MINISO (MNSO) Q2 2025 Earnings Call Transcript

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Date

Thursday, August 21, 2025 at 5 a.m. ET

Call participants

Founder, Chairman, and Chief Executive Officer — Guofu Ye

Chief Financial Officer — Eason Zhang

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Takeaways

Revenue-- Total revenue reached RMB 4.97 billion for Q2 2025, up by 23%, surpassing the upper limit of prior 18%-21% guidance.

MINISO Brand Revenue-- Revenue increased by 20% to RMB 4.56 billion for Q2 2025; mainland China revenue within the brand rose by 14% to RMB 2.62 billion, while overseas revenue rose 29% to RMB 1.94 billion.

TOP TOY Revenue-- Revenue grew by 87% year-over-year to RMB 400 million for Q2 2025, exceeding the previous 70%-80% guidance range.

Same-Store Sales-- Turned positive for the first time in four quarters, attributed to product mix optimization and operational improvements.

Overseas Markets-- Overseas revenue totaled RMB 1.94 billion for Q2 2025, up 28.6%; U.S. revenue grew more than 80% with mid-single-digit positive same-store sales growth 37 net new stores added.

Store Network Growth-- Net addition of 30 MINISO stores in China in Q2 2025, all in the flagship/MINISO LAND format; overseas store count grew by 94, with year-to-date net overseas additions of 189 for H1 2025.

Gross Margin-- Group gross margin increased 0.4 percentage points to 44.3% in Q2 2025, driven by an increased contribution from overseas and IP-related sales, including improvements in the TOP TOY segment.

Operating Profit-- Adjusted operating profit reached RMB 850 million for Q2 2025, up 8.5%, with an adjusted operating margin of 17.2%, an improvement sequentially; full-year guidance calls for further margin improvement in H2.

Net Profit-- Adjusted net profit for Q2 2025 was RMB 690 million, adjusted net margin was 13.9%.

Inventory Turnover-- Inventory turnover days reduced to 93 days as of June 30, 2025, from 102 the prior quarter, particularly with significant improvement in mainland China stores.

Cash Position-- Cash reserves stood at RMB 7.47 billion for H1 2025; Net cash flow from operating activities was RMB 1.01 billion, with RMB 750 million generated in Q2.

Capital Returns-- RMB 1.07 billion was returned to shareholders through share buybacks and dividends in H1 2025, representing 84% of adjusted net profit; interim dividend of RMB 640 million announced for 2025, equal to 50% of adjusted net profit for H1 2025.

Guidance-- Q3 2025 revenue growth projected at 25%-28%, same-store sales targeted for low single-digit positive growth; full year 2025 revenue growth expected at no less than 25%.

PROPRIETARY IP Strategy-- Company formally launched a dual-track artist IP and global IP strategy, with nine artist IP contracts signed; [Yu Yu Chan] cited as a successful proprietary IP with RMB 100 million sales targeted for the next year.

Large Store Format-- As of June, 11 MINISO LAND stores deployed across major cities; flagship and large stores now account for 5% of China store count and have sales efficiency above the average as of H1 2025.

Summary

MINISO(NYSE:MNSO) emphasized acceleration in both revenue growth and profitability in Q2 2025, with management highlighting outperformance relative to sector benchmarks. U.S. operations showed strong gains, driven by large store expansions and a localized management approach, including a new regional CEO and concentrated store openings. The firm’s proprietary IP strategy was expanded, launching new partnerships with artists and projecting increased contributions from internally developed IP products. Shareholder returns intensified, with a higher payout ratio through dividends and record share repurchases as approved by the board. Management reaffirmed full-year growth targets and signaled further operating margin improvement and store network upgrades, while reiterating their confidence in the resilience and scalability of the business model.

Founder Guofu Ye indicated, MINISO's future is to fully develop, thoroughly understand and deeply cultivate IP, achieving influence not only in China but also worldwide.

Chief Financial Officer Eason Zhang stated, In Q2, directly operated store revenue grew by 78.7%, still higher than the Y-o-Y growth rate of the direct operated store-related expenses.

Overseas stores will be expanded with a more reasonable CapEx structure, with 35% of new stores directly operated—down from the initially planned 40%—to concentrate resources on operational optimization, as guided for the full year 2025.

Board authorization now supports buybacks of up to 10% of total outstanding shares, with all repurchased shares set for cancellation.

Industry glossary

MINISO LAND: Flagship, large-format MINISO stores designed to serve as experiential brand showcases and traffic drivers, often featuring immersive product displays and higher average sales per square meter.

Proprietary IP: Intellectual property developed in-house by MINISO or through exclusive artist collaborations, distinct from traditional licensed global IP partnerships.

GMV: Gross Merchandise Volume, representing the total sales value transacted across all stores and channels, not just revenue recognized by MINISO.

MINISO flagship store: Stores with larger gross floor area and enhanced product assortments, typically serving as key anchors for the brand in prominent retail locations.

O2O: Online-to-Offline; omni-channel retailing strategy integrating online platforms with physical store experiences.

Full Conference Call Transcript

Guofu Ye: [Audio Gap] Operating profit and adjusted EPS all exceeds expectation. The growth rate across all business segments, including overseas and domestic reached or surpassed our upper limit of the guidance. Meanwhile, we also made significant progress in 2 strategic directions that is our IP strategy and the large store strategy. Coming next, I will share with you our quarterly performance highlights and our future strategic planning. In Q2, the overall GMV grew by 21%. Revenue grew by 23.1%. We achieved the first positive same-store sales growth in 4 consecutive quarters. This performance not only exceeds our prior expectation, but also be accelerated compared with Q1.

