MINISO Group Q4 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 30, 2024

There are 4 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by and welcome to Minasil's earnings conference call for the first half of twenty twenty four. At this time, all participants are in a listen only mode. After the management's prepared remarks, we will conduct a question and answer section. Before joining the question and answer section, please announce your name and institution and be kindly noted that this event is being recorded. We have announced our June quarter and interim financial results earlier today.

Operator

An earnings release is now available on our Investor Relations website at iya.musi.com. Joining us today are our Founder and CEO, Mr. Jack Yan and our CFO, Mr. Yixin Zhang. Before we continue, I would like to refer you to the Safe Harbor statements in our earnings press release, which also applies to this call as we will be making forward looking statements.

Operator

Please also note that we will discuss non IFRS financial measures today, which we have explained and reconciled to the most comparable measures reported under the International Financial Reporting Standards in the company's earnings press release and filings with the U. S. SEC and Hong Kong Stock Exchange. The currency unit is Chinese yuan, unlike otherwise stated. In addition, we have prepared our presentation for today's call, which contains financial and operational information.

Operator

If you are using it in meetings, you should be seeing it right now. You can also revisit it on our IR website later. Now, I'd like to hand over the conference over to Mr. Ye and Mr. Alice Shen from Universal Arts and we'll translate for Mr.

Operator

Ye. Please go ahead, sir. Hello, everyone. Welcome to MINISO Group's earnings conference call for the first half of twenty twenty four. During the reporting period, our global market footprint continued to expand.

Operator

We achieved a milestone of 7,000 stores globally, which is less than a year since we surpassed 6,000 stores. In the first half of twenty twenty four, the group's net store networks have seen 5 2 net new units with both Minnesota overseeing top flight experiencing their fastest store opening period in history, adding 266 and 47,000,000 units on a net basis on the first half of the year, respectively. These 2 business segments also maintain double digit growth in same store sales, continuing to be robust goods and act as growth engines in the world. Minuso, Milan, China achieved steady growth by adding 189 net new stores and keeping a 1st class same store sales performance of 98.3% of previous year's level. As a result, the group's revenue for the first half increased by 25% to RMB7.76 billion including a 7% same store sales growth and a 90% growth on an average short amount.

Operator

Product capability, it's our core competitive strengths. Continue to focus on IP and strategic categories, increasing gross margin from 39.6 percent in the first half last year to 43.7 percentage respectively, adding 4.1 percentage points. General probability is crucial for us to stand out in future competitions especially in overseas markets, especially in direct operated markets and especially in the United States. The pace of store expansion in the United States have exceeded expectations continuously with double store counts and a double digit same store sales growth. Even though we are still at investment stage in overseas markets under our effective cost control measures, adjusted net profit in the first half of twenty twenty four still increased 80% year over year.

Operator

Excluding net foreign exchange impacts, adjusted net profit increased 26% year over year, slightly faster than the growth of revenue. On our Investor Day earlier this year, I shared our mission, vision, long term strategy in implementing PAS in the next 5 years. Our mission is Light is for fun and our vision is to become the world's number one IP Design Retail Group. To relay this vision, we adhere to affordability, globalization and product innovation, at eDesigns. We have established 3 targets, 900 to 1100 net new stores in each year from 2024 to 2028, no less than 20% CAGR for revenue and a higher CAGR for EPS from 2024 to 2028 and having no less than 50% of IP product sales contribution by the end of 2028.

Operator

In the first half of twenty twenty four, despite the evolving global markets, our business model demonstrates strong resilience and our financial performance met our earlier expectations. Going forward, all of our businesses will make firm progress in accordance to a 5 year strategic plan. Now I will walk you through 2024 first half business update for our 3 major segments, MINISO Midland China, MINISO Overseas and Top Firstly, Inso Manila and China continued to achieve a robust and resilient sales base on high quality channel expansions with a 60% year over year increase in up line GMV. According to National Bureau of Statistics, the growth rate of domestic retail sales of goods were 4.1% per share in the same period last year. In particular, same store sales were at 98.3% of the prior year's levels, with a 0.9 percentage increase in ticket size and a 2.5 percentage decrease in graphics.

