MINISO Group Holding Limited (MNSO) Earnings Call Transcript & Summary

Hello, everyone. Thank you for your patience. Welcome to MINISO 2026 Interim Earnings Results Presentation. [Operator Instructions] Please note the event will be recorded. English simultaneous translation will be available for this call. [Operator Instructions]. We released our Q2 and interim results of 2026 earlier today, which is now available on our ir.miniso.com. Joining us here today are Founder and CEO, Mr. YE Guofu; and our CFO, Mr. Jingjing Zhang. Right before we continue, please refer to your safe harbor statement in our earnings press release, which also apply to this call as we will be making forward-looking statements. Please also note, we will discuss non-IFRS financial measures today, which has been explained in our earnings release and our filings to SEC and Hong Kong Stock Exchange and reconciling to the most comparable measures reported under IFRS. Unless otherwise stated, all figures are in RMB. In addition, we also prepared a PPT slides containing financial and operational information for today's call. If you are using Zoom, you can see the information. You can also preview it later on our IR website. Now I would like to welcome Mr. Ye.

Hello, everyone. In H1, MINISO Group revenue reached RMB 11.5 billion, up 22.4%. EPS grew 8.2% and operating cash flow rose 46%. Our global store accounts accounted 8,674. MINISO today stands at a pivotal moment as we operate a larger and better store, building our own proprietary IP and develop our overseas organizational capacity. Opportunities and challenges coexist. I firmly believe the strategic direction and the stage-by-stage significance of those initiatives better than the near-term number. I will walk you through our business performance this quarter across 3 segments, including MINISO China, MINISO Overseas and TOP TOY. Official data show that China total retail sales of consumer goods grew by 1.3% on a Y-o-Y basis in H1 of this year. Against this macro backdrop, MINISO China H1 revenue grew by 26.2%, not only far outpacing broad retail sales, but also exceeding our prior year guidance. This was our H1 growth rate in the past 3 years. Importantly, the quality of the growth is truly high, driven primarily by the mid- and high single-digit growth number. On the channel side, as of the end of 2022, the Q2 and MINISO China store count reached 4,665 with a net addition of 97 stores in H1, among which land format store addition, net addition 59 flagship, format store 159, regular store recorded a net closure of 121. On August 22, MINISO Land [indiscernible] Eastern suburb memory store officially opened, marking our 100th store in China. Store count number was very solid, but the quality is even more important. At the end of June, our China store count was up 8%, with the revenue grew by 26%, reflecting a substantial increase in per store output and healthy growth in the overall sales per square meter. I'd like to show you 3 sets of data. First of all, sales per square meter and the rental ratio valued each month. The format store delivered sales per square meter roughly twice that of the regular store. Compared with the existing stores, the store newly opened in 2026 are significantly larger, yet the sales per square meter held steadily with the rent to sales ratio improved. To malls, our new format is no longer a new tenant, but also the engine for foot traffic. Secondly, our store renovation pace continued to accelerate. We completed 189 store renovation in H1. Post renovation store performance has been doubled Y-o-Y against a full year renovation target of 255. We have every confidence to exceed it by the end of this year. Secondly, franchise return continue to improve, whether measured by the payback period, profit margin or promotion of the profit store, the profitability of the MINISO Land worldwide and MINISO store nationwide in H1 reached its best level since 2019. Franchisees are increasingly willing to open larger and better stores, which is the most direct endorsement for our channel strategy from swapping the page to bring better for large store driven growth. Our channel upgrade strategy has underway for 2 years and remains significantly for the future. This assessment with 2 facts. First, the proportion of the MINISO store in China remained low. And second, we continue to innovate on the store format. This year, we introduced a new member to our store metrics that is Super MINISO, the most important innovation of 2026. Looking back to the evolution of our channel upgrades over the past 2 years. In 2024, MINISO Land validated IP immersive flagship store. In 2025, MINISO Friends entered into mid- and high-end shopping industry in the affordable luxury retail. In 2026, Super MINISO bring the IP experience to the broader mass consumer base. Its product metrics was 50% IP merchandise plus 50 general lifestyle products. Since its launch, it has become one of the most popular store formats among the consumers. The aspect of our Super MINISO is that it's not over the consumer existing brand perception, rather it's built upon them. It retain consumers familiarity with MINISO, value for money merchandise. We're injecting [indiscernible] and trade-driven experience through IP. Other formats like friends, land and state progressively deepen the IP merchandise and share, helping consumers move from lifestyle general merchandise to IP land as part of the brand upgrade. But I'd like to see the success of the large store is not merely channel innovation. It's a systematic innovation by having content space and operations. The store is a space. IP is a