MINISO and TOP TOY, our 2 brands also showed accelerated growth momentum in revenue in Q2. MINISO brand grew by 20%, while TOP TOY achieved robust revenue growth by 87%. In terms of the profitability, our gross margin was 44.3%. The GP margin improvement was mainly driven by the increased contribution from overseas revenue and the TOP TOY GP margin optimization. But adjusted operating profit this quarter was RMB 850 million, up by 8.5%, but adjusted operating margin of 17.2% improved compared with Q1. We expect operating margin will continue to improve by peak season sales in H2 of this year.

Coming next, I'm going to break down MINISO mainland China, MINISO overseas and TOP TOY to walk you through our business as a whole. First of all, for MINISO mainland China, the business continued to maintain high-quality growth. Revenue grew by 13.6%. In comparison, China's total retail sales of the consumer goods grew by 5.4% during the same period. The online retail sales of the physical goods grew by 6.3%. This shows that MINISO's mainland China business growth rate not only outpaced the overseas retail industry, but also exceed online channel growth, demonstrating our tremendous advantage of the offline store. Particularly speaking, domestic comparable same-store sales has been recovering steadily since the beginning of this year, turning positive in Q2.

Entering into Q3, same-store growth momentum has been further accelerated. Going forward, consistently maintaining same-store sales performance that is our peers will become our long-term focus. Within this quarter, we achieved a net addition of 30 MINISO stores in China, including 7 MINISO LANDs. Last quarter, there might be some excessive concerns about the short-term impact of the channel upgrades. But from our perspective, this is the necessary move for long-term rapid growth. After 1 quarter of adjustment, store has quickly returned to positive growth. The number of the retail partner has reached a new height.

More importantly, MINISO mainland China achieved double-digit revenue growth despite moderate store additions, fully demonstrating channel upgrades can actually be the key high-quality growth driver of our business. Overseas market achieved RMB 1.9 billion revenue in Q2, grew by 28.6%. Among them, U.S. revenue growth was more than 80%, and which was benefited from the same-store improvement and also high-quality new store opened in this year. Due to the product metric optimization, U.S. same-store sales achieved a mid-single-digit positive growth in Q2. The 37 net new stores added to U.S. market also demonstrated good performance. The average store efficiency and the sales per square meter significantly higher than the existing stores lay a very solid foundation for our accelerated growth.

TOP TOY achieved 87% Y-o-Y growth in Q2 with a net addition of 30 stores during Q2, reaching 293 in total. 283 are in China and 10 are in overseas markets, benefited from effective product differentiating strategy and product power improvement. Same-store sales grew in a low-single digit in Q2, with GP margin improved significantly. TOP TOY is also a leader in pop toy market, which is significant and distinctive in the market. Going forward, we will continue to expand our recognizable brand network, we'll continue to improve our private brands and proprietary IP business. Coming next, I will share with you 2 strategic initiatives behind our robust performance, including large store and proprietary IP.

As the end of June, MINISO has deployed 11 MINISO LAND stores nationwide, covering Shanghai, Beijing, Guangzhou and Chengdu. 11 MINISO LAND store achieved an average monthly efficiency of several million. Shanghai Nanjing East Road, global #1 store achieved a sale of RMB 100 million within 9 months of opening, breaking new records. The SPACE store opened in Nanjing, Deji in June represent another breakthrough for TOP POY to enter into luxury malls, open new opportunities for high-end luxury shopping malls and also continue to build same scenarios for differentiated IPs. With curated product combined with immersive spatial experience, MINISO LAND has achieved new breakthroughs in both attachment rate and ASP plus higher consumer conversion rate.

So the MINISO LAND not only set new performance record, but also achieved high sales per square meter with regular stores, then contributing above average single store GP margin. MINISO LAND store also achieved excellent profitability, but also served as a key base for our hit product and the modular zones. For MINISO IP LAND, it actually helped to launch new products and limited additions and which can actually form a flywheel of the large store, creating heat, traffic, [ propogandations ] and also regular store scaling up, delivering traffic and sales to store categories across all locations.

MINISO LAND serves as a spearhead of the continued innovation and breakthrough, where flagship store is a cornerstone of our large store strategy. As of H1, we have already opened 200 flagship stores with a GFA of more than 400 square kilometers. Around half of them is being opened in 2024. Those larger store achieved sales as well as store efficiency above the average. We can see even for the past 2 quarters, we don't see the big change for absolute number of the stores. But actually, our channel structure has already been upgraded. We are not purely seeking for the quantity growth. We continue to optimize our channel mix and continue to seek for incremental growth opportunities.

Regarding the overseas markets, particularly, I'd like to mention U.S., our largest direct operated country. The operation performance and brand momentum continued to improve with large store strategy. U.S. store opened in 2025 achieved a store efficiency 1.5x higher than the existing stores. Sales per square meter also be 30% higher. The rent-to-sell ratio is also better than existing stores. The core advantage leverage this is the diversified product portfolios, including the collectibles figures to the beauty products to the stationeries and gifts and the trendy toys for the whole family loves.

Large store can satisfy the interest and the needs of the whole group age of the family, becoming a one-stop shopping destination for trendy lifestyle products for the entire American family. But why can we be successful in operating the largest store strategy? I believe it's because of our excellent supply chain and product capacity. We attach great importance to proprietary product development. 90% of our revenue are coming from the proprietary product with a product development and design team of more than 1,000 people. We accumulated very strong 1,500 high-quality global suppliers. Only by so doing, we will be able to support a multi-category, fast refreshing and high-turnover trendy department store, large store model.

