Q2 2024 MINISO Group Holding Ltd Earnings Call
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Unknown Executive: TKA Subbers Translator America Timer & Editor www.iswakfansubs.blogspot.com www.iswakfansubs.blogspot.com Thank you to all investors and analysts for joining us this afternoon. Thank you for participating in the 23rd Annual CPPCC Elections. After the meeting, please state your name and the organization of the meeting. Thank you. You know, go away.
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Unknown Executive: Thank you.?? ?? Ladies and gentlemen, thank you for standing by and welcome to MINISO's earnings conference call for the December quarter of 2023. At this time, all participants are in a listen-only mode.
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Unknown Executive: After the management makes its remarks, we will conduct a question and answer section. Before joining this section, please mark your name and institution and be kindly noted that this event is being recorded. We announced our quarterly financial results earlier today. An earnings release is now available on our investor relations website at ir.miniso.com. Joining us today are our founder and CEO, Mr. Jack Yeh, and our CFO, Mr. Eason Zhang. Before we continue, I would like to refer you to the safe harbor statement in our earnings press release, which also applies to this call, as we will be marking for it looking statement. Please also know that we will discuss non-FRLS financial measures today, which we have explained and reconciled into the most comparable measures reported under the International Financial Reporting... This meeting is being recorded.
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Speaker Change: Ladies and gentlemen, thank you for standing by and welcome to the Minnesota, earning conference call for the December quarter, a plenty of money three at a time all participants are in a listen only mode. After the management's remarks.
Speaker Change: We will conduct a question and I'll be back soon.
Speaker Change: Joining this section with modern name and institution.
Speaker Change: Finally noted that this event is being recorded.
Speaker Change: We have announced our quarterly financial results earlier today and.
Speaker Change: <unk> earnings release is now available on our Investor Relations website at IR Dot Dot Dot com.
Speaker Change: Joining us today are our founder and CEO, Mr. Jack yet and our CFO Mr. Ethan Starr.
Unknown Executive: ...in the company's earnings release and following statements with the U.S. SEC and Hong Kong Stock Exchange. The currency unit is the Chinese Yuan, which I left out in my status.
Speaker Change: Before we continue I would like to refer you to the Safe Harbor statement in our earnings press release, which also applies to this call I flew verbal marketing where it looking statements.
Unknown Executive: In addition, we have prepared a PowerPoint presentation for today's call, which contains financial and operational information for this quarter. If you are using Zoom meeting, you should be seeing it right now. It can also be visited on our IR website later. Now, I would like to hand over the conference to Mr. Ye and Ms. Allison from the MINISO IR team to translate. Thank you. Thank you.
Speaker Change: Please also know that we will discuss non <unk> financial measures today, which we have explained and reconciled it could amount comparable measure reported under the international financial what this meeting is being recorded in the company's earnings release and filings with the U S F&B and Hong Kong stock exchange the currency unit Chinese yen.
Speaker Change: Unless otherwise stated.
Speaker Change: We have prepared a powerpoint presentation for today's call, which contains financial and operational information for the quarter.
Unknown Executive: Welcome to the Ministry of Finance's telephone conference on December 31st, 2023 at the Mingchuan Goods Corp. This quarter, the overall performance of the company is new and high. We also made a beautiful end to the year in 2023.
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Mr. Yet: And also revisit it on our IRS Ryan later, now I would like to hand over the conference to Mr. Yet amid Alice shifts from meaningful our team which has greatly.
Yet: Go ahead Sir.
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Yet: Hi, Joe Clayton Tundra mentor, you'll be in Japan and Australia.
Unknown Executive: The income has been refreshed to a record 38.4 billion yuan, an increase of 54%. 43.1%, 5.3% 3.1% After adjustment, the net profit is more than 6.6 billion yuan. Tom Lister, Shingo, Adjusted for perfection. 17.2% After deducting the foreign exchange influence, we believe that 17.4%, 17.4% I want to sing a historical song.
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Unknown Executive: We hope to reach 13.8 billion yuan by the end of the year. Tencent's growth was nearly 40%, while Maodili's growth was 41.2%, while Tencent's growth was 6.2%. After the adjustment, the net profit was 23.6 yuan, while Tencent's growth was 110 yuan.
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Unknown Executive: Hello, everyone, and welcome to MINISO Group's December quarter 2023 earnings call. Our overall performance once again reached new highs during this quarter. We cap off the year of 2023 with brilliant results.
Speaker Change: Hello, everyone and welcome to minutes, Okay December quarter of 2023 earnings call. Our overall once again reached new heights during this quarter.
Speaker Change: Half of the year of 2023 with brilliant outcome total revenue hit.
Unknown Executive: Total revenue hit RMB 3.84 billion and set a new record once again, increasing by 54% year over year. The world's margin growth reached 43.1% with an increase of 3.1 percentage points compared to the same period in 2022. Adjusted net profit exceeds RMB 660 million, breaking our record once again, and Adjusted Net Profit Margin, which is 17.2%, including the foreign exchange impact, and just Adjusted Net Profit Margin reached 17.4%, which found a new report as well.
Speaker Change: RMB 384 billion as at any with bar once again.
Speaker Change: <unk> by 54% year over year.
Speaker Change: Wealth modern growth to 43, 1% with any great Big one one percentage points compared to the same period in 2022.
Speaker Change: And adjusted net profit RMB $650 million, bringing our record once again.
Speaker Change: Adjusted net profit margin reached 17 17.
Speaker Change: Excluding the foreign exchange impact and thus net profit margin reached $17 four banks.
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Unknown Executive: For calendar year 2023, total revenue reached RMB 13.8 billion, with a year-over-year increase of around 40%. The growth margin reached 41.2%, with an increase of 6.3 percentage points. At a just net profit margin of RMB 2.36 billion, representing an increase of around 110% year-over-year. 2023 is a year of not only refreshing the record of the retail industry but also a year in which I will be reporting to you every quarter, creating new and high-quality data. In 2023, Q2, the revenue will exceed 3.4 billion yuan. I hope that we will soon reach 4 billion, 5 billion, and even higher. Our chain has broken through 6,000 in KU3.
Speaker Change: Now on the year 2023 total revenue reached RMB, one 8 billion with a year over year increase of around 40% gross margin reached 41, 2% with an increase of six three percentage points and adjusted net profit margin reached RMB, two 3 billion, representing an increase of around 110%.
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Unknown Executive: Mao Zedong keeps breaking through, reflecting the success of the M&A, AP strategy, and brand upgrading strategy. The level of financial use has not only improved, but also reflected our efforts to achieve a good report in terms of asset-free business models and finance management. 2023 is definitely a year full of new records for MINISO.
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Unknown Executive: We continuously report new highs in every aspect of our operations. We firstly exceeded RMB 3 billion in revenue for the June quarter this year, and hopefully, we can break through ourselves by reaching 4 billion, 5 billion or even higher in the future.
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Speaker Change: Slightly exceeded RMB 3 billion any revenue for the June quarter. This year and hopefully we can breakthrough ourselves by Richard <unk> 5 billion or even higher in Beijing.
Unknown Executive: The total store count exceeded 6,000 in the third quarter. Our growth margin also achieved breakthroughs again and again, reflecting the success of our IT strategy and brand upgrade strategy. Our net profit margin also kept climbing, which was the reward for our asset line model and the efforts in controlling expenses. Behind all kinds of indicators, I often think about how to do better. Buffett said, although I'm over 90 years old, I dance every day to work.
Speaker Change: Total store count.
Speaker Change: In the third quarter.
Speaker Change: Our gross margin also achieved breakthrough again, then again, reflecting the proceeds of our IP strategy and brand upgrade strategy. Our net profit margin also pick climbing, which reward our asset light model and the efforts in controlling expenses.
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Unknown Executive: Because I love my job so much. I wholeheartedly agree with what you said, because I love the idea of Mincheng Youping so much. I feel very happy every day. I never feel tired.
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Unknown Executive: I feel that my job is the most interesting job in the world. And I'm not alone. The whole company is a strong team. We understand each other. We appreciate each other and fight for the same goal. In the past year, our shareholder base has expanded a lot. We are also very grateful to the shareholders for recognizing MINISO Group and investing in our stock. We will continue to operate this business with a long-term vision. I knew all these financial metrics. I was always thinking about how to outperform our past achievements. I fully agreed and resonated with Warren Buffett's work. Although I am already in my 90s, I truly do feel like I kept dancing to work every morning, simply because of our immersed love for our work. I love running MINISO and feel great happiness without feeling tiredness every day.
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Unknown Executive: To me, there is no job in the world with more funds than running MINISO. Moreover, my journey is not voluntary. Rather, it is sponsored by the strength of a powerful team within our company. We understand and appreciate each other very much and fight for the same goal. In the year of 2023, we were thrilled to see that much more investors showed up in our shareholding. I would like to express my sincere gratitude to our shareholders and hopefully deliver more value in our business operation with a long-term perspective. Although the process of globalization is somewhat imprecise, it is a process of building and demolition.
Speaker Change: There is no job in a world with more funds and running minister.
Speaker Change: Moreover, my journey not military rather and is bolstered by the strength of our powerful team within our company, we understand I appreciate which each other every much and vibrant angle.
Speaker Change: And the year of 2023, we were thrilled to be that much more investor showed up in our carefully.
Speaker Change: To express my sincere gratitude to our shareholders and hopefully deliver more value of our business operations with the long term.
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Unknown Executive: The key is not to find a definite answer but to...?? In 2023, the overall annual income of overseas companies will be 34%. We are a globalized company that has entered the market 110 times in a row. We will do our best to provide a well-equipped business plan. Translator Originally Translated Into Chinese, The Greatest Uncertainties in Our Global Expansion Globalization is a process of responding to challenges as they arise. It is about riding the wave instead of taking disastrously certain shores.
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Speaker Change: Despite this uncertainty in our global expansion globalization is a pop out of responding to a challenge as they arise.
Speaker Change: It is about riding a wave that up taking it definitely certain short for.
Unknown Executive: For the calendar year 2023, our overseas revenue contributed 34% of the total revenue. Having entered into 110 overseas markets so far, we present ourselves as a globally operated company and we are committed to fully diversifying the business layout of MINISO to increase our risk-resistant capabilities. Next, I will introduce MINISO China, MINISO Overseas, and TopToy's three major business blocks to you in detail in this quarter's full-year business situation
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Unknown Executive: Now, I will walk you through business updates for our three major segments, MINISO China, MINISO Overseas, and Top Stories. First of all, MINISO's domestic business. 1231, According to the National Bureau of Statistics, the growth of the domestic retail share of Tencent is 6.6% year-on-year, an increase of 8% Ke'ai. According to Kebi's statement, Kebi's annual sales are about 32% higher than the previous year. Start with MINISO China.
Speaker Change: Now I will walk you through business update for our three major segments Medical China will go overseas and popcorn.
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Let's start with minimal China offline sales increased by 56% year over year, compared with an increase of 8% and domestically talks about our consumers goods according to national Barrett.