Operator

Meanwhile, purchase conversion rates have remained stable. If including the Q2 house sales of Chicago products in our pop up stores, same store sales growth for H1 in domestic markets would have a positive growth year over year, which would be an impressive performance in domestic online retail industry. Online to online models also developed rapidly with a nearly 80% increase in GMV for the first half years. Entering the Q3, our year to date domestic sales have continued to maintain a double digital growth. We expect Minasol, mainland China will continue to grow by 10% to 15% in line with our earlier expectation.

Operator

The expansion of our store networks is healthy. In the first half of twenty twenty four, we had 189 net new stores, maintaining a steady pace towards our annual target of 3 50 to 4 50 net new stores. We're pushing up new stores in the first and second tier cities with growth to 60%. Meanwhile, we're thrilled to see that in the first half years, the same store recovery of higher tier cities, especially 1st tier cities, nearly 100% of the previous year's level, which recovered better than the lower tier cities. On one hand, this indicates that municipal steel has sufficient space for store openings in higher tier cities.

Operator

On the other hand, it's also indicated that our IP strategies have been notably effective in higher tier cities, significantly driving the performance of same store sales. There are a total of nearly 2,000 city and towns in China, a slower tier area, and Minnesota have entered over 1,000 of them, indicating that there is still a significant untapped market for future penetration. Our retail partners' structure is also very stable. In recent 4 years, store concentration rates for top 50 retail partners remained at 50% and more than 600 of them have been in cooperation with Minnesota for more than 3 years. The development of Minnesot is inseparable from the support of our partners and we will continue on a win win cooperation for more and better Minnesot store.

Operator

Next, let's discuss the Minsos Overseas Fitness Update. In the first half of twenty twenty four, revenue from overseas exceeded 2,700,000,000 yen a year over year increase of 43%. In particular, revenue from the direct operation market increased by 70% year over year in a comparable basis. The direct operation market accounted for 56% of overseas revenue in the first half of this year, surpassing the distributors' market. Excitingly, the overseas markets added another 2.56 stores in the first half year, which marked it the fastest store opening pace for the first half of the year since Minnesota's globalization 9 years ago, boosting our confidence in our growth of 5.50 to 6.50 net new stores for the whole year.

Operator

On most these net new stores, the numbers of directly operated stores has been set at a record of 105 with more than 50% of them are from United States. Last week, we celebrated the opening of the 200th Minnesota store at the Santa Monica Beach in California, turning Minnesota as the Asia's consuming brand with the largest store network in the United States. Hence, we have entered 40 states in the United States along with the rapid growth in the numbers of the US stores. Same Store Sales have also achieved healthy growth in the first half of twenty twenty four. Going forward, we will pay more attention to our store operation management and to achieve sustainable same store sales growth through product localization, operations localization and consumer localization.

Operator

The IP strategies have been further taken and implemented in 2024. In the first half years, IP product sales contribution exceeded 30%. In our domestic market, IP product contributions have been further increased nearly to 30% with a nearly 40% year over year growth. In our overseas markets, IP products contributions have been increased to nearly 50% and the revenues have been doubled. We uphold IP strategy as a core of the brand and continuously explore innovators' IP cooperations.

Operator

To summarize the 3 news of IP operation in the first half of twenty twenty four, there are new models, new store types and new series. Firstly, in the first half of twenty twenty four, GMV's of the IP Themes models increased by about 400% year over year, contributing for more than 30% of the IP product sales compared to less than 10% contribution in the same period last year. Secondly, our new store formats, the IP pop up stores, were launched in the first half years. They provided consumers with brand new shopping experience and have become a new channel for IP product sales. Lastly, the upgraded and development of product series of the C Mic Brand will prolong the promotion piece, extend the IP operation cycles and create more sales opportunities to a greater extent.