Going forward, as we continue to optimize and refine larger store strategy and with the ever-expanding global supply chain, and we're going to continue to have a balanced and stable development. No matter in mainland China or in overseas market, large store strategy serve as our key platform for deepen our IP strategy. Channels and contents are empowering each other. By creating new spatial experience, we greatly enrich IP meets and greets in-store pop-ups and limited product launch, all have the long-lasting memory for fans, significantly increase our integrated marketing and operational capacity for IP. Conversely, IP events and same marketing can also take more traffic to the checking activities.

For example, when MINISO landmark Melbourne store opened in July, we partnered with One Piece for an Australia-first launch, driving first-day store performance exceeding 500,000, achieved a new single store record for Australian market. MINISO has also become the collaboration leader in global licensed IP. In the near future, we will also leverage the product and operational capacity to actually work on the proprietary IPs to unleash greater value. For MINISO worldwide, we identified the potential pop toy artist IPs to build our MINISO's pop toy artist IP landscape. Through the dual-track parallel model with artist IP and pop licensed IPs, we will construct the IP ecosystem. Now we have already contracted 9 pop toy artists.

For example, for [ Yu Chan ], which has been launched in June, once being launched, it's been sold out on Mini program and we become hard to find in one store. [ Yu Chan's ] instant success marks a solid and successful step for MINISO in proprietary IP. The [ Yu Chan ] signing event held in July of this year attracted massive fan support. The mechanism will continue to be promoted, hosting signing event and exhibitions for the contracted artist at the world's top MINISO LAND stores, building deep appeal for the top-tier artists. [ Yu Chan's ] IP product will also meet overseas consumer with this year, steadily advancing our strategy of bringing 100 Chinese IPs overseas.

[ Yu Chan's ]operational strategy fully demonstrates that in building proprietary IPs, MINISO poses unique resources, endowments, food category coverage, omnichannel penetration, global deployment and end-to-end operation. Looking worldwide, only MINISO poses the great flexibilities and scalabilities in products, the most control and innovation in channels and the most extensive and high-quality global store network. In operation, MINISO will leverage end-to-end advantage from signing artists to the design development or to marketing to production to sales of the product. We deeply empower artists at every stage, jointly operating and maximizing the IP value potential. Those are MINISO's highly differentiated resources and also the key for us to achieve leapfrog development and overtaking the competitors in proprietary IPs.

Our investment in proprietary IP is not for short-term commercial deployment, but also a choice for long-term strategic development. I proposed the interest-driven consumption in 2020. IP is most important vehicle for interest-driven consumption. The initial success of this IP not only bring us product sales and brand exposure, but also allow us global channel partners to fully perceive the potentials of the IP consumption and the brand value of MINISO. I truly believe as IP and large store strategy continue to deepen as a synergy, we will create more marketing explosive moments and sales miracles. Now China IP market achieved a significant development, but we're just at the start, numerous development potentials are still ahead.

Looking at the global development history from Disney to Warner to United States to Bandai and Sanrio and Nintendo in Japan, China will see more several platform-type IP companies. This is essential pathways to the great nation's rise and inevitable outcome of the culture confidence. In this market full of opportunities, MINISO with our unique advantage of full category coverage, omnichannel penetration, global deployment and end-to-end operation, we will secure our leading position in China's top-tier IP market. MINISO's future is to fully develop, thoroughly understand and deeply cultivate IP, achieving influence not only in China but also worldwide. By deepening collaboration with world top IP to ensure operational sustainability and stable growth.

We also built a differentiated, explosive and scalable sustainable growth driver through proprietary IP. Those are also the key to our confidence for the future growth. MINISO's new strategic vision is to become the world-leading IP design retail group. In terms of the channel network, we are already the world's largest IP product retailer. The full year 2025, we expect to generate more than RMB 38 billion in GMV and more than RMB 21 billion in revenue. We have already leading in market channel, supply chain, product design and marketing. Coming mean next, we will need to strengthen our proprietary IP capacity. I believe our vision will be finally realized.

In H1 of 2025, we have returned RMB 1.07 billion to shareholders through share buybacks and dividends, representing 84% of the H1 adjusted net profit. Going forward, we will remain to committed of distributing 50% of the annual adjusted net profit as dividends and also continue with dynamic share buybacks to provide predictable returns to the shareholders. That's all for me. Coming next, I will have Eason to introduce you H2 and interim financials, please.

Eason Zhang: Thank you. Thanks, Jack. Welcome, everyone, to the meeting. Coming next, please allow me to walk you through the financials. First of all, let's take a look at the revenue. In Q2, total revenue reached RMB 4.97 billion, up by 23%, exceeding the upper limit of our guidance, 18% to 21% previously. Breaking down by brand, MINISO brand Q2 revenue was RMB 4.56 billion, grew by 20%, among which MINISO mainland China revenue was RMB 2.62 billion, up by 14%, accelerated compared with last quarter, exceeding the low double-digit growth as we provided as guidance before. MINISO overseas revenue was RMB 1.94 billion, up by 29%, in line with our expectation.

POP TOY brand Q2 revenue was RMB 400 million, grew by 87%, continued high-speed growth momentum, exceeding our previous guidance of 70% to 80% growth. Looking at H1 of 2025, the total revenue of the group reached RMB 9.39 billion, up by 21%. As we urge into H2, we're confident that revenue growth will be further accelerated, progressing towards the guidance we provided to the market by the beginning of this year. From the regional breakdown, China mainland revenue accounted for 62% of the total and 65% in last year. Overseas revenue accounted for 38% and 35% last year with an increase of 3%.

Well, regarding the same-store performance, building on Q1 2025 significant narrow down same-store decline in Q2, the same-store performance improved significantly because last year, we do have Chihuahua (sic) [ Chiikawa ] explosive sales as a high baseline. But even so, we still reached a positive same-store quarterly growth in Q2. In H1 of 2025, same-store sales declined in a low-digit number -- low single-digit number, representing tremendous improvement compared with H2 of 2024. This benefited from our channel upgrades, product mix optimization, new product launch and operational improvement. Getting into Q3 and MINISO mainland China same-store performance further accelerated compared with Q2.

