pay an annual subscription fee of renminbi 79 to enjoy a bunch of <unk> wise for example.
Receive a package of coupons enjoy additional discounts and exclusive products among others.
These drive champion Jordan every meaningful installed in China.
All right.
Our recent progress.
This program has been warmly received by our fans, we have rapidly accumulated more than $1 million and vendors.
Just on our AB testing, the average incremental spending customers update becoming payment alerts.
It is encouraging.
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Moving to overseas operations revenue for the March quarter was about RMB $520 million up 17% year over year.
During the March quarter, we officer encouraging year over year sales growth in overseas market as a whole.
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Right.
By regions.
Europe has a whole increased by 85% year Most America, 65%.
Latin America, 45%.
And last Africa, 10% Asian.
Asian countries, excluding China.
10%.
By countries, we saw year over year grows about 80% in the U S.
60%, Mexico, and nearly 6%, India and 20% EBIT.
Indonesia.
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We added 39 stores on that basis March quarter, compared to 29 stores year ago, we have been relatively risk trend opening overseas stores during the pandemic and the past two years in order to control risks.
Now observing the stable recovery trend in the past several quarters, we plan to speed up the pace of opening overseas stores. This year.
We're quite confident to open more overseas stores in this year.
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Hello, Jim.
In overseas markets.
74 stores or 4% of our total <unk> stores have not resumed operations as of March.
First.
Quarter over quarter.
The majority of such stores were concentrated in Asian countries, Excluding China and Latin America.
It reflects the lingering effects of the pandemic our operations in these two regions.
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Our efforts in product never stopped during the past two years, we've made a few years of time window to strengthen our core capabilities.
The name is product localization.
As his preliminary results, we have accelerated product launch in major overseas markets. This year.
Latin America as an example, we successfully launched 1100 skus in the March quarter and contributed directly.
5% year over year.
<unk> growth there.
We will continue to strengthen our overseas design capabilities and offer more localized products to consumers overseas in a timely and accurate manner.
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Now, let me introduce the development capital.
Pandemic has inevitably impact top towards short term performance.
We continue to follow our established strategy in this quarter and made a steady progress.
On the revenue side offline revenue increased five three times year over year.
Online business ramped up quickly and contributed more than 10% revenue this quarter from Neal lost.
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There will be some demand.
In the long term, we see huge potentials up top toy market.
According to a report by Frost and Sullivan the size of popcorn market in China has increased rapidly.
At a CAGR of.
34% from 2017, 2% to 21 and is.
Estimated to grow at a CAGR of two 4% from 10 to 22 to 26 before its size riches renminbi $110 billion.
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The fast growth top toy market in China is data all pillars diversified products sales channel expansion, increasing importance of IP incubation and co branding and growing fan base.
<unk> is strategically committed to develop its portfolio diversified products such as toy Briggs was Chinese adamant and to explore omnichannel strategy to improve capabilities and IP incubation and operation.
And to understand more about the generation Z.
Going forward top toy will follow its own way of interest based consumption and pop toward business.
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In March quarter merchandise gross margin top toy reached a healthy level of 45% improved sequentially.
Merchandise gross margin on top poised proprietary products stabilized at around 65% and revenue contribution as a past 10%.
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Taking cereal, Minnesota long term partner of Arctic co branding as an example.
Top toy launched co branding IP products grew cereal since day, one and achieved encouraging just performance.
The new product, how post new newly incubated IP strong lock accounts became the best selling skew during this quarter.
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In addition top toward continued to focus on potential categories, such as toy bricks and.
And much top toy launched original vintage home appliance series on the label, China bricks and this original sales became top sellers and was posted by many generation Z consumers on their social media accounts, because it reminded them that childhood.
That is why we believe top toy bricks has huge addressable market and growth potential.
Top toy has several toy Briggs products in pipeline and we will continue to explore the potential China bricks and to offer diversified type rigs to young consumers.
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Okay.
As I mentioned, the CFO with US a general sense of what you.
Thank you that concludes my prepared remarks, and now turn the call over to our CFO for a financial review.
Hello, everyone. Thank you for joining us today I will start my remarks with a review of the March quarter as the financial results.