store to fuel it. The momentum of the store and the value of the IP reinforce each other, forming an ever accelerating flywheel. In June last year, we launched [indiscernible], our first proprietary IP -- within just 1 year, [indiscernible] has entered into 53 countries worldwide, generating nearly RMB 500 million in related revenue in H1. The most iconic milestone was [indiscernible] Disney Toy Story 5 fashion, [indiscernible] version of Moody's [indiscernible] sold strongly across stores in multiple countries. In just 1 year, [indiscernible] success has propelled its validated proprietary IP to a new stage where it can engage top-tier global IP as an equal. Beyond the MINISO flagship store and the brand, the TOP TOY has also built its own IP metrics. Its flagship IP [indiscernible] has surpassed RMB 300 million in cumulative GMV. And you can see that while you validated the methodology within our flagship brand Omi, Y-o-Y and [indiscernible] has proven different style under the TOP TOY brand. Around the proprietary IP, we have accumulated [indiscernible] SOP expanding artist signing product definition, design to development and supply chains actually all the way to the prelaunch, spending [indiscernible] channel in-store events and fan operation. Our group-wide target of RMB 1 billion in proprietary IP sales set at the beginning of this year was achieved ahead of the schedule by the end of July. This is all proven our multi-IP multi-category localization strategy is successful. We fully demonstrated MINISO's Unit resources investment in building proprietary IP. We have the full category coverage, all channel penetration, global footprint and food chain operation. Looking across the globe, MINISO only poses the greatest of flexibilities and expandabilities in product categories. The strong base controlling the innovation capacity in channel, the bodies and the highest quality global store network in terms of footprint. On the operations front, MINISO leverages full chain advantage from signing sites to be line to development to marketing and selling product. We dip empower artists at every stage, maximize the potential of HIP. Those are precisely MINISO's highly differentiated and scared resources, and they are also the key to MINISO [indiscernible] and overtaking the proprietary IP. There are 4 clues that enable us to complete the entire process from IP concept to shelf more efficiently than the vast majority of the companies. So everyone, yuyu is just at the beginning. On August 22, we newly launched Artist IP [indiscernible], sold out entirely on his day exceeding expectation. We have already signed not on designators. You can see on the evening of 26, 5,000 sets of [indiscernible] was sold live with 1 second. And at the same time, we have already signed month for designer orders, recruiting of recredits worldwide through our IP prodigy program, our ambition is going forward, leading 100 Chinese IP onto the global stage. At the moment, local IP mortgages entered into unprecedented bond. The rise of the grid nation is inevitably accompanied by the best of the culture [indiscernible] and their global actors. MINISO were backed by our wood-trading channel product and IP operation to secure our top position in this history requirement. Our vision is to become the world's leading IP operating platform, measured by channel scale. We are already the world's largest retailer of the IP product and our proprietary IP business is using a new growth engine. That is at once distinctive, explosive and [indiscernible]. Our strategic per towards proprietary IP is a long-term choice rounded in the trend of our ingress. We were sustain long-term investments. Even in the short term, the proprietary IP product line has delivered accident report part. We not only have yuyu proven to be success, same as chocho, our second IP. If H1 profit margin was above company average, inventory turnover was capitas in 30 to 40 days. Proprietary IP strategy has placed no pressure on overall profitability, laying a solid foundation to continue our IP ecosystem. Coming next, I'm going to talk about membership strategy. Last year, I said membership would become another important engine for MINISO growth. The value of the strategic membership is steadily materialized. Member scale and contribution continue to reach new levels in H1. Our China membership grew by 31%, reaching 130 million, the all-time high. Member contribution sales rose to 57% in the same period of last year to 60% for the full year last year and 33% in Q1 and further 77% now, where at the same time, membership is the latest evidence of MINISO's growth shifting from the opportunity driven to the system driven, the value of the members should manifested in 2 sales sites. The core engine of the lifting average transaction value. Average transaction value rose by 5%, working with [indiscernible] IP, for example, like some real Disney and Harry Potter, as well as Chihuahua combined with the blockbuster effect of our proprietary IP, large store has become the core stronghold of the high-value members. As a result, cost contribution of China member was 2x higher of the nonmembers. Average transaction value of IP member is more than 3x of the non-IP members. Secondly, top-level engine to improve the retention through the process targeting and benefit-driven retention that can help to further expand the active lifetime. our precept identification of the member consumption preference and the category needs enable new products to which taught consumer efficiently will operate the benefits such as the cash paybacks credit and into the purchase into direct