Chinese retailer Miniso topped fiscal fourth quarter earnings estimates early Tuesday, helped by faster-than-expected store openings — including a flagship store in New York's Times Square. MNSO stock signaled a move above another buy point in morning stock market action.
Miniso Earnings Results
Miniso earned an adjusted profit of 25 cents per ADS or American depositary share, up 127% from a year ago and 3 cents ahead of estimates. Revenue grew 30% to $448.5 million, topping views of $434.4 million.
In Chinese currency terms, factoring in devaluation against the dollar, adjusted profit per ADS grew 150% on 40% revenue growth.
Miniso, which says it's out to create a globally recognized "lifestyle super brand," ranks No. 1 in Investors Business Daily's Retail-Discount & Variety industry group, based on fundamental and technical factors, according to IBD Stock Checkup.
Rapid Store Growth
Miniso added 277 stores in fiscal Q4. That was up 592 stores vs. a year ago. Of the new stores, 221 are in China and 56 overseas. Miniso now has 5,791 stores, with 3,604 in China and 2,187 overseas. The company also added 2 Top Toy stores in China, bringing its total to 118.
The company said that overseas markets contributed more than 40% of operating profit in the latest quarter, up from about 25% in the prior quarter.
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Revenue from Miniso's offline stores in China grew 42%, as the store count rose 9% and average revenue per store grew 31%. Revenue tumbled during Covid lockdowns in 2022 and average revenue per store still hasn't fully recovered to pre-Covid levels. Overseas revenue grew 42%, including an 11% increase in the store count.
"Leveraging China's efficient supply chains and the design capabilities we have accumulated during the past ten years, Miniso is able to offer global consumers budget-friendly products and build our customer-friendly image," CEO Guofu Ye said in the earnings release. "The value-for-money proposition enables us to show great advantages in navigating through economic cycles."
Miniso also announced a dividend for the fiscal year of 41 cents per ADS to holders as of Sept. 7.
Miniso's High Margins
The stores, geared to young, female customers, aims for a treasure-hunt shopping experience, launching 100 new products every seven days.
Barry Wang, the Hong Kong-based co-portfolio manager of Oberweis Asset Management's China Opportunities Fund, told IBD that about 75% of Miniso products are priced below $7.
Miniso was profiled in IBD's The New America feature on Aug. 4.
"Most of their products are self-designed, not commoditized products, which helps pricing and margin," Wang told IBD. MNSO stock is among his fund's top holdings.
In the June fiscal fourth quarter, gross profit rose to 39.8%, up from 39.3% in the prior quarter and 33.3% a year ago.
MNSO Stock
MNSO stock rose 6.5% to 21.69 in early Tuesday trading. On Monday, MNSO stock closed up 1% to 20.36, in the upper end of a 5% buy zone above a 19.49 buy point, according to MarketSmith.
Though rising above that buy point, MNSO stock has been etching out a shelf pattern over the past month, a fairly tight consolidation following its July 24 breakout. The 21.56 top of that shelf could serve as another entry point. A move past last week's high of 21.15 would break a trend line and could be actionable.
The stock market's current "In Correction" status suggests investors should be building watchlists and paring exposure to between 20% and 40%. New purchases are not recommended.
MNSO stock has a 99 Relative Strength rating from IBD, meaning it has outperformed 99% of all stocks over the past year. However, investors should be exercising a higher degree of caution now that the stock market rally has been knocked off its stride.
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