The year-to-date monthly MINISO same-store growth has already turned positive looking into H2, and we're going to assure you there will be a positive growth here. MINISO has been able to achieve positive same-store sales in China, such a competitive of a market, which again proves our strong resilience of the business model and our organizational strong execution capacity, vitalities and lending capacity, we have systematically compiled some of the same-store growth experience and started to export them to overseas market in Q2, combining local market condition to help the overseas market to fully understand the strategies and experience for same-store improvement strategy in China.

And you can also see that for Q2, overseas MINISO same-store performance has already improved from a mid- to high-single-digit decline in the previous quarter to a low-single-digit decline in Q2. European market same-store and the North America market same-store achieved a single -- mid-single-digit growth, which also strengthened our confidence for the overseas business growth. In terms of the store growth, in Q2, we have already achieved a net addition of 30 stores, which is more optimistic than our expectation. Internally, we see brand updates channel first. Our channel upgrade could be traced back to 2023, Q3 when we first opened our first large store in Beijing Road in Guangzhou.

Starting from then, we discussed how can large store strategy to help to improve the product assortment, improve efficiency and store models. The landmark event was opening of the MINISO LAND in Shanghai Nanjing East Road in Q3 of 2024. And now we're actually reaching the peak after the MINISO SPACE at Nanjing Deji Plaza in Q2 of this year. To date, we are pleased to share that large store now accounted for 5% of our total domestic China -- mainland China MINISO store count, contributing to a mid-double-digit growth percentage growth. And for example, all 30 stores we added in Q2 were all MINISO LAND and flagship stores.

More importantly, we now have initially formed a channel metrics covering 7 layers of the stores. We were not going to rely on small store to conquer the market. We're going to have MINISO LAND, flagship stores, regular stores, pop-up stores to create incremental opportunities. For full year 2025, MINISO mainland China store count will continue to see healthy growth. We believe the net addition would be 100 to 150. The structure would be flagship stores and MINISO LAND. We also have some regular stores, but we will still go to the lower-tier markets.

Well for MINISO as a single brand in China market, we're going to achieve expectedly more than RMB 60 billion sales for this year, already positioned us as a large consumer brand. However, in 2025, we hope we can achieve a mid- and double-digit scale growth for the full year without significantly increasing net store count. Behind this is our comparable same-store sales achieving healthy positive growth and our new store being very high quality. In overseas market, there are 94 new additions in Q2. The store continue to expand. As of H1, overseas store count grew by 189. And for the full year, we plan to add over 500 stores as new adds for the full year.

However, we're going to be quite cautious. We expected around 40% of the overseas new stores would be directly upgraded, but we revised this number to be 35% now. In other words, we'll have a more reasonable CapEx. And the team will have more energies to focus on the operational optimization of the existing stores going all out for the H2 performance peak. Let's also talk about GP margin. Q2 increased 0.4 percentage compared with last year, reaching 44.3%. H1 of 2025, GP margin was 44.3% up by 0.6 percentage compared with 2024.

In addition to the GP margin improvement for the increased contribution from overseas revenue, as mentioned earlier, the effective implementation of our IP strategy also enabled our overseas business GP margin improvement. TOP TOY brands product structure optimization also enhanced TOP TOY brands GP margin. Looking to the future, GP margin may fluctuate due to category structure changes between quarters and business seasonalities, but still, the rising contribution from the overseas revenue and increasing IP sales contribution will still seem to be upward. We're going to be quite cautious in handling GP margins.

As you may know, with our brand operating IP strategy and the realization, our GP margin has increased from 27% to 44% now -- has been reminded to many of you in the previous earnings calls, we're going to pay much attention of balancing product volume and price. Going forward, we will be more firmly to our consistent value for money position on non-IP product lines. Starting from the beginning of this year, we have already made GP margin adjustment to some of the categories, both in China and overseas market, achieving better sales performance, improving our GP margin. We're -- as we stabilize in the GP margin, we will make such an adjustment in the near future.

Regarding expenses in Q2, total expenses increased by 38%. Selling expense grew by 43%. administrative expense grew by 19%. Selling expense accounted for 23%, 3 percentage higher than the same period of last year. The Y-o-Y growth is related to our investment in directly operated stores. For example, like the labor cost, lease-related costs, depreciation and amortization grew 56.3%, seeing significant de-acceleration from the previous quarter, 71.4%. This benefited from our refined operation and strict expense management. In Q2, directly operated store revenue grew by 78.7%, still higher than the Y-o-Y growth rate of the direct operated store-related expenses.

Administrative expenses growth was slightly slower than the revenue growth, which was mainly attributable to the increased employee cost, which related to our business deployment. As I mentioned, our existing investment for directly operated stores is to have more sales opportunity to ensure our success of the future business, especially in strategic overseas market like U.S. We believe our upfront investment in directly operated stores would be released the sales potential still in H2 of this year. And the profit optimization will continue to be made. And for our YH investment going to have impact on our financial statement starting from this quarter. And we're going to take the equity method for settlement.

And the YH is going to impact our net profit by RMB 119 million, which will be excluded from the non-IFRS financial indicators. Majority of that are going to come from our 29.4% of the shareholding. In addition, there will be some optimizations. And the amortization is going to be around RMB 5 billion every quarter. Well, regarding profitability, the adjusted operating margin was 17.2%, up by 0.6 percentage points from Q1, down by 2.3% on Y-o-Y basis. The decline was narrowed compared to Q1. The trend quite be positive. Let me just break down the reason by business segment and why I'm so confident for the margin improvement. Let's take a look at MINISO brand first.

