Investors are bailing on Miniso Group Holding Ltd (HKG: 9896) this morning after the Chinese discount retailer said its profitability was hit in the first quarter despite solid revenue growth.
At the time of writing, the company’s share price is down nearly 20% versus its previous close.
However, the sell-off may be a buying opportunity for long-term investors looking to capitalise on Miniso’s strategic expansion and strong fundamentals.
Including today’s decline, Miniso stock is down some 35% versus its year-to-date high.
Miniso is fully committed to global expansion
Miniso attributed much of its bottom-line weakness in the first quarter to a more than 46% increase in selling and distribution-related costs, which were mostly attributed to the firm’s global expansion efforts.
While higher costs weigh on near-term earnings, this reinvestment in directly operated overseas stores aligns with Miniso’s longer-term growth strategy.
Companies often sacrifice short-term profits to establish market dominance.
Miniso’s expansion could fuel stronger revenue streams in the future as international markets mature.
Additionally, Miniso shares may be worth buying on the post-earnings dip as the company’s sales grew nearly 19% on a year-over-year basis in Q1, reflecting solid consumer demand despite macro uncertainty.
Investors may also find reassurance in the confidence expressed by Miniso chief executive Ye Goufu regarding the company’s long-term profitability.
In the earnings release, he emphasized Miniso’s expansive global footprint and operational adaptability, underlining management’s belief in the brand’s resilience amid economic uncertainty.
Miniso stock is focused on shareholder returns
Sell-off in Miniso stock after Q1 earnings today may be a buying opportunity because the discount retailer recorded its highest-ever gross margin for a March quarter as well.
This highlights the company’s ability to maintain healthy margins even in challenging conditions.
While international expansion is a key component of future growth, Miniso’s mainland franchise segment remained stable, demonstrating operational resilience.
Even for income-seeking investors, Miniso is a rewarding stock with a healthy dividend yield of 3.38% and an active stock repurchase programme.
These initiatives reflect management’s focus on shareholder value, making Miniso shares all the more attractive to own for the back half of 2025.
Wall Street remains bullish on Miniso shares
Evidently, Miniso may have taken a hit to profitability in its fiscal Q1, but its recent quarter was not at all a total disaster.
Plus, the company’s management committed to balance growth with disciplined cost control for more predictable earnings in future quarters in its release on Monday.
This further inspires confidence in Miniso’s ability to deliver sustainable profits moving forward.
Finally, Miniso stock now has a price-to-earnings ratio of about 15, which is inexpensive compared to the discount retail space at large. Note that Wall Street also currently rates Miniso shares at “buy”.
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