momentum for the next purchase. IP member newly acquired in 2025, the nation rate in H1 was 80% point higher than non-IP members. With purchase frequency, 2x higher than a non-IP members. Members who use cash back credit repurchased 1.6x frequent and there's no numbers. IP-driven acquisition and the largest quality upgrade and repurchase extension is our underlying [indiscernible] sustainable membership value, but we have scale structure and the frequency driving together, they would be able to sustain the long-term success. Let's also take a look at the overseas market. In H1 of this year, overseas revenue grew by 40.9% to RMB 4.06 billion. Store number accounted for 3,644 frankly speaking, overseas performance fell short of our expectation. We did somewhat our group profit. The overseas contribution to company profit declined from 35% to 20% in 2023 to 10% to 50% in H1 of this year. The impacts are coming from 2 factors. First of all, a decline in distributor business revenue. And secondly, our direct operated market outside North Europe. Americas still remain in early investment stage. The store model are still in the refinement and not yet profitable. We also made some internal review for those issues. Expanding our verses directly operated stores. We will be more focused and more prudent regulatory assessing ROI of the new stores, concentrating resources to deepen our presence in priority markets. I ask them to slow down the pace of the store openings. Unless you have 100% confidence. In H2, we will first concentrate on operating our existing -800 existing overseas directly upgraded store and replicate at single-store model materials. Overseas market is our vast horizon. Short-term fluctuation won't change our long-term growth trend. We have corrected our past growth approach that overemphasize on scale and store comps so that the terminal sales growth, inventory turnover and headquarter shipment once again, would form a closed loop in a housing way. You know that now. It is also the time for us to already improve the performance in overseas market. Our overseas business is now in the holding stage. We would like to make sure we refine our store model. And more importantly, we need to make sure the China transformation will be successfully validated in the international market. It's actually the time for another upgrade for the international market. So that's the reason. We have already made significant adjustment in the transformation for international business. So I would like to take this opportunity to encourage our overseas teams. From 2015 to now, our overseas journey has been spent 11 years. The deeper we go overseas, more profound, I can realize how difficult it is for a Chinese company to truly gain a solid foothold out and earn sustainable profit broad. It was not a product strength in the supply chain. It also organizational capacity, management control model and the localization strategy. MINISO overseas business has been profitable from day 1 yet we must recognize overseas trains today are precisely assigned that MINISO globalization has entered into deepwater stage. As a share of the direct operated business rise, we must settle in and pursue refined operation, localization, stronger organizational capacity and a globalized management control model, while solidifying our management fundamentals. We see many international consumer brands entered into China did well in the past 1 decade, but started incurring [indiscernible] in recent years. So no matter international brands come to China or Chinese brands go for international market, we have to be adoptive. Otherwise, profit would be nothing to be talked about. This is also the so-called secondary upgrading and the transformation every company needs to have faced, if they go for internationalization. MINISO China transformation over the past few years achieved a great success. We have a preliminary realized brand upgrade and business model iteration, China business started to burst with fresh vitality. The challenge we're facing for overseas business today is essentially the same as China 3 years ago, shifting from the scale first to quality first. Over the past 3 years, China delivered a transformation report card from a lending, grabbing expansion to [indiscernible] upgrade and then the refined operation. This methodology applies equity to overseas market were never short of the product supply chain or channel, what we lack of is more patience to fully refine the single store model. Going Global is Marathon. Every adjustment and every investment we made today lays a solid foundation for the long-term value, a real additional good store MINISO open overseas. Every additional consumer well served. Every additional member cumulated brings us one step closer to our vision of becoming a world-leading IP operating platform. I have faced in my overseas team, give them time, give them patience, I believe that overseas market tomorrow was surely better than what we have today. Coming next, please allow me to talk about Top Toy. In H1, TOP TOY revenue was grown by 32.7%. Global store numbers 365, including 48 overseas. This quarter, TOP TOY U.S. stores being located in Hangar of New York making the first China designer to brand entered into the crossroads of the world. In H1, proprietary IP accounted for 10% of TOP TOY with proprietary IP metrics continue to expand, with some pop-up events that are quite popular, especially [indiscernible], especially in Hangzhou debut, single mask GMV is already more than 50 million. I mean next I'm going to welcome Eason to walk you through the financials in H1 of this year, please?