Our mainland China franchise business being quite stable in margin. And in China, we also have the warehouse store and e-commerce store. The margin was lower than the franchise business model, but the impact is controllable. The decline in overseas operating margin was due to structural changes in revenue. We have more contribution from directly operated stores. We expect the margin to improve after entry into H2 of this year. We believe the profitability of our overseas directly operated store can be improved further. We will improve operational margin by enhanced efficiency, refined operation and maintain high growth. Let's also talk about TOP TOY. A significant GP margin improvement was seen in this quarter.

We made some upfront investment for example, like product R&D, overseas expansion and IT, which is actually a healthy operational investment. In mid- and long term, a 20% operating margin would be considered a comfortable target. But as we grow, we need to allow new business sufficient time and space to grow. The Q2 adjusted net profit was RMB 690 million, but adjusted net margin was 13.9%. Adjusted EBITDA grew by 14.7%, but adjusted EBITDA margin was 23.1%. In terms of the working capital, channel inventory turnover remained steady and efficient. As of June 30, our inventory turnover days was 93 days, used to be 102 days for the previous quarter.

Breaking down by brand and region, MINISO overseas and TOP TOY remained stable quarter-by-quarter. And the mainland China MINISO see significant shortening of inventory turnover days. On the procurement side, we actually structured SKU management, strengthen category standardization, implemented dynamic inventory monitoring. On the inventory management side, we established full chain product life cycle labeling system, having the seasonal marketing to implement differentiated promotional strategies, which can also lay a solid foundation in improving our cash flow and also releasing working capital efficiency. As H1 of this year, our cash reserve stood at RMB 7.47 billion, remained robust. Our net cash flow from operating activities was RMB 1.01 billion, including RMB 260 million in Q1, RMB 750 million in Q2.

Our business cash flow showed very significant improvement on M-o-M and Q-on-Q trends, benefiting from our working capital efficiency improvement. Our capital allocation strategy is going to still be balanced. Today, we announced the 2025 interim dividend for about RMB 640 million, accounted for 50% of our adjusted net profit, which will be paid after September. We believe under the existing market condition, our share price is significantly lower than its intrinsic value.

We repurchased a share of more than RMB 340 million in H1 of this year, representing 1% of outstanding shares, which means the repurchase amount in H1 of this year already exceeds the total repurchasement of the entire last year, the highest purchase amount in any half year today or the repurchase share would be canceled. In H1 of this year, returns to the shareholders through share repurchase and dividends has already been RMB 1.07 billion, accounted for 84% of adjusted net profit. That number used to be 55% last year.

The Board has also agreed to plan to utilize authorization granted by the Annual General Meeting held in June of this year to repurchase up to 10% of the total outstanding shares. We will continue the repurchasement in the open market through Hong Kong repurchase plan and rule 10b5-1 repurchase plan in the near future. We believe repurchasement in the best interest of the company and the shareholders and also show our confidence for our future business development. As we urge into Q3, we remain optimistic about the continued acceleration. The revenue growth would be 25% to 28%, significantly higher than H1. Same-store sales going to have a low single-digit growth. But adjusted operating profit will have a double-digit growth.

Adjusted operating margin continue to improve and the decline expected to continue to narrow. Looking to 2025, our full year revenue growth will be no more than 25% -- no less than 25% with quarterly growth accelerated, where at the same time, we expect in 2025, adjusted operating net profit would be RMB 3.65 billion to RMB 3.85 billion, used to be RMB 3.4 billion same period of last year. Adjusted operating margin would be improved on Q-on-Q. Thank you. Let's conclude our presentation. We are happy to take your questions now.

Operator: The first question comes from Goldman Sachs, please.

Michelle Cheng: Congratulations on the company for the performance exceed expectation. I have a question regarding the U.S. business. In Q2, I see sales go beyond expectation and the fees control has been quite managed well. You also mentioned about the large store and product adjustment. Is it possible for Jack to -- you to share with us? For your new team in U.S. market, what are those things we do right to have such good growth? What would be the key strategies in H2 in the U.S. market, especially for the profit margin, no matter for H2 or for the full year, what would be the profit for the self-operated -- directly operated stores in the U.S.?

My second question is regarding the opening of new stores. What about the net store addition for U.S. And we really would like to hear more from you, Jack and Eason, regarding the U.S. business.

Guofu Ye: For U.S. business improvement, it may come from the following factors. First of all, we continue to improve the quality of the stores, only open large stores and leveraging our multi-category advantage. Secondly, we're going to have a centralized store opening. Around 2 weeks ago, in Austin, Texas, we opened 3 stores together, which actually released the brand perception. So first of all, we opened large stores. And secondly, we will be concentrated in one region to open more stores rather than have fragmented store openings as what we did past. Thirdly, we're also working on the trendy toys, for example, for Sanrio and Disney.

And in the past, we also have the blind box and the figures, which are also showing great momentum of the growth. And fourthly, we also have the localized team for MINISO, our U.S. CEO is a localized figure with more than 20 years working experience in retail market. We started to become our U.S. CEO starting from last year. So large store, concentrated new store opening and product power improvement and localized team would be the 4 key pillar to help us to improve our U.S. operations. Looking into H2 of this year, our key is to continue to build our same-store improvement. We now have enough store account.

We have to make sure the store performance or each store performance need to be improved. But still, we need to have the right product, especially for 20 toys. We opened the large stores. Each store covers 600 to 800 square meters. We use 100 of that square meters to become the trendy store dedicated area in order to continue to engage the young people to come to our stores and making sure our stores become more appealing in the local market. Our second strategy is the holiday strategy, especially during the weekend and holidays, we make sure we have the right and comprehensive product and operations.