Unknown Executive: Offline sales increased by 66% year over year, compared with an increase of 8% in domestically sold consumer goods. According to the National Bureau of Statistics of China, on a comparable basis, theme store sales increased by around 32% year over year. In 2023, MINISO's domestic offline sales grew by about 40% year-on-year. In 2020, MINISO's sales increased by more than 25% compared to the previous year. MINISO's performance in the past two years has remained consistent.
Speaker Change: China on a comparable basis same store sales increased by around 32% year over year.
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Unknown Executive: In addition to the high level of retaliatory consumption in early 2023, MINISO's sales increased by nearly 43% in January and February of 2024. In addition to the high level of retaliatory consumption in early 2023, MINISO's sales increased by nearly 43% in January and February of 2024, 95% better than last year, and will continue to lead the industry. In February, 1360 stores across the country refreshed their history, accounting for one-third of the total number of stores across the country.
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Unknown Executive: In particular, during the Spring Festival, Tencent's Tencent Store sales increased by more than 10%, which is a good sign for the growth of QoE's performance. The company will continue to pay close attention to the sales trend and actively take measures to deal with the complex and variable PR environment. In 2023, GME of MINISO Offline Stores in China enjoyed a year-over-year increase of about 40%, powered by over a 25% increase in same-store sales. Entering 2024, GME of MINISO Offline Stores in China increased by nearly 13% during the first two months, albeit a high base of last year because of pent-up demand, and same-store sales were over 95% of the same period last year. The best recovery rate, demonstrating the resilience of MINISO, as always.
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Speaker Change: Three <unk> of Minnesota offline stores in China enjoyed a year over year increase of about 40% powered by over 25% rate interface ourselves.
Speaker Change: Entering 2024 <unk> of missile offline for in China increased by nearly 13% during the first two months I'll make a high base of last year.
Speaker Change: Up demand and the same store sales with over 95% of the same period last year, but that recovery ratio.
Speaker Change: Demonstrating the resilience of Medisoft as always.
Unknown Executive: In February, 1,369 stores, or one third of MINISO stores in China, refreshed their sales records. In addition, things resolved during the Chinese Spring Festival increased by around 10%, setting a solid foundation for growth in the first quarter of 2024. We will keep tracking this trend, staying alert, and taking positive measures to cope with the macro pandemic. At the domestic opening level, this quarter, there are 124 domestic competitors and retail stores. Nearly 70% of them come from 1st and 2nd-tier cities.
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Speaker Change: Also secondly, Brent staying alert and taking off event lashes Republic and macro headwinds.
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Unknown Executive: In 2023, there will be 601 retail stores in China; we opened 124 net new stores in China during the December quarter, 70% of which were located in the first and second tier cities. For the year of 2023, we will open 601 net new stores in China. We hope that the door of the future will be able to open.
Speaker Change: Bank of store openings in China, We opened 124 net new sports in China during the December quarter.
Speaker Change: 80% of which were located in the first and second tier city for the year of 2023, we open 601, new store in China.
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Unknown Executive: , 2024,, , and Zhao Zijian from the department of Australian development and industry value both speed and quality in our growth of store numbers. Meanwhile, we will stably operate, optimize, and maintain a healthy and comprehensive global MINISO store network. Consequently, we will pay more attention to store location or actively establish MINISO store metrics and conduct a more efficient store expansion and store network distribution. We also have the intention to optimize the power consumption of our stores. With the promotion of large-scale power stations, the average sales volume of new stores this year is over 14% higher than the overall sales volume of our stores, and the average sales volume is over 33% higher than the overall sales volume of our stores. In 2023, the domestic power consumption rate will be to create a new historical record of around 4%.
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Unknown Executive: In 2024, we expect to compete with 350 to 450 companies in China to continue high-quality development and operate in a new way, and also pay attention to enhance our store EE. As we implement our flexible store strategy, a newly opened store of 2023 was 14% larger than the average, while their sales were 30% higher than the average. Meanwhile, the closer range of MINISO stores in China in 2023 was around 4%, representing a historical low.
Speaker Change: Implement flex influenced allergy newly open store out 2023, with 14% larger than the average while theyre salt were 30% higher than the average and while the closure rate of meaningful shift in China out of 2020 brief with around 4% representing a historical low.
Speaker Change: In 2024, we expect to open 350 to 450, new stores on a net basis in China, focusing on high quality growth and a land preparation.
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Unknown Executive: In 2024, we expect to open 350 to 450 new stores on a net basis in China, focusing on high quality growth and lean separation. Next, I will introduce the progress of the overseas business. First of all, the revenue of the overseas business for the 1231 quarter is nearly 1.5 billion yuan. It has once again broken the record of overseas single-season revenue. The 51% growth rate has also exceeded the most optimistic expectation of ChiXian
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Janet: Moving on to our progress on the international pump, Firstly, obviously revenue with about RMB, one 5 billion.
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Janet: The 51% year over year growth, our revenue estimate our mouth.
Janet: Missing expectations, notably revenue from directly operated markets increased around 90% and have increased by more than 80% for three consecutive quarters.
Unknown Executive: Especially the direct market revenue growth rate is nearly 90%, and the growth rate of the three consecutive quarters is more than 80%. The direct market income is 50% higher than the overseas income. In 2023, the overall overseas income grew by 47%, the direct market grew by 83%, and the agent market grew by 24% in January. Moving on to our progress on the international film
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Janet: For the year of 2023.
Janet: An increase of 147% year over.
Janet: Per year, including an 83% increase in directly operated markets and 24% increase in distributor markets.
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Unknown Executive: Firstly, overseas revenue was about RMB 1.5 billion, another historical high. The 51% year-over-year growth of revenue exceeds our most optimistic expectations. Mostly, revenue from directly operated markets increased around 90% and has increased by more than 80% for three consecutive quarters, contributing over 50% of overseas revenue for the first time. For the year of 2023, China's revenue increased around 47% year over year, including an 83% increase in directly operated markets and 24% increase in distributors markets. Second, in the short term, the overall growth of overseas GMOs is 38%, 76% of which is in the direct market, and 27% is in the independent market. As long as the overseas market continues to maintain a high level of GMO growth, the overall growth in the North American region will be about 1.1 times. After North America, the European market will be another key market for us in the next five years. China has a growth rate of 70% compared to the U.S., and the U.S. has a growth rate of 40% compared to China. Asia has a growth rate of 21% compared to the Chinese market.
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Speaker Change: Yes, we have overseas markets increased 38% year over year, primarily due to in.
Speaker Change: 76% increase in the directly operated market and a 27% increase in distributor markets.
Major markets maintain strong momentum, including a 110% increase in North America, followed by Europe, which is another key market in the next five years, achieving 70% increase in the quarter and a 14% increase in Latin America.
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Unknown Executive: ,, The growth of Tencent is about 1.2 times. The growth of the European market is almost 70%. The growth of the Latin American market is nearly 50%, and the growth of the Asian market is about 36%. We know overseas markets increased 38% year over year, primarily due to a 76% increase in the directly operated market and a 27% increase in the distributor market. Major markets maintained strong momentum, including a 110% increase in North America, followed by Europe, which is another key market in the next five years, achieving a 70% increase in this quarter, and a 14% increase in Latin America and a 21% increase in Asia, excluding China. For the year of 2023, we witnessed a 120% increase in North America, a 70% increase in Europe, a 50% increase in Latin America, and a 26% increase in Asia, excluding China.
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Speaker Change: Firstly ancillary smelting operating market during December quarter increased by 90% year over year, including 30 night. Thank you.
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Speaker Change: We also witnessed a 23% increase in Latin America, and a 12% increase in Asian countries.
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Speaker Change: 2023, same store solving oversea market increased by 26%.
Speaker Change: Putting in 45, increasing directly operate in market and a 22% increase in distributors market.
Later oversea markets, such as North America experienced a 75% increase and we also witnessed a 34% increase in Latin America, and an 80% increase in Asia, including China.
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Unknown Executive: In the third quarter, the number of overseas KB copper and iron sales increased by 19%, and the market share increased by 39%. In the main market, North America increased by 49%, Latin America increased by 23%, and Asia increased by 12%. For the whole year, the sales volume of overseas coins increased by 26%, and the value-added market increased by 45%.
Speaker Change: 140, 74, new stores on a net basis in overseas market in the fourth quarter, achieving a new record.
Speaker Change: Nike for the years of 2023, we opened 372, new sports on a net basis in line with our guidance in 2024, we expect to open 500 to 650 net new stores in oversea market.
Unknown Executive: China's export market grew 22% while the U.S. grew 75% Latin America grew 34% while Asia grew 48% Thirdly, inshore sales in overseas markets during the December quarter increased by 90% year-over-year, including a 39% increase in directly operated markets and a 30% increase in distributors markets. In terms of major overseas markets, such as North America, it experienced a 49% increase. We also witnessed a 23% increase in Latin America and a 12% increase in Asian countries, excluding China.
Speaker Change: A majority in Asia, excluding China, and Latin America, followed by Europe, and North America.
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Unknown Executive: For 2023, same-store sales in overseas markets increased by 26%, including a 45% increase in directly operated markets and a 22% increase in distributors markets. Major overseas markets such as North America experienced a 75% increase, and we also witnessed a 34% increase in Latin America and an 18% increase in Asia, excluding There are 174 open-air markets in the overseas market of KU4. This is the highest number of open-air markets in the overseas single quarter since 2019. By 2023, we will have completed 372 doors in the year-over-year competition to launch our power generation goal.
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Unknown Executive: In 2024, we expect 550 to 650 doors to be launched in the year-over-year competition, and most of the new doors will be contributed by Asia and Latin America. The European and North American markets will also experience a rapid opening year. We opened 174 new stores on a net basis in overseas markets in the fourth quarter, achieving a new record since 2019. For the years of 2023, we opened 372 new stores on a net basis, in line with our guidance.
Speaker Change: You should come and show the Chumby using a <unk>.
Speaker Change: All of our Richardson.
Speaker Change: While this product innovation perspective, we will add hurt our IP strategy and focus our efforts and strategy category.
Speaker Change: We are committed to satisfying the demand driven by interest consumption for the worldwide consumer empathy.
Speaker Change: But there's an affordability of IP products.
Speaker Change: Bill and impacted on separate IP strategy on one hand, it continuously elaborated with global top IP on the other hand, we were focused on in Capex up design IP and generate unique brand advantage.
Unknown Executive: In 2024, we expect to open 550 to 615 net new stores in overseas markets, with a majority in Asia, excluding China and Latin America, followed by Europe and North America.,, and share the strategic plan for the next five years. Over a longer period of time, it is clear that our mission is to serve the happiness of the people.
Speaker Change: I have confidence that IV market and pork break essential we win at the fast growth in IC product off contribution in oversea market some material quarter.
Speaker Change: The IC product sales contribution of the year of 2023 already at 40%.
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Speaker Change: While developing strategy.