Okay. Thanks for Mr. Ye. Now I will walk you through our key financial metrics. Today, rather than going through the financial lines [indiscernible], I will offer some explanation on seat points that are top of the mind for you. First of all, let's review how we performed against H1 2026 guidance we give to you in the May earnings call. H1 revenue which is in line with the Chinese same-store guidance, but not that for the North American market. H1 revenue grew by 22.4%, slightly ahead of our guidance. That is 20% to 22%. On that, China revenue grew by 26.2% in H1 with Q2 in particular, grew by 23% versus our earlier expectation of only a low double-digit growth in China for Q2. This upside in China came from 2 factors. First of all, an accelerated channel upgrade. China saw a net addition of 25 stores in Q1 or 72% in Q2 [indiscernible] our projection of around 40 and secondary, the sales contribution from proprietary IP, especially [indiscernible]. China same-store cell also achieved the guided mid-single-digit growth. Well, for [indiscernible], the proprietary IP saw a very good growth. As Mr. Ye has already mentioned, for the short run, our proprietary IP delivery excellent results. The profit of our proprietary IP product is higher than the company's average level and the inventory tag has been controlled within 30 to 40 days. But for sure, 30 and 40 days may still be sort of the supply now were improving. So in that way, proprietary IP is not pressure on our overall financial of the company. Overseas revenue grew 15% in H1 below our guidance of a high double-digit growth. The main reason was a 10% decline in distributor business revenue and both Asia and the North American markets experienced temporary revenue declines. As I have already shared with you, North America met single-digit same-store sales growth came in below our private guidance of the high single to low double digits, largely because we see the weakening of the same-store performance in North America in June. I will walk you through the reasons later. Our adjusted operating profit, excluding the ForEx gains and loss, grew by 5% on a Y-o-Y basis, slightly below our earlier projection of the high single-digit growth, mainly due to the decline in distributor revenue, a high-margin part of our business. In H1, MINISO overseas GMV grew by 40% on a Y-o-Y basis to RMB 8.29 billion. The revenue grew by 50%, reaching RMB 4.06 billion. Let me just break down by region. First of all, let's take a look at Asia. In H1, Asia terminal GMV grew by low single-digit Y-o-Y, while revenue declined low single digit Y-o-Y. Markets such as Indonesia, India and the Philippines were the main driver weakening on Asia overall performance. Objectly speaking, those markets are facing macro challenges, but it is undeniable that our localized operating capacity still have some further room to improve. Our localized understanding of the market shifts and the product channel managing are not taping off. Our merchandise planning, channel strategy and the terminal execution are not as efficient as what we have made in China business. At the same time, we proactively cleaned up a bunch of underperforming low-efficiency stores. For example, in markets such as Philippines, we closed the stores with outdated formats and persistently [indiscernible], which had some short-term impact on the revenue. This cleanup of the low efficiency store in overseas distributor market will continue for another 2 quarters. But we can also see that for market like Vienna, following an earlier phase of the higher-end store closure and the product mix adjustment, it already started to show improvement. In H1 of this year, it's the efficiency has been continued to improve the best in the past 3 years. So Vietnam same-store sale grew by 20% in Q2 with continued positive growth momentum. This shows our future direction is cracked. Going forward, we will continue to depend our understanding of the Asian market, enhancing our localized operating capacities in market-specific manner focusing on channel upgrades and product mix adjustment, activity explore the product assortment and the price brands adopting to the change of the local consumption market. Let's talk about Latin America. In H1, Latin America terminal GMV grew by high single-digit Y-o-Y, but revenue declined by low double-digit Y-o-Y. These were several reasons for these [indiscernible]. For example, A number of the core markets, including Colombia faced multiple external challenges such as political volatilities, rising freight costs, natural disaster which had a [indiscernible] impact on the overseas orderings and the shipments. However, the terminal demand remained resilient. For example, the top 4 Latin American countries contribute 80% of our performance there, all delivering solid terminal GMV growth in H1, with Mexico also post high single-digit growth excluding the ForEx impact. And actually, if you use a local currency, the Mexico local GMV was grown by nearly 20%, as external adjustment fading away, disruption fading away, we have our confidence for the long-term development. The third part would be the North American market. North American market, the H1 revenue grew by 37%, reaching close RMB 1.8 billion, broadly in line with our expectations with a mid-single-digit same-store growth -- quarter. Q2 revenue grew moderately slightly to 25% were 2-year [indiscernible] at around 50%. However, in Q2, the 2-year take was still around 50% 5 year ago, residing performance against the high banks. The moderation was mainly due to 3 factors: First of all, a temporary gap in the cadence of the IP product launches. North America has a high share of the IP product and is, therefore, more sensitive to the IP launch cadence. In H1 of this year, we didn't maintain a sufficiently study on frequency, which affected the store traffic and conversion to a certain extent. This was providing valuable asset for optimizing our IP product patent spending going forward. Secondly, the sale share of the locally directed sourced product in the U.S. market used to exceed 50%, but not fully in line with our plan at the very start up this beginning. Earlier this year, against the backdrop of the tariff policy changes, we set out to control and gradually reduce the share of overseas direct sourcing. But you can see the direct sourcing of focusing on the category that are not operated by the headquarter. However, it takes time to adjust the product metrics, which was not being reflected in H1. Going forward, we will further improve the advanced -- the planning of the overseas merchandise. Thirdly, the upfront cost investment for the newly directly operated store. We have a net increase of 75 stores in H1, nearly double the same period of last year. The upfront investment will have some short-term impact on the profitability, but the good news is that the new stores opened for this year delivered significantly higher profit margin and the sales per square meter than older bonds outperforming inside selection quality channel matching. Into H2, we will shift our focus to deepen our store operation and running our already opened store deep and through. For the full year, North America and [ Europe ] market will still maintain relatively high growth. As for North American store will continue to