And then provide additional color regarding June quarter.
Please note that I will talk about the financials in RMB and we will also refer to some non <unk> measures, which have exclude the share based compensation expenses.
Revenue for our March quarter was two partners III.
Full leading RMB, including 1.82 billion RMB in China, and a 500 under 20 meeting in overseas market.
In China revenue from offline been this over meaningful brand was one five seeks the BD <unk> revs.
Revenue from E Commerce or municipal Brent was Henry.
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The revenue from <unk> was 111 million.
From a year over year plus active.
Our revenue increased by 5% year over year, primarily driven by a 17% year over year at Kohl's, the eco VLCC market.
Lots of dragged by 2% year over year growth in China.
Which was caused by the lingo a fab over the omicron vibrance.
As we have mentioned that in Ceos the prepared remarks.
In China in this quarter.
Revenue from offline being this over meaningful brand grew by 1%.
Year over year.
The pandemic has negatively affect our revenue in China in two ways.
Firstly it calls for the temporary closure of our stores.
Ample more than 300, all 10% or meaningful stope.
Temporary closed in March.
Secondly, poses a store open the local bank.
Measures taken by local government.
<unk> significantly impacted the traffic we estimate that the GM will also for the month of March alone was around the three Henry the meeting.
Should translate into revenue loss of about two Henry the meeting.
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Recall that a year over year revenue growth rate over more than 300%.
Its operation was also negatively impacted by the Army Corps.
With the most then 10% always install was temporarily closed in March.
In overseas market.
Year over year growth come from both distributor market and the cyber CBOE market with our partner over the shipment to overseas distributor what the fed to June quarter, because of the pandemic has impacted the operation of our logistics and transportation service providers.
However, considering the strong rehashed them into demand from the oversea some marquee after an encouraging <unk> growth this quarter.
And considering data most all we will be open in the coming quarters, we expect a decent gross shipments revenue to overseas in the coming quarters.
From a quarter over quarter perspective revenue from overseas. Some marquee down 28% as you may know that our overseas to be and this is a subject to seasonality typically with our strongest performance in December quarter, and a loss in March quarter.
For example, our overseas.
Revenue decreased by 40% sequentially in March quarter.
2019, which led to some independent represents a normalized seasonality default pandemic.
The stronger seasonality in March quarter over 2022 is a proof over continuing recovery in overseas market.
Gross profit was 700 and the $7 million increased by about 17% at year over year and decreased by 18% quarter over quarter.
Gross margin rate was 32, 2% compared to 28 point of 1% a year ago and the city of one point to 1% of Bojangles'.
The year over year increase was primarily due to.
<unk> revenue contribution of overseas market increase by about 2% from about 20% in the same period over the 2021% to 22% in this quarter.
As you know our overseas operation you already have a higher gross margin than our operation in China.
And then number two.
Higher gross margin contribute the buys us new products on the strategic brand upgrade or meaningful in China.
The quarter over quarter decrease was primarily due to the decreased revenue contribution from overseas market from about 26% to about a 22%.
Excluding share based compensation expense.
Selling and distribution expense was 352 meeting Inc.
Increased by 28% year over year, and a decrease by 5% quarter over quarter.
The year over year increase was primarily attributed to number one increase in personnel related expense number to increase the license <unk> Ian read to the to our newly launched IP products.
Number three.
Increase the promotion and advertising.
Expenses relating to refresh over the meaningful store in China.
Partially offset by decreased the largest expense.
The quarter over quarter decrease was due to decrease the logistic expense <unk> Z and traveling expenses.
Okay.
General and administrative expense.
191 meeting increased by 22% year over year and decreased by 11% quarter over quarter.
Year over year increase was primarily due to increased depreciation and amortization expense related to our 90 user right of our headquarter building project.
And increased personnel related expense and the <unk>.
The quarter over quarter decrease was primarily due to decreased personnel related expenses and the decrease the financial and the legal service fee.
Turning to our profitability.
Operating profit was 100, and the <unk>, meaning compared to 100.
61, <unk> in the same period over 2021 and the 255 <unk> in the previous quarter.
Operating margin was 6% compared to seven 2% a year ago, and nine 1% to 2% a quarter ago.