Unknown Executive: The company's vision is to become the world's number one IP design retail group, and it can stick to product innovation, stick to cost-effectiveness, and stick to a global three-pronged strategy. In January, we host the MINISO 2024 Investor Day and share development strategies for the next five years with investors from a long-term perspective. We brought up our mission of Light It For Fun and our vision to become the world's number one IP-defined retail group with three strategies: Product Innovation with IT Design, Affordability, and Globalization. To monitor product innovation on the road to a global super brand, MINISO Group will continue to monitor, take action in the IP strategy, implement it in the strategic category, and meet the needs of global consumer interest through the IP product meeting. Our company is working on the development strategy of dual-wheel drive on the super-IP strategy.
Stratus steak category is an important measure and product integration as well Saturday category represented by <unk> disposable products for toppling plush toys fibrinogen.
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Unknown Executive: On the one hand, our company continues to expand global IP joint cooperation. On the other hand, we focus on the brand advantage of non-digitalization of the original IP, administrative non-copyright. I firmly believe that the global IP market is a very promising market. In recent years, the contribution of overseas IP products has increased rapidly. The annual sales of overseas IP products have already exceeded 40%. Product Innovation Perspective.
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Speaker Change: And portable products to consumers and municipal par value for the whole time during 2023, I have become more confident than ever with our advantage in supply chain IP design at the traveling a lot in our overseas market.
Speaker Change: Plenty for us.
Speaker Change: If that was meant in global supply chain.
Speaker Change: And our collaboration a smaller supplier quality audits.
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Unknown Executive: We will adhere to our IP strategy and support and focus our efforts in strategy categories. We are committed to satisfying the demand driven by interest consumption for the worldwide consumer by placing emphasis on affordability of IP products. We adopt dual engine tactics on the super IP strategy.
Speaker Change: These measures will help us in maintaining our competitiveness competitive advantage in terms of cost saving in our future operations.
Speaker Change: Nowadays there were about 24% overseas supplier around 1400, <unk> supplier that we have to work with including cosmetic suppliers from Korea.
Unknown Executive: On the one hand, we continuously collaborate with global top IPs. On the other hand, we will focus on incumbent self-designed IPs and generate unique brand advanced. I have confidence that the IT market is of great potential. We witnessed a fast growth in IT product sales contribution in overseas markets from the previous quarter. The IT product sales contribution for the year of 2023 is already 40%. Issue No.
Speaker Change: Suppliers from the non external compliance on India in care product from era, and snacks and toys the bias from North America, We now have tables and long term collaboration we audit.
Speaker Change: In the above mentioned categories.
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Unknown Executive: 4, Our things of goodwill horizon and our product innovation banner reflect the progress of this year's product extent to catch up with previous evolutions and achieve almost 70% higher sales of the same product, while developing strategy. Strategic Categoristic is an important measure in product innovation as well. Strategic Categories, represented by Planboxes, disposable products for toppling, plush toys, fragrances, and perfumes, increase about 70% in sales year over year. No matter which stage a company is in, we have to make sure that the product's cost-effectiveness is not affected.
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Speaker Change: First one to optimize the globalization of our short Edward recently with devote our brokers and support to Erith market the newly opened asset.
Unknown Executive: In the past year, through a close investigation of the overseas market, I am more confident in the advantages of the supply chain and the IP design of the Mingchuan Goods Group. In 2024, we will accelerate the promotion of the overseas supply chain layout, deepen cooperation with global high-quality suppliers, achieve overseas product delivery efficiency, and enhance the supply chain anti-risk ability of the overseas market. These measures will ensure that our future business will continue to be cost-effective. At present, among the 1,400 suppliers of Mingchuan Goods, about 20% are overseas suppliers, including Korean cosmetics, Vietnamese toys, Indian textile products, and European skin care products. Supplier. Supplier. Partner
Speaker Change: Thor and captain store in London are flattening out.
Speaker Change: Great.
Speaker Change: Moving forward, we expect to see more sort of likely to be open in Europe, which will be one of our key mass marketing of our book.
Second one X product globalization.
Speaker Change: Differentiation in global products will be the engine for store improvement.
Speaker Change: Focus on satisfying category.
Speaker Change: Carryout customize RMB product according to local conditions, providing our customers aqua products with meaningful feature local and usage experience at Samsung Athletic.
Speaker Change: The third one at talent globalization as of December 31st 2023 percentage of Oversea employee safety.
Speaker Change: 50%.
Speaker Change: Demonstrate our resolve in globalization.
Speaker Change: We will continue to.
Speaker Change: Your effort and talent pool.
Speaker Change: Establishment sabbatical overseeing development of high speed and potential.
Unknown Executive: Buying affordable products for consumers in Minnesota Valley for the whole time. During 2023, I have become more confident than ever with our advantage in supply chain and IP design after traveling a lot in our overseas markets. In 2024, we will speed up establishment in the global supply chain and strengthen our collaboration with global suppliers of good quality in order to improve product delivery and the anti-risk capability of the supply chain. These measures will help us in maintaining our competitive advantage in terms of cost savings in our future operations. Nowadays, there are about 24% overseas suppliers among 1,400 global suppliers that we have worked with, including cosmetic suppliers from Korea, toy suppliers from Vietnam, textile suppliers from India, skincare products from Europe, and snacks and toys suppliers from North America. We now have stable and long-term collaboration with all these suppliers in the above-mentioned categories. There are three factors that deteriorate complete globalization. I am in charge of recruiting candidates for the International Entrepreneurship towards Europe labor market service system. Hamden Electric and other flagship electric companies have set new sales records in Europe.
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Speaker Change: In addition about developed products actively on the other hand, it will conduct its data until our path and expect their input.
Unknown Executive: In the future, there will be more good electric companies in Europe. In the next few years, the European market will become an important source of growth overseas. Secondly, product globalization. Disseminating diversified foreign products is an engine for the growth of overseas e-commerce, focus on strategic quality and develop customized products for the overseas market. MINISO's products are both brand-specific and in line with local aesthetics.
Speaker Change: South forecast probability from got reasonable manufacturing arrangement and inventory management.
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Speaker Change: Joseph Boston, Those Union, Pune, India, Arlene Austin Charger in June.
Unknown Executive: Third, talent globalization. As of December 31, the number of overseas employees of MINISO exceeded 50%. This is the best proof of the globalization of our company. We will continue to improve our global talent ladder construction to better adapt to the fast-moving and promising overseas market development.
Speaker Change: A replay will be decided.
Speaker Change: Following our strategy for the next five years and the year for all of us to fight inside.
Speaker Change: <unk> challenge and opportunity right heart by emphasizing our product innovation portability globalization strategy.
Speaker Change: Without orientation long journey and believe in victory.
Speaker Change: So what is your honeymoon chairman Chang easily digest your cellphone judo contracts, how would you want.
Unknown Executive: The first one is to optimize the globalization of our store network. Recently, we have devoted our focus and support to the EARTH market. The newly opened Oxford Street Store and Cadence Store in London have set new sales records for all EARTH stores.
Speaker Change: I'll now turn the call over to Eagle.
Eagle: Two of our financial performance December quarter of <unk> pharmacy.
Eagle: Yeah.
Eagle: Thank you Jack Hello, Iran. Thank you again for joining US today I will walk you through our financial results for the December quarter. Please note that all numbers are in renminbi terms unless otherwise noted.
Unknown Executive: Moving forward, we expect to see more stores like these open in Europe, which will be one of our key markets for growth. The second one is product globalization. Differentiation in global products will be the engine for short-UE improvement. We will focus on strategic, categoristic, and carry out customized R&D of products according to local conditions, providing our customers with popular products of meaningful features, local usage experience, and sense of aesthetics. The third one is talent globalization. As of December 31, 2023, the percentage of overseas employees will exceed 50%. We demonstrate our results in globalization. We will continue to exert effort in talent school establishments to better cope with overseas development at high speed and potential. Next, I will introduce the progress of Taobao Industries to you. This quarter's income has increased by 90%.
Eagle: I'll also refer to some non <unk> measures, which have excluded share based compensation expenses.
Eagle: Revenue was 384 billion, representing an increase of 55.
Eagle: 54% year over year revenue from China was 2.35 billion up 56% year over year. The increase was driven by number one a growth of 63% and revenue from Minnesota offline stores and number two our growth 9% from top port.
Eagle: The 63% year over year growth of installed wind business from China. It was the result of a 17% growth.
Eagle: Average store count and a 39% growth in per store sales and 90% year over year growth of top toy was the result of a 19% growth in average store count and nearly 60% growth in principal revenue.
Eagle: Revenue from overseas markets versus 1.49, billion% to 51% year over year, driven by an increase of 60% in store count and gross or 31% in personal systems.
Unknown Executive: The number of stores increased by 26 in the last quarter. Last year, the number of stores increased by 31, move on to top story quarterly revenue achieved a 90% year-over-year increase with a quarter over quarter increase of 26 and a year-over-year increase of 31. In 2024, RoboToy will pursue two key strategic directions. One is to speed up the expansion of the store, and the other is to optimize the profit structure. In 2024, we will actively expand the network layout of offline stores to create a brand store network with recognition. Moving forward, in 2024, Top Choi will run into two key strategies, which are speeding up store expansion and optimizing its margin profile. In 2024, we will actively expand the layout of Top Choi's store network, aiming to establish a recognizable and distinctive brand store network. On the one hand, Taobao will continue to actively promote free-trade products.
Eagle: Revenue from distributed markets runs seven hundreds into 3 million increased by 26% year over year revenue from directly operate markets around.
Eagle: 771 million, an increase of around 86% year over year accounting for over 50% of our overseas revenue as compared to 42% same period last year.
Eagle: Gross profit in this quarter was 166 billion up 66% year over year gross margin was 43, 1% increasing by about three points one percentage orange in the same period of time.
Eagle: And the two that you increase was mainly due to tourism.
Eagle: Lastly, we witnessed high gross margin overseas markets contributed by product optimization and higher revenue contribution from directly operated overseas markets.
Eagle: Secondly, we also witnessed higher gross margin <unk> and top toy brand due to a shift in product mix to more profitable products.
Eagle: SG&A expenses as a percentage of revenue was around 23% about 1% in orange up from 2% in the same quarter of 'twenty into two.
Unknown Executive: On the other hand, we will strictly control the cost and cost-effectiveness, improve sales predictability, arrange production and process management in a reasonable way, and improve the quality of the supply chain. We hope that in 2020, Taobao will continue to increase its market share and further consolidate its market position in the Taoyuan market. Turning to profitability, on the one hand, supply will continue to increase the contribution of self-developed products actively. On the other hand, it will conduct its data control on cost and expenses, improve self-forecast capability, conduct reasonable manufacturing arrangements and inventory management, and Conduct Lean Reform in the Supply Chain. We'd expect that PopToy would continue to improve its market shares and enhance its role in the toy market. MINISO's five-year development plan for 2024 is a new starting point. It is a year in which everyone in the company works together and strives to make progress.
Eagle: Selling and distribution expense will around B 701 million, increasing by about 71% year on year. There are three reasons number one increased personnel related expenses logistic expenses and IP licensing expenses in relation to the <unk>.