Operator

In overseas markets, we replicated our IP operation strategies and created momentum for the popular IP BT21 continuously, setting new reports for IP sales in multiple overseas markets. The great success of such IP serious operations not only brought us better product sales and stronger brand exposure, but more importantly allowed our global commercial rental partners to fully perceive the potentials of IP consumption and the brand builders of new stores. We are grateful for the support from our partners during these events. I believe that with in-depth cooperation with them in the future, there will be opportunities to create more marketing highlights and sales miracles. Thanks to the effective implementation of our IP strategies, as of June 30, the numbers of registered members of Minnesota worldwide exceeded 100,000,000.

Operator

Gradually including global membership system will help convert more IP events into our brand members and vice versa, fueling business growth of Minisource in the future. The superstores strategy is also steadily advancing globally. Taking advantage of Olympus' momentum, we opened a global flagship store at the most famous Chang'eighty's Avenue in Paris. The brand promotions of cheering for Chinese Olympics athletes attract countless consumers from all over the world to get to know more about products and culture from China via Minnesota Stores. Minnesota has over 300 stores located in Indonesia as of June 30 and the largest Minnesota fresher store in the world, covering an area of 3,000 square meters, will also be unveiled in Jakarta, Indonesia tomorrow.

Operator

We hope that these global grocery stores are not just shopping destination, but also magical paradise and wonderful land that captivated global consumer and leave them with a sense of wonder, allowing everyone to be treasure hunters in our stores. We believe that happiness is a force that can be cast on. We are committed to creating this force for every consumer who enters Minnesota stores. Meanwhile, we are also actively deploying the overseas supply chain. Through the efforts in the first half years, most of preferred categories we saw in the United States markets can be fully replaced by the supply chains from Southeast Asia, Japan, South Korea and United States.

Operator

Operating a highly edged supply chain is a must have approach for the global companies to public the evolving and challenging global markets. Let's move on to top In the first half of twenty twenty four, Topchoice revenue increased by 38% year over year, including a high quality same store sales growth of 14% coupled with a net increase of 47 Top Choice stores in the first half of twenty twenty four. Top choice self developed products continue to have breakthroughs with the proportions of self developed products exceeding 35% in the first half years. The average merchandise gross profit margin of self developed products is about 60%, which undoubtedly plays a positive role in improving the overall gross profit margin. Softchoice has been profitable for 3 consecutive quarters, reconfirming its shipping point.

Operator

As for the products, the sales of Bella Peroni and Bitch series launched in Q2 have topped the sales of all categories and topped out this year. The recently launched Sanrio Vinyl Series had exceeded 100,000 units of sales within just 50 days in launch day, achieving over 10,000,000 cells. In the future, we will continue to increase the proportions of cell developed brand products and further optimize the product profit margin. In 2024, while focusing on business, we also learned more emphasis on bolstering our corporate culture by repeatedly emphasizing the right strategy and dynamic teams internally. Looking back at the 11 years development history of Linusil, talent is the most solid strength for our enterprise developments.

Operator

As for June 30, the numbers of our global employees have exceeded 5,200. Over 2,800 some other major are from the overseas. In March, we launched a marriage and the fatality reward plan with over 10,000,000 initial fundings. On Tixi Festival, we held the very first municipal wedding ceremony for 17 couples, sensing our sincere blessings. I have always emphasized that the values of passion and persistence within the group in our pursuit of success built in light within our career in addition to the correct values and sufficient professional ability, we also need strong passions and persistence.

Operator

The passion and persistence are also the support of Minnesota employees to create industrial records and promote enterprise development continuously. We remain a huge for time soon for development and profitability in retail industry. We commit ourselves to long termism, to seeking true content, to operating with great faith and strong ambitions. Limsa hopes to provide playful, healings and useful products to our global consumers in the future continuously, offering competitive career development opportunities to our employees and bring long term and sustainable returns to our shareholders. That shall conclude my remarks.

