On March 3, Miniso Premium (NYSE:MNSO) announced its Q2 quarter 2022 financial results (Q4 2021).
The financial report shows that thanks to the obvious recovery of overseas business, the benefits of online and offline layout have been magnified. The net profit for the fiscal quarter was 210 million yuan, and the net profit margin was 7.7%, the highest in the past seven quarters since the outbreak of the epidemic.
Red Star Capital Bureau noted that Mingchuang Premium Products focused on the sinking market, and the strategy of playing the track was becoming clearer. However, while continuously expanding its scale, supply chain management capabilities and originality are still its unavoidable shortcomings.
MINISO Mingchuang Premium Products Infographic According to Visual China
Growth Keywords:
Overseas, sinking, tide play
According to the financial report, the company's total revenue reached 2.77 billion yuan, an increase of 21% year-on-year, exceeding its growth range of 8.8% to 17.5% predicted in the previous quarter, but still lower than the 28% growth rate in the previous quarter. The highlight of this financial report is that the net profit of the fiscal quarter was 210 million yuan, and the net profit margin was 7.7%, a new high in the past seven quarters since the outbreak of the epidemic.
It is worth mentioning that the overseas business of Mingchuang Premium products continues to grow. The overseas revenue of Mingchuang Premium products reached 720 million yuan in the fiscal quarter, an increase of 55% year-on-year. Domestic revenue was 2.05 billion yuan, an increase of 12% year-on-year.
The figure is from the Financial Situation The data is from the name of the excellent product financial report
At the same time, Mingchuang Premium products continue to expand stores, and the rhythm tends to sink. In the fourth quarter of 2021, the number of domestic stores increased by 133, and the cumulative number of stores nationwide reached 3168, of which about 63% of the new stores came from third-tier cities and below, and the cumulative number of stores in third-tier cities and below exceeded 1300.
The accelerated growth of the number of stores in the sinking market is also closely related to the group's strategic "private domain" in 2021.
At the beginning of 2022, Liu Xiaobin, vice president and CMO of Mingchuang Premium Group, said: "If the affordable brand positioning of Mingchuang Premium products does not change, the unit price of product customers will not be greatly improved, and the breakthrough of Mingchuang Premium Products business will focus on relying on repurchase to do improvement." At present, the group still repeatedly buys the target, which has not changed. ”
Liu Xiaobin also revealed that in 2021, Minchuang Premium will officially elevate the private domain to a group strategy. According to its statement, the first step of the private domain model of Mingchuang Excellent Products is that the store is responsible for pulling users into the private domain, and more than 90% of the nearly 15 million private domain users are from offline stores. According to iResearch data, the number of young people in low-tier cities is about 227 million, more than three times that of young people in first- and second-tier cities. Mingchuang Premium products will open stores to third-tier cities, on the one hand, they want to eat a huge sinking market, on the other hand, they also want to build a private domain pattern of the sinking market to obtain more customers and a higher repurchase rate.
Red Star Capital Bureau also noted that TOP TOY, the tide play business of Mingchuang Premium, is also a major growth point. TOP TOY's revenue for the fourth quarter of 2021 reached $130 million, up 20% sequentially. As of the end of December, the number of TOP TOY stores reached 89, including 13 DreamWorks stores and 76 tide play collection stores. At present, Miniso Premium has reached strategic cooperation with more than 80 IP copyrights around the world, including Sanrio, Disney, Marvel, Forbidden City, NBA and other IP. In January this year, TOP TOY reached a cooperation with the head e-sports club EDG to jointly launch a new product of tide play.
Figure according to the WeChat public account of Mingchuang Excellent Products
The tide play business well reflects the "interest consumption" emphasized by Ye Guofu, chairman of the board of directors and CEO of Mingchuang Premium, and its lower pricing is more in line with the consumption level of young people in the sinking market.
The risk remains:
Epidemic, management, originality
However, Red Star Capital Bureau also noted that the epidemic is still the next problem facing Mingchuang Premium. The earnings report shows that its domestic sales growth continues to be challenged by the multi-wave epidemic across the country in late October. The company estimates that the GMV losses at these affected stores are comparable to the losses in the previous quarter.
In overseas markets, 76 stores had not resumed operations as of December 31, 2021, compared with 157 stores as of September 30, 2021. The company believes that although sales in overseas markets have improved slightly in the past few quarters, it remains cautious in terms of sales and store expansion.
In order to expand the scale and cope with the impact of the epidemic, Mingchuang Premium has chosen to continuously expand franchisees.
In the 2022 Q2 fiscal quarter report, 132 of the 133 new stores in China are franchise stores; at present, there are only 5 directly operated stores in Minchuang Premium, and the number of franchised stores is as high as 3163. There are 41 new overseas stores, including 9 new direct stores and 32 new franchise stores; the current number of overseas stores is 1877, of which 117 are self-operated stores and 1760 are franchised stores.
