go miniso文件服务器,MINISO plans to go public

By YUAN Yingqi

After seven years of business, MINISO has 4200 stores in 80 countries, including 2500 in China. The company generated US$2.7 billion in gross mercantile value in 2019, 5.2 percent of the global branded variety retail market.

MINISO operates under an asset-light franchising model. Over 70 percent of MINISO stores are franchises, bearing expenses including rent, shipping, and salaries, in exchange for a percentage of in-store sales proceeds, usually around 38 percent.

Fast store openings have given MINISO abundant cash despite limited outside investment. Franchisees are required to pay at least 830,000 yuan (US$120,000) upfront, which includes an annual license fee, a renovation fee, and a deposit covering the estimated maximum value of inventories throughout the three-year franchise period. As of Q2 this year, the company had 2.85 billion yuan of cash at its disposal, 84 percent up from the previous year.

The franchise model, however, has not translated to profit. MINISO lost 290 million yuan and 260 million yuan in the 2019 and 2020 fiscal year respectively, while its revenue, mainly consisting of sales and franchising fees, dipped slightly in the 2020 fiscal year.

To turn a profit, MINISO needs to further lower its supply chain cost. Currently, the retailer is not generating enough sales (8 billion yuan in the last year) to cover expenses (8.2 billion yuan). The proceeds from the IPO will be used to expand store networks and improve warehousing and logistics.

This may turn out to be a chicken-and-egg problem since the stores need to be profitable enough first to attract more franchisees to join the network. As rent and labor costs continue to increase, especially in foot-traffic-heavy commercial areas where MINISO stores are typically located, the retailer may have a hard time making a convincing case for the profitability of its franchises.

Fully aware of these challenges, MINISO has upgraded its logistics network and invested in co-branding relationships with 17 IP licensors including Marvel and Disney. In 2020, its gross profit margin reached 30.4 percent, up from 26.7 of the previous year. Moreover, the company has placed hopes on even more aggressive global expansion. It expects to open 10,000 stores in 100 countries by 2022.