Thirdly, we need to have the refined operation and also right scheduling of the logistics. We actually identified the localized team and very professional. They are good at refined operation. So those are the 3 strategies we have in the U.S. We believe in the next 6 months, we're going to continue with those strategies. In H2, I have to mention to all of you, the trendy toy has been growing very fast in U.S. We have every confidence that in the near future, we're going to have the new sales target, especially coming from the [indiscernible] and the plush product.

For U.S., the net addition we have for this year would be 80, 8-0, much lower than what we have last year, but we hope we can continue to improve the quality and efficiency of the larger stores. Some of the new store efficiency is much higher than the existing stores. So that's the reason. The upper limit of the new store has been further elevated, where for new store opening strategies, we'd like to have concentrated all the regional stores. For example, in Texas, we have 3 stores being opened at the same time then to help to polish our brand perception. It's also good for marketing.

And all of a sudden, it can make sure the brand have explosive exposure in one region. In one region, no matter which plaza you go for, you see the MINISO large stores with good store performance. Regarding the U.S. market, I will ask Eason to walk you through the same-store performance.

Eason Zhang: Thank you. Thanks, Michelle. As I have already shared with all of you last in Q1, we see a high baseline. In Q1 of last year, the same-store growth was 30%. In Q1 of this year, the high baseline pressured our Q1 performance of 2025. But after getting into Q2 or especially Q3, we see same-store improvement has already been accelerated. In Q2, in U.S., the same-store performance has already a positive number. It's already a mid- to high single-digit growth. In Q3, it's continued to be accelerated with the profit margin in H1 of this year, profit margin of the same-store remained flat compared with last year.

Starting from July of this year, with our team's concerted efforts, operating profit of the store has already been significantly improved. So we can foresee -- we have every confidence to continue to improve the profit rate of the U.S. stores.

Operator: Next question. Let's welcome Anne Ling from Jefferies, please.

Kin Shun Ling: My first question that is regarding mainland China business. Same-store performance in mainland China has already been improved. I would like to know what would be the driver for the same-store performance improvement in mainland China? Is it because of the volume? Or is it because of the APS? And my second question, I do notice MINISO also have some O2O. For example, in taobao.com, I also see your stores. So for your same-store performance improvement, is it because it's benefited from the e-commerce platform promotionals? Is it because you actually launched more activations on O2O channel? This is my first question. My second question regarding the overseas business.

Is it possible for the management team to help me to break down the sales contribution from each region? For example, U.S., Europe and Asia, what about the sales contribution to the total sales? Then what would be our future growth strategy? As the company has already mentioned about U.S., we are also quite interested to know other parts of the overseas market. My third question is regarding TOP TOY. I really would like to know your overseas TOP TOY growth. How many overseas stores do we have? What would be our strategy there? Because TOP TOY is also for trendy toys.

If the overseas market MINISO and TOP TOY, the 2 brands, how we're going to differentiate the 2 in the overseas market?

Eason Zhang: Thanks, Anne. I'm Eason. I will ask Jack to help to respond to the first question on the same-store improvement for domestic China or mainland China stores.

Guofu Ye: Okay. Thank you. Please allow me to share with you. For mainland China same-store performance improvement, I think we do have a very special initiative. We have an initiative called the Chief Growth Officer that has been responsible for the store performance growth. We actually have the product center to take the lead, leveraging this special task force to well-connect product, operations, digital center and also our stores and product have seamless operations to improve our operation. And secondly, we also improved the product as product and commercial and operation has been well connected. Our execution efficiency has been further improved. Now we have a special taskforce in charge of that. It's already go beyond the departments.

So the popular products could be shipped to the store as quickly as possible. Secondly, we do have the popular hits dedicated area. For some of our stores, they will also be optimized from small to large by improving the GFA with more products on the shelf, and we will also be able to have a popular hits area. My third point, we actually leverage the traffic advantage in festival seasons. We find out the traffic during the holidays has been particularly high, especially for family trips. The mom and the kids can all purchase what they like within MINISO. This is indeed the thing we did. So first of all, we have a well-connected mechanism for product and operation.

And also, we continue to optimize our product. That's the reason we will be able to improve our mainland China same-store performance in H1 of this year.

Eason Zhang: Okay. I'm Eason. Please allow me to respond to the same-store improvement. Is it coming from ASP or traffic? In Q2 of this year, the mainland China, the same-store growth was a single-digit number. First of all, ASPs be the key. If you take a look at H2 or Q4 of last year, why same-store performance has been declining? The reason is because of the traffic. This is also many of the retailers being challenged now. The same-store performance has been pressured because of the traffic shortage. Last year, we do see the traffic shortage. But for this year, we don't see that too much.

So in H1 of this year, it seems many people believe the same-store performance improvement are coming from APS. It seems that still the traffic has been declining, but actually compared with H2 of last year, the traffic decline has already been narrowed or improved. So I surely believe our conversion rate has been gaining momentum for improvement. Another point I have to talk about is the impact from O2O to same-store performance. In mainland China, for our regular store, we have O2O for a few years. Compared with last year, O2O is not having incremental contribution to the same-store performance improvement. Still, the key reason is because we have a robust offline performance.

Regarding sales contribution from each region, let me just share with you our terminal GMV. Overseas GMV, Asia country, excluding China, accounted for 1/3. Latin American countries, another 1/3. Europe plus North America together accounted for another 1/3, where for other regions and countries, be a single-digit contribution of the total GMV. Your third question is regarding how TOP TOY be differentiated from MINISO on positioning in overseas market. Jack, would you mind to answer the question?