Adjusted net profit was 100 and.
11 million compared to 149, meaning in the same period over 2021, and 200 and a 5 million in the previous quarter.
Adjusted net margin was full point of 7% compared to six 7% in the same period of 2021.
Seven points of 4% in the previous quarter.
Adjusted basic and diluted earning per ads as well.
36% in this quarter compared to 52 cents.
A year ago.
Turning to our cash position as of March and the combine the balance of our cash cash equivalents and the restricted cash and other investments was five point to 49 billing RMB compared to five point a.
37 billion RMB as of end of December 2021.
Our strong cash position and ample operating cash flow has positioned us where to cope with any kind of challenges.
Turning to working capital.
No Ross or imagery improved year over year, and stabilize though quarter over quarter.
Trade receivables remain stable on both a year over year and no quarter over quarter basis.
Looking ahead into the June quarter over 2022.
We continue to operate in significant uncertainty in regards to the timetable of pandemic recovery in China, and some Asian countries.
In China, our businesses suffer a more in April than in March with average 380 meaningful store was temporarily closed.
<unk> total revenue down about 10% sequentially.
Although we have all reserved sequential improvement in may it is more related to seasonality.
As it is difficult to predict.
As the Lockdown measure, we'll come through and we remain cautious in our outlook for the June quarter.
We currently expect our total revenue to be between two points, one being RMB two two the bulk bidding Amit.
The middle point of our range represents a decrease of 9% year over year.
Our margins have been and are expected to be pressure <unk> Z wave over pandemic outbreak.
Primarily due to sales deleverage.
As we have shared in the prepared remarks, we have not faced any material cost headwinds. Thanks.
Thanks to our strong bargain power and our flexible pricing strategy.
However, we have and taking necessary actions such as controlling operating overhead.
Reducing pausing narrow related expense.
Adjusting marketing plans.
To ease shelter some impact from the challenging we face on our bottom line.
Although we have been experienced these tough challenge, we are confident with our competitive advantage and optimistic about our goals to potential in inflation type.
The fundamentals of our business remain unchanged.
We will continue to focus on those elements.
Our business.
Under our control to drive our growth and our pre tax margins.
Thank you and this concludes our prepared remarks.
Operator, we are now ready to take questions.
Thank you.
Ill begin the question and answer session.
First question today comes from the line of Michelle Cheng from Goldman Sachs Line Open. Please go ahead.
Yes, Steven.
Wisconsin, and Michelle now with <unk>.
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Matt The question Glenn you can go ahead, Ken inflation. Thanks.
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Great question. Thank you.
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Hi.
I have two questions for management on the front lines regarding inflation in costs.
Retailers are calling for high pressure on the coffee question.
The management of innovation on the cost inflation.
And how do we manage that in particular, we have very strong margin expansion.
March quarter, how sustainable it is.
And my second question is regarding ethanol expansion, so can management give us some update regarding that.
Expansion plans for China and overseas market. Thank you.
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Thank you for your question Michelle.
Yes, we have noted the situation.
<unk> cost pressure faced by retailers concerns everybody in this industry.
Let me share with you our views so to sum up.
The risks and cost pressures of retail industry I think they come from the following aspects. The first is the rising as a rising transportation.
Freight costs, including the rising oil price and the rising shipment costs secondly should come from.
Supply chain status.
Size, including the.
A rise in price of raw materials and commodities.
And also we sold the transportation of cost pressures from suppliers.
And the third is.
The impairments of inventory.
Relatively to the reduction of gross profit.
In the current.
In the current turbulent market environment.
The hotel industry.
Facing more uncertain.
More uncertain consumer demands and higher just nowadays.
This has made many companies face difficult to reorder a face a prolonged reorder.
Hi.
And there is more and more reach.
Freight pressures come underway.
Some companies are choosing to keep.
More inventories.
Because consumer demand nowadays.
More and more to <unk>.
Predict so at this time.
On the market.
Forecast ghosts, Rob can be troublesome and can lead to inventory overstock.
So this has become a common challenge for the region.
Our municipal.
We currently do not do much pressure on cost side.
It has been supported by our recent.