prove out the success rate. We expect that North America will reach close to RMB 4 billion in scale with 10% net margin for the full year. Europe is also a market where a positive arm, but is still in the early stage for direct operation development. So fluctuation is expected. In H1, Europe revenue growth moderated to 26% with the same-store down by mid- to single digits. Our European team is building organizational capacity, refined store model, let's give them the confidence and the patience to allow the market to proven our strategy. In H1 2026, MINISO made in China achieved a mid-high -- mid-single-digit same-store growth, in line with our expectations, leaving ample room for our full year target of low single-digit same-store growth. MINISO overseas same-store sales declined low single digits, with North America achieving a mid-single-digit same-store growth. North America same-store performance was quite strong in Q1 grew by 10%, but moderated in Q2, particularly because the stock out of the certain best seller, especially the best [indiscernible] IP product, we expect this stock out would be eased in September. Well, in H1 of 2026, the GP margin was 44.3%, flat versus same period of last year. For the GP margin, it was including approximately 0.6 percentage points from the U.S. tariff refunds. For Q2, the GP margin was 45.3%, 1 percentage improvement compared with last year. This was due to the tariff refunds, which bring 1.2 percentage positive growth. Based upon the refund received to date, the company expects tariff refunds will also have 20 bps to 30 bps support to the overall GP margin for the next 2 quarters. Excluding the excellent investment and the convertible bond financing, the profitability of our core business in H1 was as follows. Adjusted operating profit was RMB 1.49 billion versus RMB 1.59 billion in H1 last year, down by 6%. Excluding the ForEx factor, the figures was RMB 1.63 billion and RMB 1.55 billion grew by 5%. And -- excluding the ForEx effect, the adjusted net profit was RMB 1.22 billion and RMB 1.24 billion down by 1.7%. The corresponding adjusted net margin declined by 2.6 percentage on Y-o-Y basis. This was also proving that our selling expense ratio rose 2.7 percentage this period with last year, it was 23.1% to be specific rental and depreciation expenses related directly operating store rose from 7.1% of the revenue. to the same -- in the same period last year to 8.1% in H1 this year, grew by 1%. Advertising promotion expenses grew by 2.8%, where regarding IP license fees rose from 2.6% in H1 last year to 3.1% in H1 of this year, grew by 0.5%. The increase in the 2 items largely reflect our strategic investment in proprietary IP. Selling-related labor cost rose from 6.8% last year to 7.2% this year, up by 0.4 percentage points. So the growth of the above full expenses altogether contribute to 2.6% of the expenses increase. By business unit on this slide, it shows very clearly. The main reason for the Y-o-Y margin decline was a structural shift in the revenue. For example, in H1 of 2026, the revenue contribution from the high-margin franchise and the distributor business, the margin was -- net profit margin was more than 30%, but it's now fell 6 percentage points. While the contribution from the overseas directly operated business rose by 3 percentage points. However, last year, this number was a single-digit loss. Let's also take a look at the Working capital. Inventory turnover in H1 was 102 days versus 97 days in the same period of last year. MINISO CHina event re turnover was 67 days, which was 73 days last year. MINISO overseas inventory tender for international market was 273 days, which was 240 days last year. Going forward, our overseas business must prioritize inventory health and take decisive measures to react to support the inventory. Besides that, in the peak seasons, we have to leverage on the IP launches and the holidays for those sells big time. Coordinated membership promotion and city activities to use blockbuster products to drive the monetization of the slow moving inventory. At the end of June, our cash reserve was RMB 7.39 billion. Net cash inflow of operating activity in H1 was RMB 1.48 billion, grew by 45.5%. We constantly play high priority on cash flow management. This robust level can also provide solid support for the company's transformation. On shareholder return in H1 of 2026, the company retained 1.31 billion to shareholders, including dividends and buybacks, of which the company repurchased 520 million combined with Mr. Ye's personal share purchase approximately 54 million in H1. Our buyback sales in H1 was already exceeded the full year total of 2025, which fully demonstrate the confidence into the future business. We did not declare an interim dividend this time because the company believes the current valuation is highly attractive. We will conduct substantial buybacks over the coming period and make a reasonable dividend decision by the end of this year. Based upon the full year profit, the company's shareholder return policy for [indiscernible] is buybacks plus dividends of no less than 50% of adjusted net profit, excluding ForEx effect. Looking back on H1, our domestic business exceeded expectation once again validating our path for opening large store, building IP and pursue high-quality development works. Overseas market sustained a compound growth rate of nearly 40%. Now we are in a transition period from the scale expansion to quality operate, we still need time to build up organizational capacity. Based upon the company's current projection, we expect the company's revenue to grow by high single-digit Y-o-Y in H2, mid-double digit for the full year. On this in H2, MINISO China revenue is expected to grow [Audio Gap] revenue to decline by low double digits. Overseas directly operated business will grow low double digit, Top Toy revenue is expected to flat in H2, with low double-digit growth for the full year. Compared with our full year outlook at the start of this year, both domestic revenue and profit are somewhat better with the differences mainly coming from overseas and the Top Toy in H2, will proactively slow down overseas, continue to close a bunch of the low-efficiency distributor store and also controlling the pace of the directly upgraded stores opening, we expect a negative reduction of 50 to 70 stores across overseas market in h2, a net addition of 40 to 50 directly operated stores and a net reduction of 100 to 110 distribution stores. For the full year, our guidance for the low single-digit same-store growth for MINISO China and MINISO North America remained unchanged. Excluding ForEx, but adjusted operating profit is expected to decline by a high single-digit Y-o-Y. The adjusted operating profit margin is expected to decline 3 to 4 percentage points Y-o-Y. Our profit outlook is more cautious than the guidance we gave at the start of this year. While we expected accelerated full year profit growth versus last year, with an implied margin assumption, of a 1 to 2 percentage point decline. However, we now believe it's going to be down by 3 to 4 percentage points. Even the overseas distributor market revenue will decline over the next 2 quarters, there will be some impact on our margin. This concludes my remarks. Now let's move to the Q&A session.

