MINISO Reports 22.4% Revenue Growth Amid Overseas Margin Pressure

MINISO Group Holding (NYSE: MNSO) reported first-half 2026 revenue of RMB 11.5 billion, a 22.4% year-over-year increase, according to results discussed on its earnings call. The company also recorded an 8.2% rise in earnings per share and a 46% jump in operating cash flow. Management attributed these gains to the accelerated rollout of large-format stores and the commercial success of its proprietary intellectual property strategy, which now includes high-profile collaborations and exclusive product lines.

Despite strong top-line growth, the company faces margin pressure in its overseas division. Overseas revenue climbed 40.9%, but profitability was diluted by the reduction of distributor-based sales and the upfront costs associated with establishing direct-operated markets. The business is transitioning from a lighter-asset model to a more capital-intensive structure to gain greater control over brand presentation and customer data.

Proprietary IP Drives Sales

A central pillar of MINISO’s recent performance is its shift toward owning its own creative assets. The first proprietary IP, UU, generated nearly RMB 500 million in revenue during the period. This figure represents a significant contribution to the company's total sales, validating the strategy of reducing reliance on third-party licensing fees. The success of the UU brand was further amplified by the launch of the UU × Disney Toy Story 5 collection, which leveraged existing consumer interest to drive traffic into stores.

Management indicates that this IP strategy is expanding beyond a single character. Newer brands, such as Chocho, have been introduced to broaden the product mix. By controlling the narrative and design of these characters, MINISO aims to create recurring revenue streams and differentiate its offerings from competitors who rely primarily on external licenses. This internal creation of value is intended to improve long-term gross margins as the company scales its creative output.

Overseas Expansion And Margin Impact

The international segment saw substantial revenue growth of 40.9%, reflecting rapid store expansion in key markets. However, this growth came with a cost structure that impacted near-term profitability. The company is systematically replacing distributor relationships with direct-operated stores. While this transition increases fixed costs and lowers initial margins, it provides MINISO with direct access to consumer data and greater control over pricing and inventory management. Management views this as a necessary investment for long-term brand equity and operational efficiency.

The shift in business model also affects how the company reports its financials. The decline in distributor business revenue is offset by higher direct sales, but the latter carries higher logistical and operational overhead. As a result, the company is experiencing a temporary compression in operating margins in overseas markets. The strategic goal is to achieve stable, higher-quality earnings by capturing the value previously captured by intermediaries, thereby creating a more resilient and self-sufficient international business.

Guidance For Second Half

Looking ahead, MINISO projects high single-digit revenue growth for the second half of 2026. For the full year, management expects mid-double-digit revenue increases, assuming stable macroeconomic conditions and continued execution of its store renovation plans. The company remains focused on improving the efficiency of its overseas operations and refining its large-store models to maximize sales per square meter.

Operational metrics support this cautious optimism. Membership contributions to sales have increased significantly, indicating stronger customer retention and higher average ticket sizes. The performance of large-format stores has exceeded internal targets, suggesting that the premium store concept is resonating with consumers. Based on data from the GN auto stocks/consumer: retail earnings report, the company's strategic pivot toward proprietary brands and direct operations is expected to underpin its growth trajectory, despite short-term margin challenges.