Operator

Next, please allow Yiseng to introduce the company's financial situation in the first half of the year.

Speaker 1

Thank you, Jack, and welcome everyone for joining us today. I'm pleased to see that our business has made firm progress in Croda and Suisse's 5 year strategic roadmap and our performance has met the expectations at the beginning of the year. Our business model has demonstrated great resilience despite the softness of the domestic consumption market. In overseas market, while we doubled our directly operating store network, we managed to balance growth and margin and we can surely do better in the second half because the initiatives we adopted recently to improve operational efficiency has begun to pay off. Although the economic data remains mixed, we see structural opportunities in IP retailing and globalization.

Speaker 1

We have full confidence to deliver our new beginning targets. Now, let me walk you through our financials for the first half. Please note that all numbers are in renminbi unless otherwise stated. And I will also refer to some non IFRS measures which have excluded share based compensation expenses or SBC expenses. So, revenue saw a robust increase of 25% on last year's high base and at the high end of our expectation.

Speaker 1

We are thrilled to see those drivers of revenue performed very well in the first half. In terms of store leverage, we delivered record net additions in overseas and top line and with expected acceleration in the second half in many. And in many China, we are on track to deliver our guidance of 3.50 to 4.50 net new units while making necessary training to our existing store formats and franchisee structure. When it comes to same store sales, we delivered a 7% year over year growth at group levels. So we are particularly encouraged by our achievements in China mainly.

Speaker 1

While SSSG was 98.3% of previous by level, outperforming domestic retail sector, our product team kept introducing best selling SKUs as they have been doing during the past 11 years. Our operations team has launched several initiatives to make sure midsole's central sales is best in class. For example, our O2O business, or instant retail, increased by nearly 80% in the first half because our 4,115 stores are easily accessible to our customers and we have the right products and a comprehensive set of fast and convenient digital fulfillment solutions. In overseas, same store sales growth was 16%. We are still at very early stage to uncover sales potentials overseas stores.

Speaker 1

It will grow very fast but inevitably fluctuates. The mission critical here is localized products and operations. Although, Minnesota is a pioneer in Chinese consuming brands going overseas, our attempts at retail localization are merely at the beginning stage. In addition, top floor same store sales growth was remarkably at 14% in the first half. Next, let me talk about channel mix.

Speaker 1

Overseas DTC market is now 20% of our total revenues compared to 14% in the first half last year. The revenue contribution from the supply stores decreased by 4 percentage points. This shift in revenue mix is one of the reasons why we had another record high GP margin and it also changed operating profit distribution within a year. As more profit will be made in the second half. In terms of GP margin, the year over year hike of 4.1 percentage points is a result of not only revenue mix shift but also improvements in GP margin at every single line of business, notably in top oil and overseas.

Speaker 1

Going forward, we have reason to believe our GP margin can be optimized further because of above reasons. Yet, we will keep an eye on valid proposition and make dynamic adjustments. SG and A expense increased 56% in total, including a 66% increase in selling and distribution expenses and a 27% increase in general and administrative expenses. SG and A represented 24% of our total revenue, 5 percentage points higher than the same period last year. Now which 3 percentage points were directly related to our new DTC stores opened in the past 12 months, including RINs, D and A and payroll.

Speaker 1

As we discussed in the press release, the investment into DTC stores to make sure the future success of our business, especially in strategic overseas markets such as the U. S. Markets. As of June 30, 2024, number of DTC scores in overseas markets was 343, nearly doubling such figures compared to a year ago. In the first half, revenue from DTC scores increased by 111% while related S and D expenses such as RINs, D and A expenses and payroll excluding SBC expenses increased 83%.

Speaker 1

These new stores are expected to contribute more substantial sales in the second half of twenty twenty four. We are taking effective measures to improve operational efficiency in these DTC stores and control costs. So the initial result is very good, so we believe the hike in operating expense ratios won't last too long. Promotion and advertising expenses increased by 46% in the first half. P and A expenses as a percentage of revenue stabilized at around 3% in those periods.

