Miniso stock slumps 18% on weak quarterly earnings

Miniso Group (MNSO) shares fell sharply after reporting weaker-than-expected March quarter earnings, despite an 18.9% year-over-year revenue increase to RMB4.43 billion ($610 million). Profit declined 29% to RMB416.5 million, and adjusted net profit fell 4.8% to RMB587.2 million, attributed to a 46.7% surge in selling and distribution expenses from overseas expansion, offsetting revenue growth driven by a 30.3% increase in overseas revenue. CEO Guofu Ye cited an "increasingly volatile macroeconomic environment" as a headwind for 2025.

Analysis

Miniso Group (MNSO) shares experienced a significant sell-off, with both U.S. and Hong Kong-listed stocks declining approximately 18%, following the announcement of its March quarter financial results which highlighted a concerning divergence between revenue growth and profitability. The company reported an 18.9% year-over-year revenue increase to RMB4.43 billion ($610 million); however, this top-line growth was overshadowed by a 29% decrease in profit to RMB416.5 million and a 4.8% fall in adjusted net profit to RMB587.2 million. The primary driver for this profit deterioration was a substantial 46.7% surge in selling and distribution expenses, directly linked to Miniso's accelerated expansion of directly operated stores in overseas markets. While these international operations contributed a 30.3% revenue jump, the associated costs led to margin compression, indicating that the current expansion phase is heavily impacting profitability. Although same-store sales in mainland China demonstrated improvement, CEO Guofu Ye's warning of an "increasingly volatile macroeconomic environment" for 2025 further clouds the company's near-term outlook and has evidently amplified investor concerns regarding the sustainability of its profit model amidst aggressive growth.

Key Decisions for Investors

• Investors should exercise significant caution, given the market's strong negative reaction and the clear pressure on profitability from rapidly rising operating costs associated with Miniso's international expansion.
• Monitor upcoming financial reports closely for tangible improvements in cost control and margin stabilization, particularly whether overseas growth can translate into net profit accretion rather than solely revenue gains.
• Re-evaluate investment positions in light of the CEO's cautious macroeconomic outlook for 2025 and the company's ability to navigate these headwinds while managing its expansion-related expenses effectively.