Financial Services Association | New Consumer Daily, May 14 (Researcher Liang Youyun). Amid a wave of market concerns about Chinese brands going overseas, Mingchuang Premium revealed its latest performance for the first quarter of 2024.

According to the data, in the first quarter of 2024, Mingchuang Premium achieved revenue of 3.724 billion yuan, an increase of 26%; net profit of 586 million yuan, an increase of 24.4%; and adjusted net profit of 617 million yuan, an increase of 27.7% over the previous year. In the same period, the company's gross margin was 43.4%, up 4.1 percentage points from 39.3% in 2023.

Ye Guofu, founder, chairman and CEO of Mingchuang Premium, said, “Our total revenue reached 3.7 billion yuan, an increase of 26% over the previous year, mainly due to a 19% increase in the average number of stores and a 9% increase in same-store sales.”

New store sales growth combined with same-store sales growth

Judging from the reasons for the increase in Mingchuang Premium's performance in the first quarter, the increase in new store sales combined with the increase in same-store sales scale is an important reason for the company's performance growth.

According to financial disclosure data, by the end of the first quarter, Mingchuang Premium's global stores had reached 6,630, and 217 new stores were added this quarter. The opening speed was nearly three times that of the same period in previous years.

Among them, the number of stores in China increased to 4,034, with a net increase of 108 stores in the first quarter, which is double the rate of opening in the same period last year. In overseas markets, Mingchuang Premium stores reached 2,596, with a net increase of 109 stores in the first quarter. Stores are opening faster than in China.

Ye Guofu said, “This past March quarter was the fastest first quarter in our history. This has laid a solid foundation for achieving our goal of a net increase of 900 to 1,100 stores in 2024.”

Thanks to an 18.7% year-on-year increase in the average number of stores, the revenue of offline stores in China increased 15.6% year-on-year in the first quarter, achieving revenue of 2.502 billion yuan, an increase of 16.2% year-on-year.

The trip to sea is progressing smoothly

Overseas, due to a 19.7% year-on-year increase in the average number of stores and a strong increase of about 21% in same-store sales, overseas revenue reached 1,222 billion yuan in the first quarter, an increase of 52.6% over the previous year. Revenue from overseas markets accounted for 32.8% of total revenue during the quarter, a significant increase from 27.1% in the same period in 2023. In particular, among the company's directly-managed stores, the share of overseas revenue has reached 58%, which is an important support for Mingchuang Premium's direct management.

Regarding Mingchuang Premium's overseas business, Ye Guofu said bluntly that the year-on-year increase in revenue in the overseas market exceeded the most optimistic expectations. This is mainly due to the 92% year-on-year increase in revenue in the direct sales market, which is also the fourth consecutive quarter where the business grew by more than 80%. ,

From a structural point of view, the US and Asia are the two major markets for Mingchuang Premium to go overseas. They account for nearly 3/4 of overseas GMV, and overall sales growth mainly depends on passenger traffic growth. Among them, in the US market, where consumption capacity is strong, local same-store sales increased 30% to 40% year-on-year in the first quarter of this year.

However, according to reports, the relevant characteristics of the US consumption season are quite obvious. Consumption in the second half of the year, especially in winter, will account for more than half of the annual revenue. This quarter's growth does not indicate the final growth rate for the whole year. Currently, Mingchuang Premium has about 150 stores in the US. It is expected that 80 to 100 new stores will be added in 2024 to obtain greater synergy effects and reduce regional logistics and distribution costs.

Trendy games have become a new growth point

In addition to the excellent performance in overseas markets, the domestic trendy game business TOP TOY's revenue grew rapidly year-on-year during the quarter.

According to financial data, in the first quarter of 2024, TOP TOY achieved revenue of 138 million yuan, an increase of 55.1% year on year; the average number of stores increased by 32.2% year on year, and same-store sales increased by about 26% compared with the same period in 2023. By the end of the first quarter, the number of TOP TOY stores reached 160, with 12 new stores added this quarter.

“With rapid growth in scale, this business has begun to gradually release profit margins. TOP TOY has achieved positive profits for two consecutive quarters. Through product structure optimization, gross margin increased 8 percentage points year-on-year.” During the conference call, the revenue and profit of TOP TOY's business continued to improve, and Mingchuang Premium's management viewed as a key turning point in business development.

Ye Guofu revealed during the earnings call, “We have stronger confidence in the rapid expansion of TOP TOY, so the target for opening stores this year was raised from 50 stores at the beginning of the year to 100. By the end of 2024, the number of TOP TOY stores is expected to expand to more than 250.”

According to Zhang Jingjing, chief financial officer of Mingchuang Premium, recently revealed in an interview, the company plans to open nearly 400 stores in China and about 600 new stores overseas this year. Overseas markets are expected to account for more than half of Mingchuang Premium's sales, up from about 35% last year.

Furthermore, during the conference call, the management of Mingchuang Premium did not have clear goals for future plans to open larger offline stores, and they believe that the current big store model is not perfect.