[Operator Instructions] Michel lefrom Goldman Sachs.

Mr. Ye and Eason, I have a question regarding your largest store format in Mainland China. Mr. Ye has already mentioned the large store was performing out of our expectation. We know that for many of the larger stores, when they first opened, the performance was pretty well. If the store opening dividend for the first store impact gradually digested. What would be the normal performance of those larger stores, especially the compelled was a normal store, what would be the difference on the sales, efficiencies and the sales per square meter, whether you have any target in your mind and you have any criteria in selecting the regions or the signs for those large stores. The question is mainly regarding the large store format, please?

Thank you. Let me just start with my overall view. The larger store model continues to outperform company expectation because our first large store has been opened for 2 years. It's not going to be a short-term action, but at the same time, we have multiple large stores at the same time. It's not just for 1 to 2 stores. From this perspective, were not [indiscernible] bus driven by the opening handles. It is a sustained growth trend. Our store metrics keep evolving and now we have the platform at flagship regular and pop-up. Let me just break down the large store unit model with a few metrics. On our store performance, the Park format family is very healthy. MINISO, our earliest format in the family still deliver the store performance above 3 million baseline, while the super MINISO nearly launched in 2026 has already surprised us a lot, which came basically steady above 1 million baseline. The sales per premier, the park format was running twice as that of the regular stores. The rent-to-sell ratio, the performance running slightly higher than the regular store by a single-digit number, but the Y-o-Y trend was downward, thanks to the prime treatment after talking to the malls on the paybacks, The park Parfet store achieved a payback within 6 months in early stage and now average speaking 1 year faster than 60 to 80 months of the regular stores. Franchisee profit margin and the share of the profit of MINISO store has risen in tandem. In H1, the profitability of the MINISO nationwide reach its best level since 2019. In H1, more than 30 land format store entered into the same-store base, with average daily sales per store up to 30% growth Y-o-Y, flagship format, 400 stores. So average day sales per to grow mid and double-digit Y-o-Y. Well, let me just talk about how we choose a site. What will stick to the quality over speed. The [indiscernible] garage store and the flagship store will keep rising based upon our analysis. MINISO China total store number would reach 7,000 to 8,000. Land for [indiscernible] family would be 1,200 with 95 super MINISO and MINISO friends flagship format reached 2,000 regular format, 4,500. On [indiscernible], location value and traffic will always be our key criteria. We will take a look at the commercial district, prioritized on top traffic versus a prime commercial area. For example, we let look at the store structure priority rises the corner position, the street-facing front. Certainly, we take a look at the consumer circulation, making sure that a store is sit right on the main customer traffic corridor.

Now let's welcome Yang Runbo from CICC.

I'm Yang Runbo from CICC. I have a question. In H1 of Asia, MINISO China performance was truly idea. However, the domestic retail environment in China volatile in July to August, some of the retail companies said that they are pressured. Can you share the consumption trends you were seeing in the market? And how the company is going to respond to that with concrete measures?

