Miniso Stock Tumbles As Expansion Drive Eats Into Profits, But Retail Bulls Choose To Hold Firmly

U.S.-listed shares of Miniso Group Holding (MNSO) tumbled 17.6% on Friday, the steepest intraday decline in over two years, after the Japanese retailer reported a drop in profit.

One of Japan's largest retail brands, Miniso boasts a strong global presence and is well-known for its affordable everyday products across categories like stationery, home decor, and beauty essentials.

The company reported Q1 adjusted earnings of 1.88 Chinese renminbi ($0.26) per diluted American depositary share, down from 1.96 renminbi a year earlier. One analyst polled by FactSet expected 1.97 renminbi.

Miniso attributed the profit drop to a more than 46% increase in selling and distribution-related costs, mainly attributed to the firm's expansion efforts.

Revenue rose to 4.43 billion renminbi in the quarter, up from 3.72 billion renminbi last year. Analysts surveyed by FactSet expected 4.37 billion renminbi.

Miniso attributed the top-line growth to strong performance in its overseas markets following a significant expansion of its store footprint.

Sales in overseas markets climbed 30.3%, including a 9.1% growth in mainland China, driven by an increase of 24.6% in average store count overseas.

Overseas revenue contributes 39% to the overall company sales.

In a statement, CEO Guofu Ye acknowledged that the company faces a "volatile macroeconomic environment" but said the business is resilient due to its scale and diversified footprint.

Bank of America called the earnings report a "mixed bag," and lowered its price target on MNSO to $16.50 from $17.10.

On Stocktwits, the retail sentiment climbed to 'extremely bullish' from 'bullish’ a week ago.

One user said, "$MNSO no sense crash. hold."

Miniso U.S. shares are down 23.4% this year.

(1 renminbi = $0.14)

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