Eagle: Most of the company's business number two increased depreciation expense of the right of use assets in relation to directly operated stores and number three increased promotion and advertising expenses, mainly in connection with brand upgrade and the opening.
Eagle: New stores in overseas markets.
Eagle: G&A expenses were RMB 186 million, representing a year over year increase of about 32% driven by increased personnel related expenses in relation to the growth of our business.
Eagle: Turning to profitability operating profit in this quarter was 765 million an increase of 71% year over year operating margin was nearly 20% compared to 18% in the same quarter of 2022.
Unknown Executive: We must use the courage of those who are striving to firmly implement and stick to product innovation, stick to the three major strategies of cost-effectiveness and innovation, stick to the direction of results, stick to long-termism, stick to the belief in growth, and work together to meet the challenges and opportunities of 2024. The year 2024 will be the start of our development strategy for the next five years and the year for all of us to fight and thrive, to embrace challenges and opportunities with a brave heart by emphasizing product innovation, portability, mobilization strategy, and sticking to the result of orientation, long-term means, and the belief in victory. That's all for my speech; now, let's hear from Eason about the financial situation for this quarter. We will now turn the call over to Yigu for a review of our financial performance in the December quarter of 2020. Thank you, Jack. Hello everyone.
Eagle: Adjusted net profit in this quarter was 662 million increasing by 77% year adjusted net margin was 17, 2%.
Eagle: <unk>, 15% in the same period last year and 16, 9% in the previous quarter.
Eagle: Excluding FX impacts adjusted net margin in this quarter would be seven.
Eagle: 0.4% another new record in this quarter.
Eagle: Turning to cash position.
Eagle: As of December 31st 2000, <unk>, we had a strong cash position of renminbi.
Eagle: $6 9 billion free cash flow for Cys can history.
Eagle: <unk> 197 billion.
Eagle: 115% year over year.
Eagle: Return on equity or our OE is about 8%, let's see wide industry compared to 15% in 'twenty two thanks to higher net margin and improved asset turnover.
And longer term, we are confident to increase gross margins steadily by leveraging our core capabilities and IP product development supply chain integration and globalization. We're also optimize our expense structure and pursue a sustainable margin profile.
Unknown Executive: Thank you again for joining us today. I will walk you through our financial results for the December quarter. Please note that all numbers are in renminbi terms unless otherwise noted. I'll also refer to some non-IFRS measures which have excluded share-based compensation expenses.
Eagle: And our border approved a cash dividend of approximately 600 or 600 to minimum in this quarter.
Unknown Executive: Revenue is $3.84 billion, representing an increase of 54% every year. Revenue from China was $2.35 billion, up 56% every year. The increase was driven by number one, a growth of 63% in revenue from MINISO's offline stores and, number two, a growth of 9% from Tapoy. The 63% year-over-year growth of MINISO's offline business in China was the result of a 17% growth in average store count and a 39% growth in personal sales. The 90% year-over-year growth of TopToy was the result of a 19% growth in average store count and nearly 60% growth in personal revenue.
Eagle: About 50.
Eagle: 50% of our adjusted net profit during the second of all tend to to industry.
Eagle: Since our win became a public company in 2020, we have returned about $2 8 billion in cash to our shareholders accounting for about 50% of our adjusted net income from 2019 to attend.
Eagle: 2023 our chapter acquisition strategy in the future, we'll continue to balance grows and our commitment to bringing stable and possible return to our shareholders. Thank you and this concludes our prepared remarks.
Operator, we are ready to take questions.
Eagle: Yes.
Eagle: First line.
Eagle: Coming from Goldman Sachs.
Operator: Cheng. Please go ahead.
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Unknown Executive: Revenue from overseas markets was $1.49 billion, up 51% year-to-year, driven by an increase of 16% in stock count and a growth of 31% in personal sales. Revenue from distributed markets was around $723 million, increasing by 26% every year. Revenue from directly operated markets was around 771 million, an increase of around 86% year-to-year, accounting for over 50% of our overseas revenue as compared to 42% in the same period last year. Gross profit in this quarter was 1.66 billion, up 66% year-to-year. Gross margin was 43.1%, increasing by about 3.1 percentage points in the same period of 2020.
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Unknown Executive: The year-over-year increase was mainly due to tourism. Firstly, we witnessed high gross margins in overseas markets, contributed by product optimization and higher revenue contribution from directly operated overseas markets. Secondly, we also witnessed higher gross margins for MINISO and TOPTOY brands due to a shift in product mix toward more profitable products. SG&A expenses as a percentage of revenue were around 23%, about one percentage point up from 22% in the same quarter of 2022. Selling and distribution expenses were around RMB 701 million, increasing by about 71% year-to-year.
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Speaker Change: Meanwhile, the domestic business, so with us the MB per store within store sales plan post the holiday and even we had high base last year. So how can we think about the same dog <unk> into 'twenty 'twenty four and second question about the overseas operation. So it's good to see you management talk about the supply chain.
Unknown Executive: There are three reasons. Number one, increased personnel-related expenses, logistics expenses, and IP licensing expenses in relation to the growth of the company's business. Number two, increased depreciation expense of the right of use assets in relation to directly-operated stores. And number three, increased promotion and advertising expenses, mainly in connection with the brand upgrade and the opening of new stores in overseas markets. G&A expenses were RMB 186 million, representing a yearly increase of about 32%, driven by increased personnel-related expenses in relation to the growth of our business.
Speaker Change: Our global supply chain strategy, but can you share with us more color about localizing sourcing or some diversification of the sourcing.
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Unknown Executive: Turning to profitability, operating profit in this border was $765 million, an increase of 71% every year. Operating margin was nearly 20% compared to 18% in the same quarter of 2022. Adjusted net profit in this quarter was $660 million, increasing by 77% per year.
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Unknown Executive: Adjusted net margin was 17.2%, compared to 15% in the same period last year and 16.9% in the previous quarter, excluding FX impacts. Adjusted net margin in this quarter would be 17.4%, another new record this quarter. Turning to cash position, as of December 31, 2023, we had a strong cash position of RMB6.9 billion. Pre-cash flow for CY23 is about $1.97 billion, up 115% year
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Unknown Executive: Return on Equity, or ROE, is about 28% for CY23, compared to 15% in 2022, thanks to higher net margin and improved asset turnover. In the longer term, we are confident to increase gross margins steadily by leveraging our core capabilities in IP product development, supply chain integration, and glocalization. We will also optimize our expense structure and pursue a sustainable margin profile, and our board has approved a cash dividend of approximately 650 million in this order, about 50% of our adjusted net profit during the second half of 2023. Since our company became a public company in 2020, we have retained about $2.8 billion in cash for our shareholders, accounting for about 50% of our adjusted net income from 2019 to 2023.
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Speaker Change: Gentlemen, changing surgical <unk>.
Speaker Change: Some we don't.
Speaker Change: Hello.
Speaker Change: Thank you Michelle this is Jack.
Jack Yet: I will answer your first question for the <unk>.
Jack Yet: Domestic sales trends.
Jack Yet: So the first two months in this year in China, We see took her Jeremy increased by about 30%.
Jack Yet: And our goal is to.
Jack Yet: Two rich about 50% year over year growth quarter on quarter for same store sales.
Jack Yet: For the first two months, we have recovered to about 95% of last year.
Unknown Executive: Our capital adaptation strategy in the future will continue to balance growth and our commitment to bringing stable and forcible returns to our shareholders. Thank you, and this concludes our prepared remarks. Operator, we are ready to take questions. First line: it's coming from Goldman Sachs, Rao Chen. Please go ahead. Hello, Mr. Ye.
Jack Yet: And we still see room of improvement for the whole quarter. So.
Jack Yet: We can see what happened in <unk>.
Jack Yet: In March.
Jack Yet: And.
Jack Yet: Usually the months after seeing why is a low season for our China business. So for this year. It will entrust you'll have had interest still be the case, but let's.
Unknown Executive: Congratulations again on the company's great performance. I have three questions to ask. First, I'd like to start with China. During the Chinese New Year, we had a very good performance in copper. Can you share with us if there are any sales delays after the Chinese New Year? Last year, we did very well in the Chinese New Year and Barbie IP campaigns. But we are still worried about the technology. So can you share with us how we should look at China's performance in copper and GNV this year? This is a question about China's copper and electricity.
Jack Yet: <unk> positive on this as we have seen the amongst mum's trend or this march.
Jack Yet: As a little bit lower than last year that means we have seen a stronger.
Jack Yet: Post to seeing why months this year and are for same store sales growth.
Jack Yet: Yes, this will be a ramp our key focus in our operations in China. So in addition for the.
Jack Yet: In addition to link operations, we still have three directions. The first is to improve all were.
Unknown Executive: The second question is about overseas. Thank you very much, Mr. Ye, for mentioning some changes in the supply chain. Can you share more with us?
Jack Yet: Productivity innovation and the development and productivity power is one of our core capabilities and we currently estimate that we can find to all products, our construction product structure to improve our sales, especially for them.
Unknown Executive: There are several overseas markets, including local purchases. Can you tell us more about the proportion of non-Chinese purchases and future supply chain plans? The third question is about overseas markets.
Unknown Executive: We know that the US and Latin America have been doing well. As Mr. Ye mentioned, Europe is the center of development this year. In addition, Asia has been weaker in the past year, but it is slowly improving. Do we have any strategies to drive the recovery of these areas? These are my three questions.
Jack Yet: Interest consumption based products.
Jack Yet: Go.
Jack Yet: To improve the sales contribution.
Jack Yet: Well.
Jack Yet: C band into a benefit all same store sales, including buying Bulks, a plush toys and other IPO related products. The second direction is to improve our you know.
Unknown Executive: I will simply translate them. The second question is about overseas operations. It is good to see management talk about a global supply chain strategy, but can you share with us more color about localization sourcing or diversification of sourcing from the non-China market? Thirdly, for the overseas market, we have very strong performance in the US and Latin America, etc. Is there any strategy we can discuss to improve our personal performance in those markets lagging behind, like the Asian market? Thank you. China's total GDP growth in February was 13% and is expected to grow by 15% in Q1. So Hot Electric January, February. The first month will be the off-season.
Jack Yet: Channels, we now notice that for the nearly 4000 minutes are sourced from China, which do have some structure.
Jack Yet: Opportunities for example, two thirds of our domestic stores I was in 100 to 200 scale mirrors at this moment.
Jack Yet: And it's personal ourselves is obviously lower than our standard install above about 200 to 300 square meters and our flagship store <unk> two 500 square meters. So since this year, we will begin to.
Jack Yet: No.
Jack Yet: <unk> some of these smaller stores increases.
Unknown Executive: This year, we will see the same trend, but in March this year, the return will be slightly lower than last year. , In addition to more detailed operation management, there are two directions. Many people often forget when they step on inclusive convenience stores. And a junkie's combo also makes sense if no one calls her a 1.
Jack Yet: It's area and improve its shows and so direction is to improve our brand awareness, including number one we will continue on.
Our brand upgrades.
