Miniso’s profit margin drops again: globalization and IP development burn cash together

By opening bigger stores and building heavier IPs, Miniso is also making its business more expensive.

In the first quarter of 2026, the company's adjusted net profit margin dropped to 9.7%, falling below 10% for the first time in nearly two years; after excluding foreign exchange gains and losses, the adjusted net profit margin was 11.1%.

For Miniso, this scenario is not unfamiliar.

In the first quarter of 2025, the company also went through a stepwise decline in net profit margin. At the time, management explained that North America's directly operated stores were in a ramp-up period, with significant upfront expenses.

This year, under the pressure from overseas directly operated stores not yet being released, Miniso started spending around "IP," leading to higher licensing costs, advertising and promotional expenditures, and content-driven marketing investments.

Miniso is standing at a crossroads where almost every consumer company wants to break in:

Overseas markets, IP consumption, trendy play emotions, large offline stores.

But the directions do not immediately bring thicker profits, but display the investment pressure sooner.

In 2023, Miniso’s adjusted net profit margin remained in the range of 16%-17%; although it declined slightly in 2024, it still generally stayed above 15%.

Entering 2025, the metric dropped to around 13%. Even with ongoing same-store growth improvement, adjusted net profit margin did not break back above 14%.

The step down in profit margin is evolving from a one-off fluctuation into a longer clue:

The places Miniso wants to go are indeed alluring—but the travel costs are high.

Multiple Profit Pressures

In recent years, Miniso’s margin improvements mainly benefited from several factors: higher gross margins in overseas markets, large store models boosting sales per square meter and per customer, and IP products enhancing premium capabilities.

Together, these supported Miniso’s prior profit performance, pushing gross margins above 45%.

But as this growth logic went deeper, changes began to emerge.

First, the slope of overseas business growth is slowing.

In 2024, Miniso’s overseas revenue increased 41.9% year-on-year and remained a key engine for the group’s gross margin rise. But in 2025, overseas revenue growth began to step down quarter by quarter.

In Q1 2026, Miniso’s overseas revenue growth slowed to 21.9%, unusually lagging behind the domestic market.

Due to the decline in share of high-margin overseas revenue, Miniso’s quarterly gross margin fell from 44.2% to 43.3% compared to last year.

In recent years, Miniso’s overseas stores shifted from franchise-heavy expansion to more directly operated large stores.

By the end of Q1 2026, Miniso’s overseas stores had reached 3,617, with 745 directly operated, accounting for more than a fifth of overseas stores.

This quarter, global directly operated store revenue grew nearly 50% year-on-year, while expenses related to these stores grew 35%, indicating that the optimization model for direct stores is showing results.

The direct operation model has higher operating leverage, meaning fast revenue growth can dilute rent, labor, and depreciation/amortization; but if overseas growth continues slowing or even revenues decline, rigid expenses will further squeeze margins.

To counter cost pressures, Miniso is also trying to repair margins in overseas markets.

Management says the company will systematically increase the proportion of high-gross-margin IPs, pursue the "reduce width, increase depth" strategy, focus on hot products, eliminate tail-end IPs; on the supply chain, they are extending the inventory cycle for core suppliers' top products from 2 months to 3-4 months to lock in costs earlier.

Ye Guofu also mentioned at the earnings meeting that Miniso's U.S. price range mainly falls between $5-25. Within this range, consumers' motivation to purchase is more emotional affiliation with IP—"I like it, I’ll buy it"—rather than simple price comparison.

Based on this judgment, Miniso has already started differentiated pricing tests in the U.S., claiming that gross margins increased month-on-month in May, with hopes of steady improvement ahead.

But whether price adjustments can truly repair profitability depends on external costs and consumption environment. On one hand, high oil prices may keep raising logistics costs; on the other, if consumer sentiment weakens in some markets, it will restrict room for price hikes.

The domestic market is another constraint.

Miniso’s first quarter gross margin declined year-on-year, not just because the share of high-margin overseas business dropped, but also because of the domestic "return of cost-effective product assortment."

Management says, they exchanged "a bit of restraint in pricing" for "obvious volume increase."

In other words, in China's consumer environment, Miniso still needs to stabilize customer flow and conversion with more mass market price points. On one hand, they rely on IP to push premium, but can't lose the price appeal of mass retail either.

This tug-of-war is amplified by external competition. IP retailers like POP MART continue to strengthen IP licensing and celebrity partnerships, offering ever-richer Disney, Sanrio and other joint products, with celebrity collaborations now becoming new traffic entry points.

With users' expectations rising, Miniso must do more than "sell at higher prices"—they also need to prove their IP products are worth it.

In Q1, Miniso's sales and distribution expenses, excluding equity incentives, grew 37.7% year-on-year. Sales expense ratio increased 1.6 percentage points to 24.5%. Expense growth mainly came from direct store investments, promotion and ad spending, licensing fees, and logistics costs.