Ryzen gross margin during the past quarters, and I think it's mainly due to following reasons first our walk to expense our expense structure. So in the <unk>.
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The freight costs.
Payout by municipal.
As from the supplier to the main source powerhouse.
This part only accounts for around <unk>.
A portion of the.
<unk> costs and the freight from in source warehouse to the domestic mutual retail partner stores over distributors stores.
Charge, two Chris bonding original partners our distributors. So the rise in freight costs will not have material influence Kim now.
Our retail partners and distributors because they use the <unk>.
Bell products using cost pass Mark Hoppe strategy, so the rising input costs.
So no impact on GAAP gross margin to <unk>.
Secondly, in the supply chain side, all large procurement volume.
As a result of.
More than 5000 stores worldwide.
<unk> is tremendous.
Cost advantages and our long term mutually beneficial relationship with our suppliers.
This enabled us.
Strong and enough market empowered to consolidate our cost packages. So therefore.
Thanks to our flexible pricing strategy, and our terminal and pricing wise so.
It's Fred costs, all the commodity prices rise we can all trust are these incremental costs.
Price and.
Promise that mixture that we have.
We can achieve our established.
Yes.
Gross margin targets.
And.
Third as we always count image.
As I shared earlier.
Inventory turnover days range is at 60 to 70 days and close to our pre COVID-19 level.
Specifically.
Why.
19 Arlington.
This was.
63 days.
And in export.
For you to deteriorate in Q1, which was about 78 due to the Kobe.
Thanks to our continuous efforts to reduce costs.
Yes.
The past three quarters, our aged inventory turnover days has recovered to 68 days, which is darcos developed pre COVID-19 level.
And at this moment China.
China is the least and the latest to be.
And to be affected by the global innovation and this has positioned unsold gal.
But of course the global.
Yeah.
Rising.
As certainly has some <unk>.
Transportation mechanism and will pay more closer attention.
Two the changes and continued to do good job.
Yes.
Thiago when do you want <unk> sure.
<unk> and <unk> guidance.
<unk> mission is so essential for glioma, Joel mentioned that around which we introduced in <unk>.
Yes.
And our <unk> guidance.
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I will translate for example.
Yes.
Your question on store expansion.
Let me start with the overseas markets.
Now we still maintain our.
Our guidance.
<unk> of 350 store in calendar year two.
But China.
It's a more complicated story here.
Everyone has.
Everyone knows what happens here.
And as the whole restricted restrictive measures.
Uh huh.
Absolutely.
Wire and.
As.
Sure his prepared remarks, we will dynamically.
<unk> of just our stoping.
Based on that.
Pandemic control in China.
And the.
The basic.
We're here.
<unk>.
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<unk>.
Long term our house.
Holden missile system.
And based on that.
Okay.
Thank you.
Hi, Thank you.
Thank you.
Thank you. The next question is from the line of New <unk> from Bank of America Merrill Lynch Lyse Open. Please go ahead.
Yes.
What about now.
When you look at all yet.
English is just Hollywood Thank you Kimberly.
Johan.
Michelle.
Great.
Thank you Michelle.
<unk> EBIT, John <unk>, John Pat or with I can I'll, probably ask Thomas to Josh <unk>.
Bromine comments home she is my name.
Scott.
It took off with the U the social.
Hey, Tom Secrets, I think somebody in Shanghai now.
That's what it is helpful for you also on telecom.
Yes.
That's helpful Christian.
Sure we've been Joe what's your team not recorded I should say Aha.
Following this.
Yes, yes, I am Tom what are the actual Anthony yes.
Yeah.
Well I would say Dan that should've wafer downhole no. Let me say that our plan for me I'd ask you differently.
Uh huh.
So the wind to Nigeria, Tongo, what's been a social apps, you've got Peter and Jojo attachment that you quote.
Jim thoughts maybe majority no mollycoddling Tito thank you too.
So you took a quarter until it could take.
I think you will drill core that you call it does actually.
Thank you.
Thank you Anthony.
The market is concerned about China spending power deterioration.
In EMEA Terminalling, my safe consumption downgrade or more conservative spending it might take some time to restore consumer confidence.