Jack Yet: One two.
Jack Yet: Open.
Jack Yet: A batch of new stores with higher performance.
Jack Yet: No.
Unknown Executive: The agency is not known in China to have the latest products on store this year. In terms of product history, our core strategy is to adjust the product structure to improve sales. In particular, the increase in the product range of interest-based consumption will have a positive effect on the sales of the same product, including the blind box category, the doll category, and other IP products. Secondly, to improve the channel capacity. We have noticed that there are nearly 4,000 retail stores in China that have the opportunity to upgrade their channel structure. For example, about two-thirds of domestic stores are located between 100 and 200 square meters. The power consumption is significantly lower than the standard power supply of 200 to 300 square meters and the large power supply of 300 to 500 square meters.
Jack Yet: Better.
Jack Yet: Image and better operations.
Jack Yet: Number two Meanwhile, we plan to build Minnesota, one store.
Jack Yet: <unk> matrix now we are trying different different directions, including meaningful IP land munis. So go and various store types and now all of these are in pipeline. Thank you.
Jack Yet: Sure.
Jack Yet: Yeah.
Speaker Change: Yes, gentlemen, Hello.
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Unknown Executive: This year, we will modify a part of the store to expand the operating area and improve the power efficiency. The third one is to improve the selling power. We will continue to promote brand upgrading and create good-performing, good-image, and good-operating flagship stores. At the same time, our plan is to create a brand. To Zhang Beidong, I thank you, Michelle. This is Jack.
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Speaker Change: So circling Linda associated Michelle.
Unknown Executive: I will answer your first question about the domestic sales trend. So in the first two months of this year, in China, we saw total GMB increased by about 30 percent. And our goal is to, you know, reach about 15 percent a year growth for the whole quarter for same store sales. For the first two months, we have recovered to about 95% of last year, and we still see room of improvement for the whole quarter. So, we'll wait and see what happens in March. And usually, the month after CNY is a low season for our China business. So for this year, it will still happen.
Speaker Change: <unk> got a bunch of suitability suddenly junior regime, which isn't let me a trivial is going to hover user greens onto your window, you can change Alicia Nevada cleans up plenty of analysis of the Hunter Green zone, when we just cleaned it up.
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Speaker Change: Okay, Michelle for a second.
Speaker Change: Second question is are neutral salts.
Speaker Change: Our thinking of this issue has always been consistent that is from a longer term perspective, we are always optimistic about all prospectors skiing.
Unknown Executive: It will still be the case, but what's positive about this is that we have seen the month-on-month trend for this March is a little bit lower than last year. That means we have seen a stronger post-CNY month this year. And for same-store sales growth, yes, this will be one of our key focus areas in our operations in China. So, in addition to lean operations, we still have three directions. The first is to improve our productivity in innovation and development.
Speaker Change: North American market and European market, and so, especially the North American markets. So for these questions I think as a business owner.
Speaker Change: As enter printer, we should think big think long think longer so first of all we.
Speaker Change: In consumer sector, noting a sensitive industries secondly.
Unknown Executive: Productivity power is one of our core capabilities. We currently estimate that we can fine-tune our product structure to improve our sales, especially for interest consumption-based products. We are going to improve their sales contribution, and it will benefit our same-store sales, including buying books, flash toys, and other IP-related products. The second direction is to improve our channels. We now notice that for the nearly 4,000 MINISO stores in China, we still have some structure and opportunities. For example, two-thirds of our domestic stores are within 100 to 200 square meters at this moment, and their per store sales are obviously lower than our standard store, about 200 to 300 square meters, and our flagship store, 300 to 500 square meters.
Speaker Change: We have always believed that.
Speaker Change: As if there is any trade.
Speaker Change: Friction because.
Speaker Change: All of the America.
Speaker Change: American offline retailers.
Speaker Change: Rely on Chinese suppliers, so much that so this will be.
Speaker Change: Uh huh.
Speaker Change: Industry wide impact.
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Speaker Change: And the influence so.
Speaker Change: The American consumers will pay four days at the end of the day. So if Dell is annual based policy it wont be a long term policy.
Speaker Change: Finally, we will make full proper proposition on this so first is that all pricing strategy is cost plus Mark Hall, because we have no cost advantage and uniqueness and IP and all.
Speaker Change: Self own brand. So these three advantages decided that we have pricing power ball products. So we can trust meet all the negative influence to the ending price. The second is we have been preparing ourselves and supply chain.
Unknown Executive: So this year, we will begin to upgrade some of these smaller stores, increase their area, and improve their sales. And the third direction is to improve our brand awareness. Including number one, we will continue all of our brand upgrades. We want to open a batch of new stores with higher performance, with a better image and better operation. And number two, meanwhile, we plan to build MINISO's own store metrics. Now we are trying different directions, including MINISO IP LAN, MINISO Go, and various store types. And now, all of these are in the pipeline. Thank you. The dress code is "Overseas Identity." From the beginning of this year, Anne has been worried about the weight division of CTIP.
Speaker Change: Now for the U S market with our local sourcing has accounted for 30%.
Speaker Change: And it will increase in this year and we have also.
Speaker Change: Cooperated with a lot of qualified OSA suppliers as we share at about 94% of our oversees all of our suppliers are now located in overseas and we are you know.
Speaker Change: Doing propositions in other aspects, but no I'm not at Liberty to share more we'll share more after this.
Unknown Executive: At the same time, there is also some modification to the weight class of a capable world champion. Watching this video was a breakthrough for me. Thank you so much for making me, and I hope you come to the world I exchanged values with. We must handle the foreign issues Shizu. Then we are firmly in favor of the America-Pacific sugar market in the long term, especially the sugar market in the West of China. We should stand at a higher level and look at this issue from a longer perspective. First of all, we are a consumer company, and the possibility of fish habitation will ensure that the International Speed Tour stays in circulation for American consumers. So even if there is such a policy in the future, it will not be a long-term policy. Last but not least, we need to be well-prepared. First, our pricing model is cost-added pricing. Because we have sufficient cost advantages and unique IP advantages, we have our own brand advantages. These three advantages determine the company's pricing requirements for products.
Speaker Change: This project is done. Thank you can you may listen whatever procedure.
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Unknown Executive: Therefore, we can deliver cost-effectiveness to the middle price. Second, we are making some preparations for supply chain orders. At present, the percentage of U.S. assets is about 30%.
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Tim: Great.
Unknown Executive: This year, it will be further increased. We have also deployed a lot of overseas high-quality suppliers. There are more than 1,400 overseas suppliers in the world.
Tim: So John here.
Tim: Ladies and gentlemen.
Speaker Change: So tell me what shortly is job one.
Speaker Change: Those of China.
Speaker Change: Cellular in June.
Unknown Executive: 24% of them are overseas suppliers. We are also making some more advanced preparations for the supply chain. However, I can't share more now, but I will share it with you when the project is completed.
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Unknown Executive: Okay, Michelle, for number two, the second question is our, you know, initial thoughts. Um, our thinking on this issue has always been consistent, that is, from a longer-term perspective, we are always optimistic about our prospectus in the North American market, in the European market, and so on, especially in the North American markets. So for these questions, I think, as a business owner, as an entrepreneur, we should think big, think long, think longer. So, first of all, we are in the consumer sector, so we are not in a sensitive industry. Secondly, we have always believed that if there is any trade friction, because all of the, you know, American offline readers, they rely on Chinese buyers so much, this will have, you know, industry-wide implications and influence. And so American consumers will pay for this at the end of the day. So if there is any of this policy, it won't be a long-term policy.
Speaker Change: Okay.
Speaker Change: <unk> to add on these questions. So.
Speaker Change: No.
Speaker Change: We have very ambitious goal for the next 10 to 20 years I think we're in.
Speaker Change: So municipal missile USA is.
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Speaker Change: So to date on U S border.
Speaker Change: So we have this imagination, but it is still a small fraction of their home.
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Speaker Change: Consumption World So number one.
Speaker Change:
Speaker Change: We are not like e-commerce players right. So.
Speaker Change:
Speaker Change: We're not that sensitive number two.
Speaker Change: If this is industry wide influence.
Speaker Change: It will benefit.
Speaker Change: Our players we have cost advantage, such as peninsula and number three.
Unknown Executive: Finally, we'll make a few preparations for this. So the first is that our pricing strategy is cost plus markup because we have enough cost advantages and uniqueness in IP and our self-owned brand. So these three advantages decide that we have pricing power for our products, so we can transmit all the negative influence to the ending price. The second is that we have been preparing ourselves in the supply chain. Now, for the US market, our local sourcing has accounted for 30%, and it will increase this year. And we have also cooperated with a lot of qualified overseas suppliers. As we shared, about 24% of our suppliers are located overseas. And we are making progress in other areas, but now I'm not at liberty to share more. And we'll share more after this project is done. Thank you.
Speaker Change: We contributed to local.
Speaker Change: No.
Speaker Change: <unk> retail environment and ecosystem.
Speaker Change: By adding adding diverse adding diversity we are not.
Speaker Change: No.
Speaker Change: We are not not a barbarians at the gate, we announced.
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Unknown Executive: I have to add something about the US market. Because in the United States, we think that in the future, in 10 or 20 years, we will do a business of $100 billion or $300 billion. This $300 billion business, this kind of business, in the U.S. retail market, is also a very, very small business. So the U.S. government will not impose sanctions on the three companies of Mingtao Products. It's not like e-commerce.
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Speaker Change: And with that you'll will that once again, just so you got would've unduly using this at all one way or Tom do you tend to.
Unknown Executive: As soon as e-commerce comes up, tens of thousands of dollars, tens of thousands of dollars in the future, tens of billions of dollars of GMIV will have a huge impact on the U.S. retail industry. So the U.S. will sanction individual e-commerce platforms, but it will not sanction our e-commerce business. Then the U.S. will sanction the entire industry in the future.
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Unknown Executive: Then the U.S. will have an advantage. Then the U.S. will have an advantage. If tariffs are imposed, it will not only be tariffs on Chinese products but also tariffs on all Chinese products, so the impact on us is also very small. These are the two points. Thirdly, cotton products in the U.S. have increased U.S. consumption. The left is all about demography.
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Unknown Executive: The right is all about the commodities and business environment. Have to, Yeah. Okay. Three things to add to these questions. And so we have a very ambitious goal for the next 10 to 20 years. I think if we do well enough, MINISO USA will be a business like in a 10 billion US dollar business, or even a 30 billion US dollar business. So we have this imagination, but it is still a small fraction of the whole US consumption world. So number one, we are not like e-commerce players, right? So we're not that sensitive.
Speaker Change: We shared on Investor day that we want to focus.
Speaker Change: Key markets, such as Europe, and North America.
Because in addition to the USA European market in the next five years will embrace and a huge development. Our initial goal is that by the end of the next five years.
Speaker Change: Our store network shall reach you know that's not what happens can have thousands of sports in Europe.
Speaker Change: In addition to doing well in our existing.