Guofu Ye: Yes. I think TOP TOY is a professional trendy toy brand. Its pricing is targeting the primer market, where for MINISO, we are actually covering both lifestyle product, but also the trendy product. So TOP TOY is actually a professional store for trendy toys, where within MINISO, it's all-in-one store, but also have the trendy store corners. So for MINISO, we actually have a dedicated area for the trendy toys, where for TOP TOY, it has a food store for the trendy toys. For the MINISO, the price is more user-friendly. And also the strategy and positioning for TOP TOY and MINISO differs a lot.

Kin Shun Ling: For overseas market, are you still going to have a net addition of 100?

Guofu Ye: No, I was talking about the total number of TOP TOY in overseas market. It's still going to be more than 100. Where for TOP TOY, the account is going to be 70% to 80% growth for this year. But for this year, we're going to seek for high-quality growth. The store number net growth would be 50 to 60, but still the performance growth would be 70% to 80%.

Operator: Next, please. Samuel Wang from UBS, please.

Samuel Wang: I'm Samuel from UBS. I have one question. My question is regarding the proprietary IP or collaborative IP with artists. I'd like to ask you for the artist IP or [ Yu Chan's ] sales. What about the [ Yu Chan's ] sales to the overall contribution of the artist IP-related sales? What will be your overall target? How it's going to contribute to your total sales? For artists IP, you probably need to have a new business model as IP operation. So for that, is there any plan or strategies that the company can share with us? This is my first question regarding artists IP. My second question if possible, and the management team to share with you.

In the past, we're working with global large IP, but now we do artist IP. Why do we have such a shift? My second question is also targeting the overseas markets. I have already clearly noticed in U.S. market in Q2, same-store performance turned positive, where for other overseas market, same-store performance are still a bit pressured. For overseas market, what are those markets go beyond expectation? What are those lower than expectation? For those markets being pressured, what would be the forthcoming measures?

Guofu Ye: Thank you. I'm Jack. Let me just share with you artist IP strategy. Yes, indeed, it's a strategic move. In the past, what MINISO do is only in the global IP licensing. But starting from now, or starting from 6 months ago, we have already started our new strategy. Now I can officially announce the dual drive strategy. On one side, we have international IP. But at the same time, we're also going to develop our own proprietary IP. Yesterday, I see the release from POP MART, which makes me quite excited. On one side, I see the consumer buying, the consumer actually buying the trendy toys. And secondly, I see the capital market also buying in the trendy toys.

We can see trendy toys is in the infancy stage in China. The market is expanding now. MINISO has a great growth momentum here as we build our proprietary IP and [ Yuyu Chan ], our first proprietary IP has been quite successful and it's already short of supply now and the production cannot catch up with the demand. Proprietary IP would be our key strategy. Why we can do IP right? In the past, we didn't notice how important it is. But now we started to understand the value of the proprietary IP. And MINISO has every opportunity to do proprietary IP right.

In the past, when we were working with global IPs, we indeed enjoy great advantage for product development, marketing and the channel, but we are indeed back of the proprietary IP. But as long as we started to take actions on proprietary IP, I believe the future would be full of promise. We now contracted 9 artist IPs. [ Yu Chan ] is actually our first one. And I truly believe for this year, Yu and going to actually make a very good sales. And the next year is going to -- the sales is going to be RMB 100 million for Yu. I can surely inform the market.

We have already understand the grid methodology for the proprietary IP operations. Even for TOP TOY and we actually acquired IP for [indiscernible], it's great was RMB 100 million. Now for this year, it can reach RMB 250 million and likely to be RMB 600 million next year. So no matter for TOP TOY or MINISO, we are continuing expanding our proprietary IP. For example, we contracted the artist IP like Yu, and we also acquired [indiscernible] IP. Those 2 IPs surprised us with beyond expected outcome. We're going to engage more new IPs.

When Chinese GDP capital is more than USD 10,000, I think the rise of the great nation rest with the rise of the culture, especially the IP. I think the IP culture in China is just at the start. It has a great prospective. It's going to generate a GMV of more than RMB 300 million, RMB 400 million in China and our RMB 30 million overseas shipment, while at the same time, our proprietary IP also going to have further shipment to overseas market. We never mentioned this before, but let me tell you, proprietary IP is something we explore and continue to grow. I can surely share with all of you.

We have been quite successful in being the proprietary IP business model where what would be the advantage of MINISO in building proprietary IPs because for MINISO Group, it's more like having another growth driver or another way that can help us to be truly differentiated, having very nice growth and replicable experience. We're going to continue to engage artist IPs. The cost is not high. It's not a high spending, where for some of the artists, we will be able to help them to run their business and grow their business as a whole. Now in China, only us and another 2 to 3 competitors may be capable of doing so.

For example, like MINISO and TOP TOY that are all under our umbrellas, where for short-term performance contribution and the profit, we rather would like to improve the quality of the IP and IP value. We have every confidence in proprietary IP. I hope you can keep an eye on MINISO for our proprietary IP strategy. Thank you.

Eason Zhang: Thanks for Jack. You feel quite passionate when talk about proprietary IPs. This is indeed one of your most like topic recently. You can see it still show great mission and vision as a great entrepreneur. And we also would like to welcome you to join us for the Hong Kong offline roadshows. Jack will share with you more on the proprietary IP and IP strategy. Samuel, you also raised another question. What are those overseas market go beyond expectation? What are those on lower than expectation? Let me talk about it in this way. We have our business in more than 100 countries and regions worldwide.

For some of the market, they may have the ForEx, local retail, macroeconomic impact or even some of our customers may have some hurdles locally. Sometimes the performs good, sometimes not. In H1 of this year, in U.S., in Canada or in Australia, we do notice a very nice growth, especially in Canada. You see we have localized team in U.S. And in Canada, we also have a seasoned local retail expert to lead our localized team. When our Canada leader took the office, the sales result was looking quite well. The sales growth was a triple-digit number or even grow by more than 100%.