Speaker 1

License expense increased 24% consistent with our revenue growth. Logistics expenses increased by 54% compared to 43% of revenue growth in overseas, reflecting to a certain extent the rising trade costs caused by tension in international shipping during the first half. Turning to profitability, operating profit increased 18% year over year. Okey margin was 19.3%, compared with 20.4% in the first half of last year. Notably, there was a $12,000,000 net foreign exchange loss in this first half, compared with a $55,000,000 net foreign exchange gain in the same period last year.

Speaker 1

Excluding SBC expenses and FX impact, adjusted OE margin was 20.3 percent compared with 20.1 percent last year. Adjusted net profit was RMB1.2 billion, up 18% year over year. Adjusted net margin was 16% compared with 17% last year. Excluding FX impact, adjusted net margin was 16.2% compared with 16.1% last year, implying our stable profitability and scalable growth. Adjusted EBITDA increased by 26% year over year outpacing the growth in revenue.

Speaker 1

Adjusted EBITDA margin was 25.4% compared to 25.2% in the same period of last year. Adjusted basic and diluted earnings per ADS increased by 18% 19% respectively. Turning to cash. So by end of June, we maintained a strong cash position of RMB6.9 billion. Net cash flow generated by operation in the first half was about RMB1.3 billion.

Speaker 1

Dollars CapEx was 303,000,000 yen and free cash flow was about 1,000,000,000 Turning to working capital, the channel inventory, which turnover remains efficient. By the end of the first half, 26% of Minsoft's brand's inventory were located in overseas DTC market compared to 21% a year ago. Inventory turnover days were 81 days, including 70 days in China and 127 days for Minsul overseas in ADC markets. Structurally, inventory over 180 days accounted for about 12% on group level. Turning to capital allocation, we are committed to a dividend payout ratio of no less than 50%.

Speaker 1

Our capital allocation strategy will also continue to balance fast growth and our commitment to bring stable and foreseeable returns to shareholders. The follow-up company has approved an interim cash dividend for the first half of twenty twenty four with a total amount of approximately RMB 621,000,000. Upon the payments of the interim dividend, the company will have retained RMB 1,400,000,000 in cash to shareholders through dividends and share repurchase from year to date. Since 2020, we have returned RMB3,600,000,000 to our shareholders upon the payment of the interim dividend, accounting for 62% of adjusted net profit accumulated from 2020 until the first half of this year. We are confident in accomplishing our full year business plan and 5 year strategy and believe that our shelf price has been trading below its intrinsic value.

Speaker 1

The following: the bulk company has approved the shelf purchase program to make the best of the general mandate branded at our general energy generating held in June this year. Under this general mandate, the company may repurchase its shares and ADS in the next 12 months, not exceeding 10% of the total outstanding shares, and execute share repurchase in open market, subject to market conditions. We believe that the share repurchase program is in the best interest of the company and its shareholders as a whole and create value for shareholders. Our performance for the first half once again demonstrates the strength and resilience of our business model and reflects our ability to execute on our IP and globalization strategy. I'm very confident that we will once again meet our full year targets.

Speaker 1

Our financial strategy will continue to remain disciplined in terms of budgeting, cost control and allocation of capital as we commit to delivering stable profit and healthy efforts. Our target for the year of RMB10 1,000,000 to RMB24 1,000,000 unchanged from our expectations at the beginning of the year. The revenue is expected to increase by 10% to 7% on a midyear basis and adjusted net profit target is JPY 2,800,000,000 or higher. Thank you. And this concludes our prepared remarks.

Speaker 1

We are now ready to take questions.

Operator

Thank you. The first questions are coming from Ms. Lucy Liu from Bank of America Merrill Lynch. Please go ahead.

Speaker 2

Hi, management. Thanks for taking my question. So two questions here. Firstly is on the domestic market. In July August, we have witnessed some weakness in the domestic demand.