Unknown Executive: And number two, if this is an industry-wide influence, it will benefit, you know, players with cost advantages such as MINISO. And number three, we contributed to the local, you know, offline retail environment and ecosystem by, you know, adding diversity. We are not, you know, we are not, not a barbarian at the gate.
Speaker Change: Distributor market in Europe. We were also try different witness such an open directly operated flagship stores were tried to participant in operations or try to.
Speaker Change: <unk> set up a JV with all distributors in various ways to support local market.
Speaker Change: Meanwhile, we have still have a lot of white space in Europe, a lot of countries. We haven't had one single minute per store and that's all next next stage pending.
Unknown Executive: We are not a broker and so on. Thank you, owner. I don't know. We focus on Europe and America in advance in the investment market. Because, in addition to the United States, Europe will also see great development in the next five years. Our goal is to reach the size of 1,000 stores in Europe in five years' time. In addition to deepening the current market, we will also try to support the development of the local market through various forms of cooperation, such as direct supply of flagship stores, entering the stock market, and so on. At the same time, there are still many countries in Europe that have not been able to come up with a good product.
Speaker Change: Except Europe, we now have two series of overseas stores in Asian countries, and Latin American countries for.
Speaker Change: For example, seen Latin American countries. This is a market that has the highest operational efficiency in Minnesota ecosystem now in terms of per store sales our top five overseas market.
Speaker Change: Our top five markets are locating in Latin America now in this market will have 515 missile sports, but this is a market with 560 million population. So we believe we can have about 2008.
Unknown Executive: We also plan to gradually enter these markets. In addition to Europe, we currently have two-thirds of our stores in Asia and Latin America. The Latin American market, which is represented by Mexico, Chile, and Peru, is the most efficient market for overseas operations of folk products. We currently have 5 markets in Latin America, 4 of which are in China. There are currently 550 branches in Latin America.
Speaker Change: <unk> stores in there.
Speaker Change: Four Asian countries now it accounts for about <unk>.
Speaker Change: Uh huh.
Speaker Change: One third of all of our GMB in overseas markets, although the same store sales or personal sales recovery.
Speaker Change: Still lags behind its peers about four CYP three it's still contributed contributed about 40%.
Unknown Executive: This is a market of 5.6 billion people. We have about 2,800 locations in China. The sales volume of the Asian market accounts for one-third of the overseas sales volume. Although the sales volume of Tengdian is now behind other regions, it still accounts for more than 40% of the overall overseas sales volume. 2024, 2023. CHINATOGAN, KU1's 60% and 67% stability has been improved to KU2 and KU3's 75% and 79% and further improved to KU4's 82%.
Speaker Change: All of our overseas revenue for.
For the past four quarters in 2023, Crestor sales recovery reads in Asian countries recovers steadily from 67% in Q1 to 75% in Q2 and to 779% in Q3 and further improved to eight 2%.
Speaker Change: In Q4, we have high confidence to further improve our per store sales in this area.
To further enlarge our business in general we don't want to limit ourselves in overseas market and wish you.
Speaker Change: Bank loan and our strategy for overseas market in the future is to focus on key markets, such as Europe, and U S market and fully diversified the overseas operations by using our flexible store models. Thank you.
Unknown Executive: We are confident that we can further improve the level of power consumption and continue to expand the scale. Overall, we do not set limits for ourselves. The future of overseas business is to focus on Europe and the United States. Therefore, we should develop more and use our flexible door-to-door business model to fully disperse business risks. We shared on investor day that we want to focus on key markets such as Europe and North America because, in addition to the USA, the European market in the next five years will see huge developments. Our initial goal is that by the end of the next five years, our store network can reach thousands of stores in Europe. So, in addition to doing well in our existing distributor market in Europe, we will also try different ways, such as opening and directly operating flagship stores. We try to participate in operations or try to set up JVs with our distributors in various ways to support the local market. Meanwhile, we still have a lot of white space in Europe.
Speaker Change: Thank you.
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Unknown Executive: A lot of countries we haven't had one single MINISO store, and that's our next next stage planning. So, except for Europe, we now have two-thirds of our overseas stores in Asian countries and Latin American countries. For example, in Latin American countries, this is a market that has the highest operational efficiency in MINISO's ecosystem.
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Unknown Executive: Now, in terms of personal sales, our top five overseas markets, all of our top five markets are located in Latin America. Now, in this market, we have 515 MINISO stores, but this is a market with 560 million inhabitants. So we believe we can have about 2,800 stores in there. For Asian countries, it now accounts for about one-third of our GMV in overseas markets. Although same-store sales or personal sales recovery still lag behind its peers, for CY23, it still contributes about 40% of our overseas revenue. For the past four quarters in 2023, personal sales recovery rates in Asian countries recovered steadily from 67% in Q1, to 75% in Q2, and to 79% in Q3, and further improved to 82% in Q4.
Speaker Change: <unk> Asia.
Speaker Change: So the first question is about the.
Speaker Change: Increasing support for distributors in Europe market could you. Please elaborate how are we going to support them and what is the strategy difference between.
Speaker Change: U S and EU and second one is.
Speaker Change: Unit economics in domestic market, especially.
Speaker Change: That was the first year of a reopening so how should we compare the profitability of our store.
Speaker Change: 2019, and last one is on the Q1 guidance.
Mr. You already guided for China, GMB, our 50% gross so how should we think about the overseas GMB growth in the first quarter. Thank you.
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Speaker Change: Sure vehicle Julia fail on the <unk> Hudson County, which is you know one of your auto charger.
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Unknown Executive: We have high confidence to further improve our personal sales in this area and to further enlarge our business. In general, we don't want to limit ourselves in the overseas market, and we should think long term. And our strategy for the overseas market in the future is to focus on key markets such as Europe and the US and fully diversify the whole overseas operation by using our flexible store models. Thank you. ,, Thank you, Michelle.
Speaker Change: Yeah.
Speaker Change: So the urban market as Bert very good no currently we use flexible ways to cooperate and to enhance our support to local local distributors, including JV or including you know cooperating with our store operations.
Speaker Change: I think.
Speaker Change: The European market is a very good markets.
Speaker Change: Including the average GDP.
Speaker Change: GDP per capita average consumer spending and so on so I think.
Unknown Executive: And the line is coming from Bank of America, Lucy Yu. Please go ahead. Mr. Ye, Ethan, congratulations on your record-breaking performance.
Speaker Change: It's a comparable market in terms of size and prospectors.
Speaker Change: The U S market.
Speaker Change: I know that you all alluded to.
Speaker Change: So he is local which actually a union tulwar payment would your orders and you do achieve them.
Unknown Executive: I have two questions. First, Mr. Ye just mentioned that the support of European agents is increasing. We have also opened many excellent stores. Can you tell us more specifically about the support in which areas or which countries?
Speaker Change: <unk>, Yeah, Youll see it in court so at.
Speaker Change: As Ingo said I'll give you plenty of that.
Speaker Change: So you wanted to do this at home.
Blueish all kind of.
Speaker Change: Oh.
Speaker Change: <unk> is a warmer throughout our father cheap.
Speaker Change: So timna inching.
Unknown Executive: Also, what are the differences between our European strategy and the US strategy? Mr. Ye just mentioned that our channels are more diversified. The US side may have more support. Other than that, are there any other different strategic directions? This is the first question about Europe. The second question is about some digital issues. We finally entered a relatively normal Chinese year in 2023. Investors are actually very concerned about our domestic single-channel UE business, especially the profit margin of our closed stores. I don't know if you can share this with us.
Speaker Change: Population wise.
Speaker Change: Europe has a hard has now nearly 700 minimum population so more than.
Speaker Change: Or $470 million of debt in the North American market. So.
In longer term with thing European market is still a very important growth engine for many sourced overseas business.
Speaker Change: So for your second question about the sport.
Speaker Change: Let's say that's very good question as we shared at our Investor Day.
Speaker Change: The same store sales of the whole <unk> industry in China.
Unknown Executive: What are the differences between the two, especially compared to 2019? Lastly, the first quarter. Mr. Ye just mentioned that the domestic first quarter is expected to see a 15% increase in GNV. As for the overseas side, it was 40% two months ago. What is our prediction for the first quarter?
Speaker Change: Nearly 20, 95% compared to the pre Covid times I E 2019.
Speaker Change: And we still maintain very house SC payback period of four <unk>.
Speaker Change: Our.
Speaker Change: Our franchisees are retail partners, we're seeing long view and for the first quarter.
Unknown Executive: Can our executives and agents help us to break it down? Thank you. Let me briefly translate this.
Speaker Change: About.
Speaker Change: About the guidance I think.
Unknown Executive: So the first question is about increasing support for distributors in the European market. Could you please elaborate on how we are going to support them? And what is the strategy difference between the US and EU? And the second one is on unit economics in the domestic market, especially since that was the first year of reopening. So how should we compare the probability of per store sales versus 2019? And the last one is on Q1 guidance. Mr. Ye has already guided for China's GDP growth of 15%. So how should we think about the overseas GDP growth in the first quarter? Thank you.
Speaker Change: You mean the guidance for.
Top line and both of them outright.
Speaker Change: Yeah topline for oversee and break that down into a wholesale versus.
Speaker Change: Versus DTC and if you can give any guidance on a module that would be great. Thanks, okay.
Speaker Change: Okay.
Yes, I think.
Speaker Change: No.
Speaker Change: We we still see very healthy growth for the first two months in our overseas market, Jim we increased about 40% our year over year basis.
And although we still have you know two to three rigs to end this quarter now we believe.
Speaker Change: Overseas market as a whole can maintain year over year growth of about 5% to 45%.
Unknown Executive: In Europe, the way we operate is very flexible. We have warehouses, and we have our own distributors. I think the situation for European stores is similar to that of North America because their economic situation, income, per capita income, and consumption structure are almost the same.
Speaker Change: For your growth rate, including 60% to 70% increase in DTC market and about.
Speaker Change: High teens to low twenties in our wholesale markets.
Speaker Change: Hum.
Speaker Change: About the margins I think.
Speaker Change: They are still they are still.
Speaker Change: Uncertainty here.
Unknown Executive: So we are still very confident about Europe. I think Europe and North America's market sizes and market potential are similar. The European market is very, very good now. Currently, we use flexible ways to cooperate and to enhance our support to local, local distributors, including JV or including, you know, cooperating with sales to operations. I think the European market is always a very good market, you know, including the average GDP, GDP per capita, average consumer spending, and so on. So I think it's a comparable market in terms of size and prospectus with the US market. Also, the population of Europe is far greater than that of North America. I think there are about 600 million to 700 million people in Europe.
Speaker Change: We're still which you say is because.
Speaker Change: It depends on the margin profile of our DTC markets.
Speaker Change: So for the Q1 as a whole is usually a low season for all overseas markets. So if you look at the past several years.
Speaker Change: Q1.
Speaker Change: Usually has about low teens or to low twenty's Q O Q decline compared to the Q.
Speaker Change: Previous quarter Q4.
Speaker Change: Bob.
Speaker Change: We have <unk>.
Speaker Change: Our reserved better.
Speaker Change: Four months in this Q1.
