MNSO Q2 2025: Overseas Revenue Mix Rises to 38%, Accelerating Global Channel Shift
MNSO’s Q2 2025 results highlight a decisive global pivot as overseas revenue contribution climbs to 38% of total sales, up from 35% last year, driven by robust U.S. and TopToy growth. Brand channel upgrades and a deepening proprietary IP strategy underpin margin resilience and future scalability, despite cost inflation and regional volatility. Management signals increased confidence in global expansion and sustainable profit growth heading into the second half of the year.
Summary
- Overseas Expansion Outpaces Domestic: Overseas revenue share rose to 38%, reflecting strong U.S. and multi-region growth.
- Channel and Store Model Upgrades: Large-format and experiential stores are driving higher productivity and brand leverage.
- IP Strategy Deepens Competitive Moat: Proprietary and artist-driven IP is emerging as a scalable growth engine.
Performance Analysis
MNSO delivered broad-based revenue growth in Q2 2025, with group revenue up 23% year-over-year, surpassing the upper end of prior guidance. The core MINISO brand contributed the majority of sales, with domestic revenue accounting for 62% and overseas for 38%. Notably, overseas revenue grew at a 29% pace, outstripping the 14% growth in China, highlighting a structural shift in the business mix toward international markets.
TopToy, the company’s collectible toy brand, posted an impressive 87% revenue surge, reinforcing its status as a key growth vertical. Gross margin expanded to 44.3% in Q2, up 0.4 percentage points year-over-year, as product mix optimization and IP-driven merchandising offset cost increases. Net profit margin held at 13.9% despite a 38% rise in total costs, reflecting disciplined channel upgrades and operational leverage in both direct and agent store models.
- Overseas Growth Leverage: U.S. sales grew over 80%, with new large-format stores outperforming legacy formats in productivity and profitability.
- Channel Mix Shift: Large and experiential stores now represent 5% of China’s store count, contributing a rising share of double-digit sales growth.
- Inventory and Cash Flow Discipline: Inventory cycle improved to 93 days, supporting a Q2 operating cash flow of RMB 7.5 billion.
The company’s capital returns accelerated, with RMB 10.7 billion returned to shareholders in H1 via buybacks and dividends, reflecting management’s confidence in long-term cash generation and undervaluation of the share price.
Executive Commentary
"Our two major brands, MINISO and TopToy, have both delivered strong revenue growth... The effective implementation of the product differentiation strategy has led to continuous improvement in product competitiveness. In the future, we will continue to expand our brand stores and Internet, while constantly improving our own brand and the sales contribution of free IP."
Ye Guofu, Founder & Chief Executive Officer
"Our core domestic business has stable profitability... The decline in the profit margin of overseas businesses is still due to structural changes in income, but after the sales boom in the second half of the year, we expect that the impact will weaken and the profit margin will increase. We believe that the profit margin of overseas direct income businesses itself has a lot of room for improvement than our goal."
Zhang Jingjin, Chief Financial Officer
Strategic Positioning
1. Global Channel Upgrade and Store Model Diversification
MNSO is moving beyond small-format retail to large, experiential stores—MINISO LAND and MINISO SPACE—which now account for 5% of China’s network and are scaling rapidly overseas. These formats drive higher average sales per store, attract new customer segments, and act as platforms for IP merchandising and cross-category sales. The U.S. market, in particular, is now focused on fewer, larger, and higher-quality openings, with a full-year target of 80 new stores, prioritizing flagship locations over sheer quantity.
2. Proprietary and Artist-Driven IP Ecosystem
The company is executing a dual-track IP strategy—combining international licenses with proprietary and artist IPs—to deepen differentiation and margin control. Management highlighted recent wins with homegrown artist IPs such as Youjiang and Luoming, each expected to cross significant sales milestones. The IP flywheel is designed to create repeatable, high-margin product cycles and foster brand loyalty, echoing successful models seen at global entertainment and toy conglomerates.