Speaker 2

So could you please update us how is your performance in the 1st 2 months of in July August? And how should we think about the pop up store contribution to these 2 months as well as for the rest of the year? So that's the first question. And the second one is for the selling and distribution expense as a percentage of revenue, which has exceeded 20% this quarter. So this is the highest since we have listed.

Speaker 2

So I believe this is due to faster overseas DTC expansion during the low season. But how should we think about this ratio going forward in the second half? Should we expect that to go back to maybe like Q1 level or last year level? Thank you.

Speaker 1

So I will translate for Mr. Yap quickly. So about your questions on the performance in the recent in recent months. So this means all same store sales in China in the first half year was about 98% with ASP increased by 0.1% and traffic down by 2.5% and our conversion rate from store busy to purchase stabilized. Now we are facing a challenge by a very soft domestic consumer market, but Minsa has very, very high confidence to keep the best in class same store sales in China, specifically in the 1st 7 months same store sales was above 97 97% year to date.

Speaker 1

And, we will see a a rather lower base entering into September and we also are working on our IT products, improving operational and investment in instant resale. So our target for full year is to stabilize our central sales with 100% of recovery or higher or lower than 20% points on that base. And our target for the whole year for our news of our China business remain unchanged with 10% to 15% year over year growth. And about the same store sales in China, we have more initiatives going forward. The first is improving our product capabilities and which is our very core capabilities and we'll focus on IP and strategic categories to improve our, to optimize our product structure.

Speaker 1

And we will have a lot more and more interest driven product categories going forward, which will help our increase in central sales, including blind box, or lucky Dropbox and Flashpoint and other IP products. The second is increase improve our capabilities in channel extension as we have talked and talked in the past 7 quarters. Now we have thousands of stores in China that have we can improve by structurally operating the store format or inside and so on. So since last year, we have been executing this improvement. Our plan is to finish this improvement in the next couple of years.

Speaker 1

And the 3rd is to improve means of brand awareness, including our strategic brand upgrade. And we want to build lots of flagship stores with better image and better performance. For example, 2 weeks ago, we had a newly launched pipeline that we opened in Tianjin and we have received very, very positive initial feedback from consumers there. And we have also Zhongbo, Nu Tran, this new kind of store formats launched this year. And going forward, we will have another store format by an experiment, which we are very looking forward to see that.

Speaker 1

Thank you. And this is about the second question about DTC store selling expense and distribution expense. A quick answer is, it will decrease. As I mentioned, the hike of our expense, especially those expenses with DTC stores won't last long because if you remember, we have talked that mid store stores in the U. S.

Speaker 1

Now are already in 40 states already. Considering that we have owned, like, 200 stores, that means our stores in the United States are very separated. That means we will really need to open more stores before we can get these logistics expenses or related expenses to avoid leverage. So because our store expansion plan in the U. S.

Speaker 1

Is very quick, for example, by the end of this year, we will have doubled our store base compared to 1 year ago. So we think that when we have 300 stores or 400 stores or even 500 stores, we've concluded that we reached these logistic expenses or and other rent and other expenses such as the store rents and labor costs are also on the way to be optimized. So I think in the second half, you will see that our operating expense ratio be significantly reduced. Thank you.

Operator

The next questions are coming from Ms. Michelle Chen from Goldman Sachs. Please go ahead.

Speaker 3

So I have two questions for management. For the first one is on U. S. Market. Given the volatile consumption market in the US in the past few months, do we see any new opportunities or risk and how this will impact the strategic expansion and store format?

Speaker 3

And also the second question is about Europe market. This is one of the key focus we mentioned earlier of the year. And can you update us the key any development for different markets in terms of the store format partnership with different partners and also the store format, etcetera. And any good progress we are seeing so far and any room for further improvement? Thank you.