Speaker Change: Because of the DTC market.
Speaker Change: You may notice that we opened a lot of new stores in the fourth quarter last year. So that means the revenue contribution from the DTC marketing this quarter will be significantly higher.
Unknown Executive: North America and Canada, that's 400 million people. Therefore, the population growth is also greater than that of North America, so I think that the market in Europe is very good. The EU is a major development region in China. Population wise, for you know, Europe as a whole, it has, you know, nearly 700 million people.
Speaker Change: Then that in last year so so.
Speaker Change: So because the DTC market is still in its early stage and it is.
Speaker Change: Apparently not being fully normalized margin profile. So it may dilute some of our.
Operating margin as a whole, but we have high confidence that we think long.
Unknown Executive: So more than 470 million of that in the North American market. So, in the longer term, we think the European market is still a very important growth engine for MINISO's overseas business. So, for your second question about the sport UE, this is a very good question.
Speaker Change: With the.
Speaker Change: Increased salt Ptc's sales scale.
Speaker Change: We'll pass it will you know.
Speaker Change: Food positive impact to our operation margin.
Speaker Change: So Hawaii or we can't use resolve themselves leverage we can have better control on a range.
Unknown Executive: As we shared on investor day, the same store sales of the whole CY23 in China were nearly 95% compared to the pre-COVID times, i.e., 2019 times, and we still maintain a very healthy payback period for our franchises, our retail partners, within one year. And for the first quarter, about the guidance, I think. Hey Lucy, you mean the guidance for the top line and bottom line, right? Yeah, top line for overseas and break that down into wholesale versus VTC. If you can give any guidance on the margin, that'd be great. Okay.
Speaker Change: Labor costs.
Speaker Change: Promotional and advertising expenses and so on to being true.
Speaker Change: The margin profile for the overseas <unk> market and.
Speaker Change: At the end of the day to improve the.
Speaker Change: Operating margin of the company.
Speaker Change: In general we are.
Speaker Change: Are quite positive.
Speaker Change: Our margin profile for the whole year.
Speaker Change: Thank you.
Speaker Change: Thank you Jason.
Speaker Change: Thank you.
Speaker Change: E.
Speaker Change: Third line.
Speaker Change: Is that line is coming from UBS Mr. Stanley Wang. Please go ahead.
Stanley Wang: Sure Yeah, so I'm cognizant of the Tiger Johnson.
Stanley Wang: <unk>, how does the year to help with out of the US you know what again Youre down to South Asia you guys are sure to your take.
Unknown Executive: Yes, I think, you know, we still see very healthy growth for the first two months in our overseas market. GMV increased about 40% on a yearly basis. And although we still have, you know, two to three weeks to end this quarter, now we believe the overseas market as a whole can maintain a yield growth of about 5 to 45 percent, including 60 to 70 percent increase in the DTC market and about high 10s to low 20s in our wholesale market. About the margins, I think there's still uncertainty here. We're still waiting to see because it depends on the margin profile of our DTC market. So for Q1 as a whole, it's usually a low season for all overseas markets. So if you look at the past several years, Q1 usually has about a low 10s or low 20s OQ decline compared to the previous quarter, Q4.
Stanley Wang: Since it will take quarters ago, SG&A ratio, I'd say beyond or condo, that's actually I thought gosh sand ours, John look of HR should be attentive to shall colleagues said I know what he's here so sure that make what ABN tissue G. In the uptake of SG&A a quick.
Stanley Wang: Quake all either another opted out of short hills will appear to Australian dollars.
Tiger Usher sand our city grocery the sins.
Stanley Wang: Syndrome time, Richard elements as you're doing your SG&A to take our guidance did you ship out showed that there was a bunch of Oshkosh are accounted as future.
Stanley Wang: T shirt or something like that to us and that translates into margin Ciszek, Assam yen sounding a high sugar sure how should it go to share incremental take a pause.
Stanley Wang: These events.
Stanley Wang: SG&A now Thiago <unk> Goldman Sachs.
Stanley Wang: <unk> core for that at the end of the NC two quarters robots are not alcoholics elevation.
Unknown Executive: But, We have, you know, observed better performance in this Q1. Because of the DTC market, you know, you may notice that we opened a lot of new stores in the fourth quarter last year. So that means the revenue contribution from the DTC market in this quarter will be significantly higher than that in last year. And because the DTC market is still in its early stage, and it's apparently not in a fully normalized margin profile, it may dilute some of our operating margin as a whole.
Stanley Wang: <unk> done that tenure.
Speaker Change: Now policy and sure before I think hi, Daniel the washout Chabertia salamander <unk>.
Speaker Change: Sure John Bookout demo Shaanxi, because again, we won't see quadrant homes will start to shift with having to quit Arctic immune children without going holiday. They trivialize homes, Samsung signed our Utah Touche Channel partners. So we do have Denver conglomerate.
Speaker Change: C J quiet since you guys have always LSI Asia.
Unknown Executive: But we have high confidence that if we think long-term, with the increase in the DTC's sales scale, it will have, it will, you know, have a positive impact on our operation margin. Hopefully, we can use, you know, leverage, self-leverage, we can have better control on rents, you know, labor courts, promotional and advertising expenses, and so on to improve the margin profile for the overseas DTC market. And, at the end of the day, to improve the whole operation margin of the company. So, in general, we are quite positive about our margin profile for the whole year. Thank you. Thank you, President Ye. Thank you, Ethan. Thank you. The third line.
Speaker Change: I have two questions. The first is regarding the SG&A ratio I noticed that in the Q4 last year, our SG&A ratio is actually around 23% to 24% of higher total sales when it passed I think our guidance is generally 20% to 22% of revenue on a standard <unk>.
Speaker Change: One of the main reasons, so just to attack for 'twenty. One before is that a new norm for us to forecast estimate and a ratio. Given we are also very aggressive on PTC sales expansion. So that's the first question. The second question is regarding the distributors.
Speaker Change: Our strategy in China market, we aim to.
Speaker Change: Increase their store area.
Unknown Executive: The third line is coming from UBS, Mr. Samuel Wang. Please go ahead. Thank you, Mr. Ye and Mr. Eason, for your explanation. Congratulations to the company for achieving such a good performance. I have two questions. One is about the S-DNA ratio for the fourth quarter. I see that the S-DNA ratio is about 23 to 24, which is higher than the previous quarters. I understand that the S-DNA ratio is higher in the
Speaker Change: And do we have any pushback, how do we persuade them.
Speaker Change: To expand their store networks and do we have any quantified number or how many big format stores, we are going to open in.
Speaker Change: <unk> for us thank you.
Speaker Change: Thank you Samuel this disease.
Speaker Change: For your first question about the SG&A trend. So first of all in the in the December quarter, we have seen in crest, but if you look at the O S. G and a ratio as a percentage of revenue has increased like one percentage points compared to the same period.
Unknown Executive: I know that in 2024, the S-DNA ratio will be 23 to 24. This is a new trend. In the past, the S-DNA ratio was maintained at 20% to 22%.
Speaker Change: Last year right.
Speaker Change: The year over year improvements in a major leap in relation to our.
Unknown Executive: I would like to know if the S-DNA ratio is still the same as the 23-year trend. This is the first question about SG&A. The second question is about the expansion of the range of our partners or the plan to move the company to a better location. This year, we will have quantitative guidance. For example, how many new companies will have big companies? How many partners will expand the range of the company? How do we convince them to expand the range or move to a better location? For example, moving from the third floor to the first floor.
Speaker Change: Newly opened direct stores, especially in key markets, such as the North America, including increased rental related expenses and people expenses and.
Speaker Change: Store opening related marketing.
Speaker Change: Marketing expenses and so on.
Speaker Change: So.
Speaker Change: As a shell.
Speaker Change: In my answer to this question.
Speaker Change: Sure.
Speaker Change: If you look at the whole year, we feel positive about the improvement of the whole operational strong operational margin.
Unknown Executive: In this way, the rent will be more. I would like to ask you about this. I will also simply translate it. I have two questions.
Speaker Change: Of our DTC.
Speaker Change: Market, so with the revenue contribution of the deepest market increased and if we.
Unknown Executive: The first is regarding the SG&A ratio. I noticed that in Q4 last year, our SG&A ratio was actually around 23 to 24% of our total sales. In the past, I think our guidance was generally 20 to 22% of revenue. I understand that D2C is one of the main reasons.
Speaker Change: Successfully increase improved its margin profile, which will contribute positively to the whole operation margin to the company as a whole.
Speaker Change: If you look at if you look at this problem on the court ultimately perspective.
Unknown Executive: So just to check for 2024, is that a new norm for us to forecast the SG&A ratio, given that we are also very aggressive on D2C sales expansion? So that's the first question. The second question is regarding the distributors' strategy in the Chinese market. We aim to increase their store area for them. Do we have any pushbacks?
Speaker Change: It is still it will have some.
Speaker Change: Certain because.
Speaker Change: For example, you investment you've put investments such as you know.
Speaker Change: Store rings marketing expense in this quarter, but the store.
Speaker Change: <unk> will have to open until next next several quarters. So it will.
Unknown Executive: How do we persuade them to expand their store networks? Do we have any quantified number of how many big format stores we are going to open in 2024? Thank you. Thank you, Samuel.
Speaker Change: Obviously impacted this quarter's P&L, so I strongly suggest.
Speaker Change: Look at this question in at least on an.
Speaker Change: Yearly basis.
Speaker Change: And for your second question about the channel upgrades, yes, we do have a we do have a plan, but it's not finalized yet.
Unknown Executive: This is Eason. For your first question about the SG&A trend, So, first of all, in the December quarter, we have seen it increase. But if you look at the whole SG&A ratio as a percentage of revenue, it increased like 1 percentage point compared to the same period last year, right? The EU improvements are mainly in relation to our newly opened direct stores, especially in key markets such as North America, including increased rental related expenses and employees' expenses and store opening related marketing expenses, and so on.
Speaker Change:
Speaker Change: We now have nearly 4000 scores and the newly to surge.
Speaker Change: Within 100 to 200 square meters at the end of day, we want to upgrade all debt that we issued to take.
Speaker Change: Take the measure of step by step and it has to depend on the availability of the neighborhood in the shopping malls and depend on the negotiations with franchisees. So that his business right you have to make negotiators negotiations and it has some are unsurpassed.
Unknown Executive: As I share in my answer to Lucy's question, if you look at the whole year, we feel positive about the improvement in the whole operational margin of our DTC market. So with the revenue contribution of the DTC market increasing, and if we successfully improve its margin profile, it will contribute positively to the overall operational margin of the company as a whole. But if you look at this problem from a quarterly perspective, it will have some uncertainties because, Uh, you know, if, for example, you invest in an investment such as, you know, uh, store range, marketing space this quarter, but the store will, you know, will have to open until the next several quarters. So it will obviously impact this quarter's P&L. So I strongly suggest, you know, you look at this question at least on a yearly basis. And for your second question about the channel upgrade.
Speaker Change: Certainties. Thank you.