Beyond business inputs, investment gains, debt, and financial instruments also magnified volatility in Miniso’s P&L.

In Q1, net profit surged 199.7% to 1.248 billion yuan, of which nearly 900 million came from investment returns from the AI company MiniMax.

Miniso excluded stock-linked securities and Yonghui loan-related interest in their adjusted net profit, emphasizing only 4.7 million of the 50.4 million stock-linked securities interest was actual cash outflow.

In Q1, Miniso’s adjusted net profit excluding FX gains/losses was 633 million yuan, up 8.1% year-on-year.

Without excluding FX gains/losses, adjusted net profit was 551 million yuan, down from 587 million in the same period last year.

Own IP Is Not a Shortcut

According to Ye Guofu’s vision, for Miniso to permanently improve its profit structure, it must ultimately rely on its own IP.

He believes licensed IPs mostly leverage mature images for short-term sales; own IPs are “absolutely exclusive, absolutely differentiated,” with higher gross margins and more sustainability. The bigger imagination is not just about selling more products, but also monetizing IP value chains: external licensing, multiple business formats, as well as continuous content creation.

Miniso isn’t slow on cultivating its own IP.

Its own IP, “YOYO,” surpassed 100 million yuan global cumulative sales within six months of launch, reaching 165 million yuan sales in Q1 2026.

Behind this are industry tailwinds, and channel changes. The popularity of soft vinyl plush toys in 2025 boosted awareness for trendy toys, plush, and emotional consumption categories; while large store models provide better offline display scenarios for IPs.

This approach has already reflected in domestic store operations.

In Q1, Miniso’s China same-store sales grew by high single digits, domestic revenue jumped 29.6% year-on-year.

Around 80 stores were adjusted this quarter, and after renovation, daily sales improved by over 50%; playground and flagship large stores together accounted for about 12% of stores, but contributed roughly 30% of sales.

Going forward, Miniso plans to adjust/upgrade over 300 stores this year, with a key focus on “open big, close small, open good ones, close bad ones.”

Ye Guofu mentioned at the earnings meeting that since the beginning of the year, the company has received applications for thousands of new stores, over half of which explicitly requested large or flagship stores; big stores can achieve payback within a year on average, some top-performing playground stores even within six months.

TOP TOY, which has filed for a Hong Kong IPO, is also leveraging trends for rapid expansion.

By the end of Q1, TOP TOY stores totaled 355, up 75 year-on-year; overseas stores numbered 39, up 35 from a year ago.

In the same period, TOP TOY revenue grew 51.4% year-on-year, faster than the group’s overall growth.

Theoretically, Miniso has already established a scaling path for its own IP:

Own IP first gains exposure via Miniso playground and flagship stores, then is validated by trendy toy users in TOP TOY, and finally sales are amplified through Miniso’s broader store network and lifestyle scenarios.

Demand for IP and trendy toys isn’t limited to first- and second-tier cities.

Miniso says stores in cities at all levels saw positive same-store growth: provincial capitals and major cities focus on penetration and new customer acquisition, while county-level markets achieve double-digit growth via "trend toys going rural." Emotional consumption covers a wider area than the outside imagines.

For IP, the hardest part isn't the cold start, but forming a stable fan base and repeated purchase.

Since this year, Miniso requires trendy toy purchases to register for membership, meaning toy buying, IP preferences, and member data are more closely linked.

Management said at the earnings meeting that over 60% of performance in Q1 came from member repurchases, up from 54% for all of 2025.

Management sees member operations as a major lever for domestic same-store growth in the second half of the year—first half focuses on new customer acquisition, second half on repeat purchases and conversion.

To make own IP more quickly visible, Miniso has grown more willing to play the celebrity card.

Ye Guofu once used the LABUBU and Lisa case to highlight the amplification effect of collaborating with world-class artists for IP promotion.

In March, Miniso collaborated with BLACKPINK's Jennie, opening "Jennie Ruby" pop-up store at Shanghai Grand Gateway Plaza, which broke 2.2 million yuan in sales on opening day.

In April, TOP TOY worked with Zhao Lusi, continuing to amplify its influence among young trendy toy users.

The celebrity card is essentially a traffic card. It can quickly create exposure, queues, and social buzz, but also leads to higher marketing costs.

In Q1, Miniso’s promotional and ad spending grew 73.7% year-on-year, licensing fees grew 42%. This was the first time in six quarters that promotion spending growth outpaced licensing fees.

The last similar situation can be traced back to Q3 2024, when Miniso’s big store story really made headlines: the company announced its ambition to become "the world’s No.1 IP design retail group," launching the MINISO LAND global flagship on Shanghai East Nanjing Road.

Own IP is not a light-asset shortcut, but a longer-term investment. It requires store scenarios, membership systems, trendy toy channels, celebrity marketing, and content operations all working together.

For Miniso, once own IP succeeds, there is indeed a chance to improve profit structures; but before that, expense pressures usually precede profit realization.

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