This is a very good question. According to the data from the National Bureau of Statistics, as many of you can see. You can see that in June, it was declining. And in July, it was only grew by 0.6%, which is not ideal at all. But for MINISO China, we remained strong. Since July, MINISO China GMV has grown about 20% Y-o-Y, driven by those rising shares of the larger store and also the land format in our store mix and steady same-store development. You can see that in July, the same-store average daily sales has grown by mid-single digits. At this point, with MINISO China, we have a mid-double-digit revenue growth in H2. Those results are inseparable from our strategies being mentioned. Let me just share with you people, product and the stores. First of all, even you see the social retail was going down. However, I see for traditional retail business will still need the consumer to work. However, you see that for emotional, sales was going up. For example, auto products, trendy toys, the sales was growing up, but traditional retail business was not growing that fast. That's the reason we have to continue to build our MINISO range because we're not building immersive IP thing, that is the future trend. Let's also talk about people. Membership operations are a key growth lever for us, especially buildout. The cash -- the membership system, we showed some progress on membership program during the earnings call, including the growth in membership number, membership contribution to the cells. We need to have the refined operation of the store. And secondly, you need to talk about the product. Our product mix will not be truly aligned with IP. For example, our proprietary IP, which can actually provide most interest-driven product with many emotional value, those product sales was growing very fast. Especially in H1 of this year, proprietary IP led by [indiscernible] become a notable incremental driver with the designer toy category, proprietary IP now has already had a mid-single-digit share of [indiscernible] sales and the double-digit show of the online sales growing very fast, especially in top-tier stores such as MINISO Land and MINISO Space. And in the GE collaboration, we have been deliberately pushing into higher price and to test more prime merchandise. And also, we're going to have the first Lisa branded pop-up store, which would be available starting from the first of September. Many international celebrities and the superstars are happy to embrace and working with MINISO and hope they will be able to work with us to continue to work on the interest-driven consumption market in China. The economy was not good, but Chinese population is still huge. China has 1.4 billion people, Generation Z and people born after of the 1980s and 1990s are still going to be a big proportion. Those people are never short of the material consumption. They need emotional value and they need the interest consumption. Our competitors are also growing very fast, which showcase in China has a huge potential to go further. In terms of the channel, I was talking about what we indicate to bringing the better bird strategy, which will provide ample room for sustainable environment of our domestic business in the upcoming years. Upholding the principle of quality over quantity, our domestic business is still a fairly ideal state. We will keep advancing the renovation of existing stores. I have already highlighted MINISO China, 4,665 stores spend a variety of the store formats. We're going to go for the lower tier stores. And you can see young people in China, they all need the interest-driven consumption with emotional value. If we're going to build good store scenarios, immersive experience, our trendy toy product and IP products are more attractive that can actually help us to continue to improve the consumption and continue to draw the design to enthusiasm and move the price band further. I was coming back from the Northeast part of China. I see many of the stores being well positioned. I was mentioning about our store efficiency is no less of our competitors. Some of our stores can even outperform pop margin. That is our internal goal. If you have time, I'd like to suggest you to take a look at our store at the [indiscernible] store. We have 2 stores there facing each other. You can see that our performance outperformed [indiscernible] Shopping Mall, which actually boost our great confidence for the larger stores. We internally proposed we need to improve the sales per parameter over the competitors. That is indeed the internal target we have. We have every confidence to make this target happen because you know that for our product and our trendy toy product in the land was more than 35%. And we're going to make it more than 40. We already have to proprietary IP now, including [indiscernible] and [indiscernible]. [indiscernible] was just launched 2 days ago. If our proprietary [indiscernible] prove to be successful, then we're going to have 2 proprietary IPs with annual sales of more than RMB 1 billion. If we successfully hit this target, I believe our diversified format plus proprietary IP it's going to be a 50% performance from the 22 IP collaboration product for another half. In that way, our business model will be more stable, more sustainable and more immersive and more experimental. Majority of our store are having more than 800 square meters, including 2 floors. So I have every confidence in our large store format, especially in the land format. Even if we are facing challenges now. However, I should be -- we are still in the pen stage of the transformation. The profit has been under pressure. However, we have a promising future, and I surely believe the business model we're running up still make us feel excited. That's for domestic mortgages. But for international market, we are facing many problems. I know that starting from C, I will spend more time working on the international market. In H1, we are working for the store format refinement in China. In H2 of Asia. We're going to move to the rest of the China -- international market. In Mexico, from 5th of September, we're going to also have the MINISO land format in Mexico. Profits happened in China also being faced in international market. And in Mexico, we're going to celebrate the anniversary. The Latin American consumer preference are similar to that of China. Their income population structure and population density are very close to that of China. It's also the time for them to embrace the transformation and upgrading. And you see the macroeconomic picture as far as I believe, interest-driven consumption, emotional value would be the next driver for the future growth. And we probably don't need too much material value. Only in some African countries was still in need of the so-called material grave. However, some developing countries like China and Asia countries, we have been shifted from the material revenue to the emotional value for interest-based consumption.

Anne from Jefferies.

Mr. Ye and Eason and the IR team. I have a question. That was about our latest performance. What are the latest the same-store sales, SSS speaker for July and August? As well as being a factor, could you split same-store sale into average selling price, ASP and traffic? How much have a store upgrade renovation and the product mix shift contributed to the growth? Which product categories are performing best? Given the softer retail in the last year's high base, what's your outlook for the same-store sales in H2 of 2026. Are there any difference between the higher-tier and lower-tier cities?

In July and August, MINISO China seems to perform a very steady, which is beyond our expectation, especially where we have the super MINISO store. The performance was quite competitive. The product -- the store for manager breaking down order value of volume contributed 80%. Average transaction value grew by 20%. The volume and price are rising, which is very healthy. And we also mentioned we're going to have higher consumer unit price and higher gross margin, which is not being started yet. We actually opened more high-end stores in the [indiscernible] as well as the Taikoo shopping malls. And the product is still in the refining stage, need to be further improved. I also would like to mention same-store growth is driven by multiple engines, including the store upgrades and the product upgrades along with the memberships, where for the upgrades are not the sole source within a single mid-single-digit same-store growth, store renovation contributed roughly low single digit. The rest are coming from the better refined operations, including the -- optimizing the product channel magic, making sure the right product in the direct channel and also tailoring the product mix to different store styles or types. I have already mentioned to you, we have more high-end stores, but we are still going to improve our product. Product adjustment takes time, but that's not for the store adjustment. We were talking about the store adjustment, we're still building the infrastructure, building it right and then we're going to count on our product to continue to grow. We have our proprietary product along with the accelerated development of the product mix. As you can see in the matter for large store model or designer toy, they are now in the Tier 1 to Tier 2 cities. -- penetration ratio in the lower term cities are very low. This means later cities offer broad room for expansion and are a potential source of the future same-store growth. Let's talk about the category performance. [indiscernible] is one of our best performing category with a share of the [indiscernible] to 1 percentage point on IP shares. IP products overall accounted for around 1/4 of the sales. The show from the proprietary IP and artist IP rose by 4%. Let me talk about H2 outlook. The high base lending coming from the Zootopia race in November and December last year. And we also have a decent IPO for the same period of this year. Overly speaking, with same-store sales growing mid-single digit year-to-date, we remain confident in delivering full year low single-digit same-store growth in China, and the mid-double-digit revenue growth in H2. We also see several important levers. First of all, keep optimizing low-efficiency stores. Second, on the product front, back to school season is a key figure. We did not do particularly wide last year, and we will make sure we capture it this year. We're facing opportunities for culture creative categories, and we're going to work on that further. It's also going to be a good opportunity for us. Certainly, on holiday, we will capture the sale dsell search window around National Day and the mid-autumn day, most strengthening repurchase and the merger through the membership credit merchandise.