Speaker Change: Okay.
Yeah.
Speaker Change: Yes.
Speaker Change: It's <unk> from Jefferies.
Speaker Change: And Lynn. Please go ahead.
Lynn: Hi, I'm going to tell me my house.
Lynn: Sorry.
Speaker Change: [laughter] buys.
Lynn: So what have you found that Nick.
Lynn: Sorry.
Lynn: What is your high <unk>, maybe or not no.
Lynn: No woman again to show what in general what May seem like a highlight dreams.
Lynn: Yea or nay got woman doesn't it got it.
Lynn: Nick a like a wholesale did they got Nick Nick I sure wish that wish on that already well then they go down quarter, Nick opinion that Youll mail you shipped outside they just showed you was what you've done it achieved due to the ACA module Navient that Guy is Lee Goldman Chinese Anika Junkie I saw on kind of Nick I mean, he showed the pin pad I suppose.
Speaker Change: Oh, sorry, I got a little jumpy like Asahi <unk> Javier colleague, India that should not.
Unknown Executive: Yes, we do have a plan, but it's not finalized yet. You know, we now have nearly 4,000 stores, and nearly two-thirds are within 100 to 200 square meters. So at the end of the day, we want to upgrade all of them, but we should take the measures step by step.
Speaker Change: As usual our mail Jo Mills in China. He got a highway Nick Nick boarding ruble, you'll eat into the guidance a clay at Goldman Sachs.
Mike: Hey, Mike.
Speaker Change: So my first question is on that kind of weather for the municipal brand, where you have a shipment margin of 22, 6% for the half year.
Unknown Executive: And it has to depend on the availability of the neighborhood in the shopping malls and depend on the negotiations with franchisees. So that is business, right? You have to make negotiations, and it has some uncertainties. Thank you. The fourth line is coming from Jeffrey and Lin.
Mike: And on a half on half basis improved by <unk> two percentage point.
Mike: We just wondering whether there's any breakdown or idea in terms of the margin difference between the domestic market versus the overseas market in overseas market like you know between direct operator, and the wholesale business, particularly for what.
Unknown Executive: Please go ahead. Hi, I'm going to turn in my haul. Sorry. Excuse me, I would like to ask about the overseas market. I have the impression that we have the overseas direct sales market and the wholesale market. I would like to ask if there is any data on the first half of the year or a quarterly margin. Overall, we see that the MINISO brand is about 22.6% higher than the previous half year, but there is no distinction between overseas and domestic. If you have any ideas, please share them with us.
Speaker Change: Can you go into what she said.
Speaker Change: Okay. Thank you and.
Speaker Change: Yes.
Speaker Change: About the breakdown I mean, I think you mean, the op margin right yeah.
Yes, I think there is a dynamic mix dynamic mix no.
Speaker Change: The 22, 6%.
Speaker Change: We do not disclose them maybe.
Unknown Executive: So my first question is on whether for the MINISO brand, where you have a segment margin of 22.6% for the half year, and on a half-on-half basis, improve by 0.2% each point. So we're just wondering whether there's any breakdown or idea in terms of the margin difference between the domestic market versus the overseas market, and the overseas market between the direct operator and the wholesale business. This is my first question.
Speaker Change: Sure.
Speaker Change: It's after your calculation, but that's close that's close to a management tons. So there.
Speaker Change: This mix, which we have no minutes of China, which obviously is asset light and there is higher <unk> margin higher op margin.
Speaker Change: Because the GP margin in China domestic in China is nearly around city city to nearly 40% and the expense structure is quite large for this business. So obviously you can have you know a certain percent.
Unknown Executive: Thank you. Okay, thank you. About the breakdown, I mean, I think you mean the OP margin, right? Yeah. Yes, I think it's a dynamic mix.
Speaker Change: Also our op margin.
All overseas market, especially for DTC market since is at its early stage and its margin profile.
Unknown Executive: Now, for the, you know, 22.6%, we do not disclose them. Maybe, you know, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it That's close to our management account. So, among this mix, we have, you know, MINISO China, which obviously is asset light and with higher OP margin, higher OP margin because the GP margin in China is nearly, you know, around, you know, 38 to nearly 40%. And the expense structure is quite, you know, light for this business.
Speaker Change: <unk> is not that stable and block trades quarter over quarter.
Speaker Change: On a quarterly basis. So we do not think that sepsis right time to prescribe base.
Speaker Change: This is part of our margin. Thank you.
Speaker Change: No I don't see that Jojo Lasalle Lounge, Asia America, Oh, Joe Nigro fungi.
Speaker Change: Leonardo George.
Speaker Change: A woman.
Speaker Change: Nick our dreams, So Tom maybe on that you said you saw Doctor immediately go snake, although they've been in the market yes.
Speaker Change: Yes.
Speaker Change: So you know what put you at all Nick Joseph with Citi.
Speaker Change: Although it isn't all tweet detail door. She was a woman that make a wholesale maybe Anthony neilson.
Unknown Executive: So, obviously, it can have nearly, you know, 30% or so of OP margin. But for our overseas market, especially for the DTC market, since it's at its early stage, and the margin profile is not that stable, and it fluctuates on a quarterly basis, so we do not think that this is the right time to discuss this, this part of the margin. Thank you.
Speaker Change: Davidson.
Speaker Change: Joshua rule, just down the hall women's amateur esports or the social.
Speaker Change: Uh huh.
Speaker Change: Module with a colleague or is this all women policies that are going.
Speaker Change: Why not make a oh, it's only been about a woman that usage, how will wonder Richard kind of digital outlets foothold Degas He's got it got it.
Speaker Change: And they do pay.
Unknown Executive: So, my question is, you know, regarding the, um, uh, European operation, which is not part of the directly operated business. So, moving forward, you know, how are we going to, uh, reclassify it? Or like, you know, how do we look at the European market? That's a very good question.
Speaker Change: So my question is regarding the.
Speaker Change: Oh European operation, which is not part of the direct operated business. So moving forward. How are we going to are we going to have reclassified it or like you know how do we look at the European market.
Speaker Change: Oh, that's right yeah, Yeah, that's very good question and I think if you look at the whole.
Unknown Executive: And I think if you look at the whole overseas markets for Minnesota, I think the best thing we noticed is that we have a very quite flexible business model among, you know, different markets. For Europe, you are right that all of our markets now are operated by our distributor partners. And Mr. Ye mentioned that, hopefully, by the end of the next five years, we will have thousands of stores in European markets. And we are quite confident with the possibilities to achieve this goal. And margin-wise, you are right that it will contribute to a positive impact on the whole OP margin. Actually, we have continuously witnessed this trend go on during the past, you know, three to four months. Now, well, we see, as we increase the, you know, proportion of IP products exported to these wholesale markets, we have seen the whole margin profile of the distributor market improve, including an increase in GP margin and increased sales leverage, and so on. Got it, got it.
Speaker Change: Overseas markets of Minnesota, I think the best thing we noticed that is we have a very quiet flags pole fitness business model among different markets for Europe, you are right that all of our markets now.
Speaker Change: Operated by our distributor partners.
Speaker Change: And Mr. <unk> mentioned that hopefully by in the next five years, we will have thousands of stores in European markets.
Speaker Change: Markets.
Speaker Change: And we have seen where we are.
Speaker Change: Confidant Bruce.
Speaker Change: The possibilities to achieve this growth and our margin wise you are right that that.
Speaker Change: Will contribute it.
Speaker Change: And no positive impact on the whole of op margin.
Speaker Change: Actually we have continuously.
Speaker Change: Witness this trend.
Speaker Change: Go on during the past three to four months.
Speaker Change: We see as we increase the.
Speaker Change: Proportion of IP products exported to these wholesale market we have seen.
Speaker Change: Oh margin profile, all distributor market improved including increase in GP margin.
Speaker Change: And increase the you know the the.
Speaker Change: The sales leverage.
Speaker Change: So hum.
Unknown Executive: My last question is on behalf of a client. In fact, growth in the U.S. is quite good, and we can also see our efforts. But so far, we are still a direct market. We have more than 200 direct markets. There are no direct markets in other countries or in China.
Speaker Change: Got it got it well, it's only one peanuts Jesus is China.
Speaker Change: On behalf of Eagle cohort or T cells that can make whether it be on the agenda on heightened my heart. The nah I'm just kind of what was I think I don't really know that should or shouldn't I thought Tom was related in the hiseQ3 usage, how oil money I'm glad it's always hard to see a woman does just that.
Speaker Change: Well thank you.
Speaker Change: Do you take a market like Chicago, which I don't lay out the podium.
Unknown Executive: So the question is, when can we start to open the joint part? Then our capital investment will not be so big. So my last question is about the U.S. market, where we have had a very good performance so far. But at this stage, it's still a directly operated market where we run our own store. So when will we start our franchise business model in the U.S.? Thank you. That's a very good question.
Speaker Change: So you know.
Speaker Change: So what did you I didn't know what Mr. Mitchell Holdco types of take I found it got like a job on would be helpful said Nah I'm Joe.
Speaker Change: So George I'll make a woman that's how we'll manage it with that Oh. My My last question is on the U S market, where we have a very good performance in all of them. So far up at this stage, it's still at directly operated.
Speaker Change: Market, where we run our own stock so when will we start like.
Speaker Change: Our franchise business model in the U S. Thank you.
George: That's very good question.
Unknown Executive: Yes, we have, you know, we have been, you know, quite open to considering various options in growing our US market, but now, more than 90% of our stores are directly operated. In the future, we're still open to exploring various possibilities. But at this moment, we want to do it by ourselves because, If you look at, you know, the wholesale market, the DTC market, the overseas market, obviously, when we want to accelerate the growth of a certain market, the best way is to do it by yourself, because you can have more control over the whole business, right? So at this moment, the US market is at its momentum. So we want to seize this momentum and find out how well we can optimize the OP margin.
George: Yes.
George: We have you know we have been and are quite open to consider various options in <unk>.
George: Grow in growing our U S market for now.
George: More than 9% cross border all of our directly operated in the future. We're open still old country explore various possibilities, but at this moment, we want to do it by ourselves because.
George: If you look at the wholesale market the DTC market versus market.
George: Beardsley when we want to accelerate the growth of a certain market the best ways to do it by yourself because you can have more control on the whole business right.
George: So at this moment the U S market is at its momentum so we want to see this momentum and we want to.
George: To know you know find out how well can we optimize the op margin and how how large can we you know can.
Unknown Executive: And how large can we, you know, can we, you know, enlarge the addressable markets at first, but in the future? We are still open, but not at this time. Thank you. Okay.
George: Can we you know.
George: In large addressable markets.
George: At first in the future we are still open but.
Speaker Change: No at this stage, but not at this time. Thank you Okay got it thank you.
Unknown Executive: Thank you all again for joining our call today. Now we shall conclude our call. We will see you in the next quarter. Goodbye.
Okay.
Speaker Change: All again for joining our call today, we shot our call with you in the next quarter Goodbye.
Speaker Change: Yeah.
Speaker Change #100: They are recording has stopped.