FAST NEWS: Miniso’s Profit Leaps on Strong Margin Gains

The Latest: Store operator Miniso Group (MNSO.US; 9896.HK) on Monday reported its revenue rose 4.5% year-on-year to 2.8 billion yuan ($396 million) in its latest fiscal quarter through September, while its profit rose 161.5% to 404.1 million yuan over the same period.

Looking Up: The big profit increase came as Miniso boosted its gross margin to 35.7% in its latest fiscal quarter from 27.4% a year earlier.

Take Note: While the months of July and August were relatively strong, Miniso said resurgences of Covid-19 and resulting control measures in September “negatively impacted” its business for that month. Other retailers have said the situation worsened in October as a growing number of cities dealt with Covid outbreaks.

Digging Deeper: Miniso operates a chain of small, attractive shops selling inexpensive goods like stationery and toys typically costing $10 or less. Like many consumer-facing companies in China, it faced a difficult operating environment in the first half of this year due to Covid restrictions that included a lockdown of the entire city of Shanghai in April and May. The company is partly protected from difficulties in China by its big presence outside its home market where most countries have significantly eased or canceled Covid restrictions. It had 2,027 stores outside of China at the end of September, accounting for about 38% of its global total of 5,296 stores.

Market Reaction: Miniso shares jumped 29% in Monday trading in New York after the results came out. After the gain they have nearly doubled from a low point in mid-September.

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Reporting by Doug Young