While many cell has raised the price for certain products second half of last year, how should we think about potential impact on south and now consumption down cycle.
Youll consider to adjust the strategy and second question is on there.
All situations in both China and overseas during the second quarter, so far and following that the China sales have been quite soft lately, how should we think about the inventory destocking.
In the second quarter also that product. Thank you.
Okay.
Although oceano quit on needle coke.
Yes sure.
Sanjay Chenzhou conducted you may know that youre not too when I'm done.
Sure.
Please go <unk>.
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Yeah, Glenn Yeah, Christian Glennie, because most of the women Aegean.
One of which is your total portfolio.
<unk> tons of global users.
Sure Vishal.
So just should agree you need agility.
Yes, it does.
Again, I mean, it's I'll use agenda Bender with Savannah, coming along and do you think you have to.
Just help me with that change.
And that money is gone up.
Sure.
Can you talk here Youll Pavel.
Since you said that you need.
The advantages of immuno <unk> Joseph <unk>.
Okay.
<unk> one <unk>.
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Other claims that you have towards this is normally used.
Giovanni.
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Okay.
I'm really not strategic.
This is John .
Yes.
But where you thought it would be.
So somebody.
John Jumbos.
So it sounds as though you essentially shelving coming June commodity deliveries.
So the sheer timing downtown so Jonathan hurn equally well.
Let me show up you mentioned your children.
But what are you kind of give them.
Yes.
Sure.
Our translator for CEO .
So thank you for your question Lucy.
One thing I want to point out here is that.
So many countries are facing.
<unk> inflationary pressure off at this level and.
And consumers.
Tended to look for value more in such a high inflation families.
As.
Very good opportunity for us because that is our advantage.
A result experience and capabilities.
Supply chain.
Inventory management, and our pricing strategy will continue to leverage our value proposition and cost advantage and get more capacity.
Position in this downturn or consumer.
For a long time municipal has always all of our pricing strategy of taking.
Around 50% merchandise gross margin.
Starting in 2021.
Our new product question margins are represented by these IP products.
Increased by <unk> five.
5%.
But if need to be emphasized that.
This price increase.
I just.
For the 6% interest based products, while the rest 70%.
The mix of products, we will seek to all value proposition and I can show a shadow.
Numbers in the past three or four years.
The average selling price per meaningful products in China market.
Has things slowly.
Decreasing from.
Renminbi.
Five two to less than.
And then Brito.
During the same time, our margin in China market stabilized.
So we won't.
Right.
Minnesota product price competitiveness.
We'll do that based on all of that of competition and do some no.
Differentiate.
Rising to meet the multi diversified.
Thanks.
As Al said I think this strategy.
It's influenced our gross margin is positive.
And in the future there will be not.
Net and channels, while parcels for our promotional.
Promotion strategy.
We'll see.
There'll be still be or the 70% interest interest based products.
And only for new products.
Yes.
As we communicated in last quarter's earnings call.
Really hope that after the brand's upgrades when consumers come to full <unk> feel that we've got more expensive but.
Have more value.
Yeah.
Okay.
Thiago <unk>.
So according to <unk> rollout.
And intellectual silicon tailwind volume Gordon.
You're bound to see us on committed too lumpy xylophone shall we go into this year.
Susan do for familial <unk>.
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Okay.
A volatile guidance.
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<unk> you Michelle Concho I don't call that go on air with that audience.
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Okay.
Yes.
I will translate for example.
I'll answer your second question.
So first hubs.
Yes.
Recent recovery.
Okay.
So first off in China.
Currently.
Even for US in this situation in March because we had a more stricter.
Tom measures.
So sequentially the Jimmy in April .
Down 10%.
Many many do too.
Number one.
The temporary store closure.
Even higher.
So in April .
There was about eight.
Schools afforded coast.
And the <unk>.
Number two with traffic footprint sales force also.
Chris.
And the or.
The operations in mainland, China and saw some kind of recovery.
Some kind of recovery.
That's our judgment.
It's more related to us.
Yes.
To this model of.
Strong months in Minnesota.
And but on the other side of it also sold out.
The store closures in China.
Chris.
That's fair.
Yes.