According to the Red Star Capital Bureau, for the headquarters, franchisees can enter the enterprise without bearing heavy costs such as store rent, employee wages, etc., and can also obtain benefits from franchisees; and the influx of franchisees can also allow Mingchuang excellent products to quickly occupy the market, increase market share, and have more voice in front of suppliers and expand the scale effect. The continued expansion of overseas franchisees in this quarter will undoubtedly help it occupy overseas markets and form a certain scale, while also facilitating its response and reducing the uncertainty and risks brought by the epidemic to overseas markets. (For details, please poke: revenue slowdown, stock price slash, Mingchuang excellent product "KPI" is difficult to complete)
However, as Miniso Premium continues to expand its franchisees, its ability to manage operating costs and supply chains is also facing challenges
In terms of operating costs, the financial report shows that the sales cost of Mingchuang Premium Products in the Q2 fiscal quarter of 2022 was RMB1,909.9 million, an increase of 15.4% year-on-year.
Screenshot from The financial report of Mingchuang Premium
In terms of single-store revenue, in the Q2 fiscal quarter of fiscal 2022, the overseas single-store revenue of Mingchuang Premium Products still increased by 43.7% year-on-year. However, in China, the epidemic situation and the density of stores have diluted their single store revenue. According to the prospectus submitted by Mingchuang Premium in 2020, the sales of same stores in the second half of 2019 decreased by 3.8% compared with the same period in 2018. In the Q2 fiscal quarter of fiscal 2022, the revenue of its domestic Mingchuang premium single store fell by 7.4% year-on-year.
In addition, the management of the supply chain is still the sword of Damocles hanging over the head of Mingchuang Premium.
Mingchuang premium products basically adopt the OEM model, some foundries in order to control costs or even "shoddy charging", Mingchuang excellent products have repeatedly reported quality problems, plagiarism and other negative news.
In September 2020, the day before the listing of Mingchuang Premium Products, the Shanghai Food and Drug Administration issued the "2020 Phase 1 Cosmetics Supervision and Sampling Quality Announcement". According to the announcement, in the Pinli Department Store in Jing'an District, Shanghai, the "one-step peelable nail polish" represented by Mingchuang Premium (Guangzhou) Co., Ltd. detected a trichloromethane content of up to 589.449 μg/g, which is more than 1400 times the national standard limit of 0.40 μg/g.
On the 12th day after the listing, Mingchuang Premium held a quality strategy conference, and Ye Guofu announced that he personally invested 100 million yuan for quality control, and then improved the quality control of suppliers and products by uniting various quality inspection agencies.
However, in May 2021, the Guangzhou Municipal Market Supervision and Administration Bureau announced the results of the 2020 Guangzhou Protective Mask Product Quality Supervision and Random Inspection. In the supervision and random inspection in the fourth quarter of 2020, the two batches of "MINISO (nominal)" disposable masks produced by Nominal Mingchuang Excellent Products (production date/batch number: 2020-09-15/1971028501; 2020-09-15/1971028503) were found to be unqualified by the mask belt and the junction between the mask belt and the mask body.
Mingchuang Excellent Products, which takes the integration of the supply chain as the main method, also needs to spend great efforts to improve the supply chain management capabilities.
The more far-reaching and deadly problem of Mingchuang Excellent Products is the shortcomings of originality. Even if Mingchuang excellent products modify the trademark, and guangzhou time-honored brand, guochao IP joint name, try to step on the national tide wind to get rid of the plagiarism, copycat label, but the original ability is obviously difficult to make up in a short period of time.
Mingchuang Premium products and Guochao IP joint name According to the official WeChat of Mingchuang Premium Products
In April 2021, a designer @ Li Tang00 reported the plagiarism of Mingchuang Premium. Red Star Capital Bureau's inquiry into Tianyancha found that there were many infringement lawsuits against Mingchuang Premium.
The problem of originality also exists in the sub-brand of Mingchuang Excellent Products. At present, SUN Yuanwen, founder and CEO of TOP TOY, publicly stated that he recognized the importance of original IP in 2021, but at present, TOP TOY is still dominated by the tide of foreign procurement and cooperation IP, and the ratio of brand procurement and original products is about 7:3.
Ye Guofu said that 2022 will be the first year of the MINISO brand strategy upgrade, and if the strategic effect of this upgrade is not good enough, its "100 billion stores in 100 countries" goal, which has been extended to 2022, may be postponed again.
Red Star News reporter Yu Yao intern reporter Zhang Luxi
Edited by Tao Yueyang
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