Next question. Let's welcome Shi Di from Huatai Securities.

My name is Shi Di from Huatai Securities. You know that -- thanks for providing us a very clear [indiscernible] In H1 of this year, the company has many new IP and many new products, for example, collaboration with Gene and generated a strong but in H1, your proprietary IP, [indiscernible] are also performing very well. What IP types and category expansion are planned going forward in H2, what are the levers for creating the broad boxes in H2. And the holiday season, you have in your pipeline?

Our IP strategy remains driven by 2 engines, licensed IP and proprietary IP. Each has it's own plans or the license IP, we have partnered with 180 global IP spending, EMEA full and TV and celebrated. Accumulating end-to-end experience from IP selection to product development to operations. You also talk about the [indiscernible] collaboration. Our product, for example, like accessories, [indiscernible] designing and producing, and also, you see from the 1st of September, those products would be available. And we also have more IPs in the pipeline, where at the same time, we also have a [indiscernible] total, which just to release its great potential, while at the same time, you can see for [indiscernible], the demand is far beyond than the need. And the wages actually be stocked a out. We never expect this is going to be that popular from the rev beginning, which is -- another way to look forward to that. It was very, very popular on the red book, which enjoy very good progress. On top of September was going to officially launch collaboration with [indiscernible]. But at the same time, 9th of September, we're going to have the lease collaboration, IP excision. You all know how impactful this might be. We're going to be the IP collaborator and IP extrusion worldwide. We have already mentioned, we're going to have the product. For example, the blinded box as well as the [indiscernible] product or the patent and the price would also be quite friendly to the normal consumer. So you can say the price would actually be further improved compared with what we had last year. The GP margin contribution is also reaching the best level. We'll actually continue to improve that, and continue to improve the product, the price and be more experienced for the global layout. Well, regarding the proprietary IP, that is our long-term strategy level. We're going to work with a large store format. As I have already mentioned, for [indiscernible], you in June and July, sales was more than RMB 100 million for 2 consecutive months. I was going to have a major IP collaboration later. That's going to go beyond the Disney collaboration. As you can see, [indiscernible] also have the collaboration with McDonald's and also working with [indiscernible] coffee. All those advertisement could be identified on [indiscernible]. Yesterday, and we also noticed that [indiscernible] is indeed a very popular one. And all the consumer brands would like to work with us for that. So take a look at the [indiscernible], you will see how popular [indiscernible] would be? So you'll see that the success of [indiscernible] proved again our proprietary IP model is truly successful and feasible. And we're also going to have a good design, the team is getting more confidence. Success could be -- but there are 2 success. It's not a lock at all. You need the methodology and the set of the strategy to be mature. And we're also working with different celebrities, especially our collaboration with Louis Vuitton, which is very, very well established, which is also the global leading strategy. As you can feel, that is already go beyond the dot. We're learning, but what is supporting that is a great strategy of my team. We're going to launch a better and good marketing innovation in the near future, go beyond our peers, really supplies industry society and the consumers. So this can also help us to further clarify our commercial proprietary IP are actually going from stage to stage to a more mature phase. So to summarize my answer to question, I think we have a few levers. We continue to work with the top licensed IP, celebrated IP in sensor incubating our proprietary IP with our existing IP metrics. We're going to have the IP and the product working together, we're going to work with different categories and SKU, leveraging our large store and different formats to continue to convert the IP sales and continue to advance our proprietary IP. You can even come to our store to take a look at that. You can see that for Disney and [indiscernible] now having the blind box been working together. And you can also say that for [indiscernible], the blind box was also being well created, very much professional as far as I believe our blind box is making huge progress regarding the collaborations, which is now in fees than our peers. This is also something we're progressing very fast. As long as we have a good use case, good IP, if the consumers come to our store, they believe we are professional, especially after working with [indiscernible] and we surely believe the MINISO trendy toy consumer measure is continue to progress. That could also help to build future collaboration, where at the same time, it's going to be a great driver for our future groups.