In recent days.
For the overseas operations.
I think the hope.
Sure.
The overseas situation is much better debt finance.
Hi, there.
We'll look at.
Yes.
The March quarter's year over year growth.
Status.
No.
Andrew.
The June quarter, we have apparently acceleration.
Recovery.
Market.
Sample, India and even this year.
Our average is so old.
60% year over year gross especially.
In your market have sold more than one person.
Yes.
And your second question on the inventory.
My first.
My first impressions year based almost.
On the institution.
Are you is that we're.
We're just fine.
<unk> on the inventory.
Costs.
During the past two years.
<unk> funds.
Bonds every chance.
Every chance we get in.
To control our inventory turnover days.
And we also Gary.
And our.
Inventory management.
<unk> SaaS so.
In the in March due to the <unk>.
From measures our inventory.
Naturally not negatively affected a little bit.
But.
The inventory turnover days for China.
Steel.
The low level of 60 days.
Sure.
In fact, I want I want to express that.
Sure hold control level.
Quite good so we are very cognizant of where they.
This side thank you.
Yes, I'll take that Jason.
Thank you. The next question is from the line of Neon comes from from Credit Suisse. Nice Open. Please go ahead.
Hi, This is Jeff I mentioned I think I know what you think is compelling.
Finally from Russia.
Thank you next question please.
Yes.
Concurrently with the Chinese I think anymore.
Sounds great.
So just a short one.
It is simply.
Thank you and regarding scar tissue.
So quick question.
And maybe I'll quickly translate so how is our related.
Okay. Thanks Marty.
Right in the scenario.
It is stabilizing.
And also in overseas countries.
Yes.
At this time.
Stabilized forthcoming.
Thank you.
Yeah.
Okay.
Due to that kind of <unk> that you didn't Bermuda.
Andrea Sean Wieland, mainly is on the Columbia Sony.
Yeah.
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Linda <unk>.
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Yeah.
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When we go live with JD and kind of you got shunted wondering Anthony on margin, let me Sheila on the on yet.
A little.
So let me whatsoever.
Let me start by neighborhood, but I mean, what would you tie that Jean <unk> Hello.
Johnson <unk> dual <unk>.
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A total of a dynamic.
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Does any of that in there.
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Well, Michelle sort of adjacent young let Michelle answer on <unk> is this is all you know at least on this yet.
And it seems like that.
Is it a little jumpy.
Gotcha.
Thank you rod cost.
So generally speaking since we are efficiently.
Officially launch our <unk>.
And then on the program.
Since.
Lost.
Cluster.
In the fourth quarter.
Ever seeing wins quite well in most of America a market.
It'd take America.
S market as an example, since it has.
The majority of powerful.
In your business.
But as of the end of March we had before.
Many vessels.
Mostly direct directly operated.
And the store number increased.
By 70% year over year.
Terms of average store performance average store sales in March quarter.
We have seen 100.
Recovery to the pre COVID-19 level and if we look at the high season, the peak season of December quarter last year.
Average store performance for us.
10%.
Higher.
And of course it has.
Large parts.
The whole recovery of the U S retail.
Yes.
Retail market.
Beyond that we also have accomplished a lot of internal management improvements such as the localization of our products such as the solution through our supply chain. So during the past several quarters, we have seen more and more profitable stores in the U S.
S markets and we are more and more coast to see relatively stable.
Our store model and the Wii.
We really hope we can do we can have this jumped down in.
In Europe too.
So.
Except the U S. We also try Canada market in the second half.
Sure.
And except to the North American market, we also had other.
Several subsidiary markets.
I would say that many of them.
Half of stall model there.
Especially in the next year, so for the whole NAS sauce.
Market, including this year.
Major problem of then.
And David it's steered there. So it has still lingering effects on all of those shows there. So we do really hope that in 2022.
The impact of the Kobe in these.
Market will be.
Eventually so that we can.
Improved.
Substantially all of them.
Ken.
<unk> subsidiary markets. Thank you very much.
Okay.
Thank you once again for joining us if you have further questions. Please contact <unk> investor Relations team.
Our contact information can be found on today's press release, we will see you next quarter.
Okay.