3. Supply Chain Localization and Tariff Mitigation
To offset U.S. tariff risk and adapt to local consumer preferences, MNSO has accelerated local sourcing and inventory positioning in key markets. The company’s supply chain flexibility, with over 1,500 global supplier relationships, enables quick product adaptation and tariff cost management, minimizing gross margin impact and supporting continued overseas expansion.
4. Capital Allocation and Shareholder Returns
Management is actively returning capital through buybacks and dividends, with H1 2025 buybacks already exceeding the prior year’s total. The payout ratio on adjusted net profit reached 84%, and the board has authorized additional repurchases, signaling conviction in both business fundamentals and current valuation.
Key Considerations
This quarter marks a clear inflection in MNSO’s global strategy and operational discipline, with several factors shaping the investment case:
Key Considerations:
- Overseas Execution Quality: U.S. and Canada operations are outperforming, underpinned by local teams and improved store economics, but Latin America faces FX and inventory headwinds.
- IP Monetization Traction: Proprietary and artist IPs are scaling, with management targeting RMB 1 billion+ in annual sales for leading titles.
- Channel Productivity vs. Expansion Pace: Store growth is increasingly weighted toward high-traffic, high-margin formats—regular store openings will slow in favor of flagship and experiential locations.
- Cost Structure Flexibility: Investments in direct stores, especially overseas, are front-loaded but expected to unlock operating leverage in H2 and beyond.
- Resilient Cash Flow and Inventory Management: Inventory cycle improvements and healthy cash reserves position the company to weather macro volatility while funding growth and returns.
Risks
Key risks include ongoing FX volatility in emerging markets, execution risk tied to rapid overseas expansion, and potential gross margin pressure from continued tariff shifts or supply chain disruptions. The company’s ambitious IP strategy requires sustained creative and operational investment, and any underperformance in new IP launches could impact revenue mix and profitability. Management’s confidence in overseas margin recovery is contingent on successful scaling of large-format stores and further localization of supply chains.
Forward Outlook
For Q3 2025, MNSO guided to:
- Revenue growth of 25% to 28%, an acceleration from H1 trends.
- Continued improvement in adjusted net profit margin, with narrowing YoY margin declines.
For full-year 2025, management raised guidance:
- Group revenue growth expected to exceed 25%, up from prior 22.8% outlook.
- Adjusted net profit targeted between RMB 36.5 billion and RMB 38.5 billion.
Management highlighted several factors that will drive the second half:
- Further acceleration of same-store sales growth in China and overseas
- Stronger margin contribution from IP and large-format stores
Takeaways
MNSO’s Q2 performance demonstrates a maturing global platform with increasing earnings visibility from international markets, proprietary IP, and disciplined channel upgrades.
- International Mix Shift: Overseas sales now drive incremental growth and margin upside, with the U.S. and Canada leading the charge in operational execution and store productivity.
- Brand and IP Leverage: Proprietary IP is becoming a core differentiator, enabling higher-margin product cycles and deeper consumer engagement across markets.
- Watch for Margin Expansion: Sustainable profit improvement will hinge on continued success scaling large-format stores and extracting value from IP investments, especially as cost inflation and FX volatility persist.
Conclusion
MNSO’s Q2 2025 results confirm the company’s strategic evolution into a global, IP-driven retail platform, with operational discipline and capital returns supporting long-term value creation. The shift toward overseas growth and proprietary content positions the business for further margin expansion and resilience, though execution in new markets and IP categories remains a key watchpoint.
Industry Read-Through
MNSO’s acceleration in overseas revenue and channel innovation signals a broader trend in global specialty retail: scalable, experiential formats and proprietary content are becoming essential for margin growth and consumer stickiness. Competitors relying on legacy formats or third-party IP may face increasing pressure as vertically integrated, multi-format models gain share. The company’s approach to supply chain localization and tariff mitigation offers a playbook for peers navigating geopolitical risk and regulatory shifts. Success in artist-driven IP and experiential retail could set new standards for brand monetization across the global value retail and lifestyle sectors.