Where for Australia, in our prepared remarks, we have already mentioned our flag -- pop-up stores with the new large stores being opened in Australia. But what are those markets who may grow that's our expectation. There are a few I can share with you. The first one is Latin American market. The revenue was declining in H1 of this year, but actually, the GMV on the retail was growing due to a few reasons. First of all, Latin American market, the local customer is someone we worked long term with greater trust and who is adjusting inventories in H1 of this year, which has been completed now.

And secondly, for Mexico market, the local currency fluctuates a lot for the past 12 months. The adjusting using USD to purchase our product. So ForEx is one thing that impacts the Mexico business. But you can see that for Mexico or even for Latin American countries, the performance was quite steady for the past few years. There are some small markets, not a big contributor of our business. The performance is go beyond our expectation. For example, Chinese Hong Kong, many of the traffic go directly to mainland China market. The leasing fees for the retail industry has been quite high, but the Hong Kong business accounted for a very small part of our total business.

So overall speaking, from H1 of this year from Q1 to Q2, the market was going up. In Q3, we see the trend being further accelerated.

Operator: Next question, let's welcome [indiscernible] from Huatai Securities, please.

Junhao Fan: I have 2 questions. First question, tariff impact, which has been started in Q2, and you also made some proactive adjustment for U.S. business, where you actually -- or your supply chain plans for the tariff measures, is there any updates whether the price adjustment to tariff impact your sales? We'd like to hear more details. My second question for the mainland China business in higher-tier cities, you have the IP strategy, where for lower-tier cities, you have the money for value strategy. What about its performance now? What will be the same-store performance in higher-tier and lower-tier cities? Any difference?

Guofu Ye: Thank you. Let me have to respond to your second question first regarding the same-store performance in higher and lower cities. Overall speaking, in H1 of this year or starting from beginning to now, the same-store performance in higher-tier cities outperformed the lower-tier cities. You were talking about the tariff impact. Starting from April this year, U.S. tariff is always something that the market has been concerned about. Let me give you the result first. Tariff didn't impact our margin for U.S. business. In order to take care of the tariff, we make the following acts. First of all, starting from 2024, right before political situation changes in U.S., we already have some strategic inventories in U.S.

Secondly, we leverage our integrated supply chain management in U.S. We have already deployed the direct sourcing in U.S. We do have many direct sourcing in the U.S. On one side, it can help to be the countermeasure of the tariff impact. and also help us to have the localized product R&D and also sourcing to take care of the local consumer needs. Thirdly, we also make some tax plan for the tariff. So here now, you can see all those measures are working very well. Our margin are not impacted by tariff at all.

Junhao Fan: Very comprehensive introduction. Congratulations on the company's ever improved performance.

Operator: Next question, [indiscernible] from Yangtze River Securities.

Unknown Analyst: My name is [indiscernible]. I have 2 questions. The first question that is the self-operated business and also the distributor business in the overseas market, what would be the growth for both? And second question, recently, we noticed the company has been taking many actions regarding IP. So I'd like to ask you for MINISO LAND, what about the growth now? And how it's going to drive the offline sales in mainland China? And secondly, what would be the future IP development regarding the business cadence?

Guofu Ye: Sorry, due to the Internet connection rate, can you repeat your second question? Let me help to respond to the first question. For the overseas direct sales and the distributor business model in Q2, overseas market growth was 29%. The direct sales is higher than distributor model growth. And actually, we have a division of the BU. On has been called direct sales. Another one has been called as agency business or the direct business. But later, we find out both business are working complementary. Even in the direct sales business, we have the franchise stores or even in the distribution model, we have some self-directed stores.

So the division won't be able to truly tell the growth of our overseas business. So that's the reason internally, actually, we sell -- we keep less attention to such division. But generally speaking, the direct sales growth rate is higher than the distribution model.

Unknown Analyst: The second question is regarding proprietary IP. What would be the cadence of the proprietary IP? And then what about MINISO LAND?

Guofu Ye: Thank you. Proprietary IP is a key driver for us. In the past, we only have one thing to count. That is the global IP licensing. But now we take the parallel tasks. Proprietary IP and global IP are all quite important for the company. We're going to continue to develop proprietary IP and continue to unleash its value potential and resources. The second question you were talk about is MINISO LAND. It's actually a success really surprised us, go beyond our expectation. For our Shanghai Nanjing East Road store within 9 months, the sales is already more than RMB 100 million. And recently, we also have a few MINISO LAND stores proved to be quite successful recently.

So what are those benefits for MINISO LAND bring to us? We will be able to engage a large number of the trended toys artists to contract with us, to work with us. I mean the cooperation is also in-depth cooperation for MINISO LAND. The fundamental logic is IP cooperation. And actually, for MINISO LAND, IP-related contribution are more than 80% or even 90%. For example, for Turkey, 30 shopping mall, we are the only one to provide the blind box and trendy toys. But why we can work with 30 shopping mall is because they believe we are the international brand. We have international IP.

As we move into the luxury shopping malls, we're not only going to do international IP, but also the domestic territory IP. Artists can work with us for proprietary IP and continue to improve their exposure. This can also help to further collect and also engage more IP artist resources. MINISO LAND and also the MINISO fans and space, those are the 3 product lines. We're going to really engage in making the IP business right and comprehensive, where for those proprietary IP artists, we're going to create them a good and open platform for cooperation. I believe it will become a very solid foundation for us to develop our proprietary IP business.

So for MINISO Land, we're not only going to have it in China, but also in overseas markets.

Operator: Thank you very much. Thanks for all the participants. Here comes to the end of today's call. See you next quarter. Thank you.

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