Speaker 1

Let me quickly translate. So overall in overseas market, the same store sales was double digit growth in the 1st month and we're at that early stage as I mentioned. We have a lot of improvements in brand awareness, product localization, professional organization and so on. So we strongly believe that we will have, you know, we still have long term to first our same store sales growth, but we'll grow fast, but it will inevitably fluctuate, especially on a quarterly basis. In last year, 2023, the major driver of our U.

Speaker 1

S. Business was same store sales growth. But in this year, since our target is to double this business, well, I think our major driver will be in store network expansion. So in the first half, the U. S.

Speaker 1

Same store sales growth increased by 14%, 1.4% and the store network, store numbers doubled and which is in line with our expectation. And by the end of July, we already added about 69% 69 new stores in the United States and we'll have about 100 for 3 years in this year. And in the future, we'll see that United States will accelerate in terms of open and we will open to discuss, to have, you know, more, franchisees or distributors come to join us to have very rapid store level expansion while maintaining a healthy profit in United States. And since we increased 14% in terms of same growth in the United States. In the future, we will have in the several side to increase further.

Speaker 1

The first is product side. We will adjust our product structure to increase the local supply chain and increase our inventory turnover and reduce the product lead time. And on upside, we want to increase more local sourcing, especially in IP related snacks, IP related cosmetic products and IP device. And we will also introducing best in class supply chain suppliers in other parts of the world, including cosmetic and beauty tools in Japan and Korea. And we will also increase our IP related product research and developments, which will increase our international experience with IT products.

Speaker 1

And in terms of storefronts, we will upgrade our stores there, including image and product experience. We will operate our digital system to improve the store efficiency as we did in China several years ago. And on loyalty customer, our loyalty program, we will increase our loyalty program, as we mentioned. We will improve our customer insight capabilities and we will tailor products with our product structure and tailor our store operation measures to increase the customer stickiness and increase purchase repurchase. We will have a strategy in the overseas, especially in the US.

Speaker 1

We will have localizing, including the buyers, and we will have a business doing overseas and including training localized operational, operational staff, operation team, and we will have a lot of online course and training course. And we are now building, you know, our, our, you know, department in the Southeast Asia to train new staff, new overseas team in Malaysia. And the first batch of this project has finished. And this new new team will be the core team of our expansion in the United States. And in the next 2 years and in 2024 to 2025 we will also set up training center in the in the North America and get fully prepared for our expansion there.

Speaker 1

On your second question, so we have 2 measures. The first is to operate our store formats. That's take UPS example, where we have been, you know, proactive, rapidly help them to increase and upgrade their channels to open bigger stores and to open better stores. So in the first half, its same store sales increased by 50%, five-zero, and its total sales increased by 150%. And that has once again demonstrated that our super store strategy has helped increase the overall performance of the market.

Speaker 1

And in terms of personal sales per day, UK now is about 20 ks in B and increased by 50% year over year. So it still has room in a competitive ways to the United States compared with Mexico market but it's already a huge jump for itself and it's the best in Europe already and in the future UK will be the benchmark market in Europe for MIMSOL, and I think the Europe market with athletes can open 1,000 stores in the future, so it's a huge potential. The second is we want to still reiterate our fortress of IP and differentiated IP is a key to our future success in the era. From our data, IP is now 49% of total sales in there and EBIT increases by 65%, especially our flagship stores in France, which has an $0.85 of IP sales. And this has robustly helped the overall distributed distributed market to increase its GP margin.

Speaker 1

And the third is Stay Core. Our top 100 SKUs contributed about 90% of our total sales in Europe, and each segment has performed very well. In the future, our key product categories in this will make MISO stores in Europe getting more professional and more and provide more immersive shopping experience to our customers. That's helped us to increase our store conversion rate. So thank you.

Speaker 1

Thank you, Ms. Sharon.

Operator

Thank you. We shall conclude our call now. Thank you all for joining us today. We will see you in the next quarter. Goodbye.

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Earnings Conference Call
MINISO Group Q4 2024
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