Ladies and gentlemen, thank you for standing by, and welcome to MINISO Group Holding Limited's earnings conference call for the second quarter of fiscal year 2021, that ended on December 31st, 2020. At this time, all participants are in a listen-only mode. After the management's prepared remarks, we will conduct a question and answer session. Please note this event is being recorded. Now I'd like to hand the conference over to your host speaker today, Mr. Eason Zhang, Director of Investor Relations. Please go ahead, Eason.
Thank you, Ryan. Hello everyone, and thank you all for joining us on this call. The company has announced its corporate financial results earlier today. An earnings release is now available on our investor relations website at ir.miniso.com. Today, you will hear from our Chairman and CEO, Mr. Guofu Ye, who will start the call with an overview of our business and growth strategy. He will be followed by our CFO, Mr. Steven Zhang, who will address our financial results in more detail before we take your questions. Before continuing, I would like to refer you to the safe harbor statement in our recent press release, which also applies to this call as well, as we will be making forward-looking statements.
Please also note that we will discuss non-IFRS measure today, which we have explained and reconciled to the most comparable measures reported under the International Financial Reporting Standards in company earnings release and financial filings SEC. With that, I will now hand the call over to Mr. Steven Zhang to give on behalf of Mr. Ye. Please go ahead, sir.
Thank you, Eason. Hello everyone, and thank you for joining us today. In today's call, I will give you an update on MINISO in December quarter, and then share with you our new X strategy. For MINISO, we are pleased to see our domestic operation record an encouraging performance, while our overseas operations move further along the path of recovery. During this quarter, we add 184 new stores to our global store network. While the pandemic hit offline retailer globally in calendar year 2020, we add 303 new stores during the year, demonstrating our partners' confidence in our resilient business model and a faster than average recovery speed. As for our domestic operations, we delivered a net addition of 135 new stores in China in this quarter, accounting for around 60% of total net addition in calendar year 2020.
Besides, we continue to unlock opportunities across China's low tier cities as about around 60% of new stores opened in this quarter are located in this market. As for overseas operations, we entered two new countries and opened 49 new stores in this quarter, accounting for 63% of net addition in calendar year 2020. Despite 153 overseas stores were temporarily closed by year-end, and many other overseas stores being forced to reduce their business hours due to the impact of COVID-19, revenue generated from overseas operation increased by 32% sequentially. In terms of sales recovery, in China, while occasionally case of COVID-19 happened from time to time in this quarter, we reached an overall recovery rate at about 95%. Some stores in low tier cities recover to 100% or even pick up growth. In overseas markets, the average recovery rate once reached to around 60%.
With the pandemic fluctuation several times, and the holiday social gathering, increased the difficulty of recovery in some countries. We saw an unstable and a fragile recovery trend for the overseas market as a whole. Product-wise, we stick to our 711 philosophy as a core of our product strategy, provide customer with a fresh and amazing treasure hunting experience. In addition, we continue to seek cooperation with new IP partners. For example, by cooperating with Bilibili, we launched a series of new products and activities that were warmly received by our customers. This cooperation has laid on the foundation of a highly overlap of user base between MINISO and Bilibili. Besides, our sponsorship to one of Bilibili's gala for Chinese Lunar New Year enhanced our communication with young customers and refreshed MINISO's brand image.
IP initiative is an important component of our product strategy, and we will remain committed to launch more IP product in the future. As a young public company, MINISO announced our X strategy in December, further illustrating our vision of becoming a global leading new retail platform. Today, I would like to take this opportunity to talk about our strategy in two topics. One, why X strategy? The second, how do we achieve our vision? Why X strategy? We celebrated the seventh anniversary of MINISO brand in 2020. Our team has accumulated a core strength in supply chain management, retail knowhow, asset-light business model, and digitalization. As we realize a huge potential in many sectors in new retail, we believe it is right to expand this core strength into this new sector. Let me share with you in detail and discuss why they are practical.
Luckily, efficient supply chain is our core comparative advantage. We operate with more than 600 highly qualified supplier partners who are able to meet our sophisticated demands. By connecting their unmatched manufacturing ability with our unique customer insight and massive data, we pioneered the C2M in industry long before e-commerce player. As a part of our efforts to optimize the supply chain, we build mutually beneficial relationships with them by procure products in large volumes, being punctual with our payment to them, and guide them towards better product efficiency and enhance cost control, thus creating a virtuous cycle in which our supply partner can focus their attention and energy solely on continuous improvement of product quality, and we can enjoy benefits of improved quality in a cost-effective way.
In addition, our efficient supply chain system, together with our ability to offer frequently refreshed products, help us balance fast product innovation with healthy inventory levels and make us more competitive among peers. We can further leverage this efficient supply chain into our new initiatives. Secondly, we have accumulated in-depth retail know-how from all operational experience and a deep consumer insight. We place strong emphasis on optimizing every key aspect of store operation using such know-how to create a treasure hunting shopping experience. The standardized layout, decoration, lighting, modestly priced products, and our friendly staff in our store contribute a welcome environment for our store visitors. They will also find the store easy to navigate due to our optimized product arrangement and display. We have done this so well that most people that visit our store are going to be impressed by the difference between us and peers.
We believe the same will apply to our newly opened TOP TOY store. Thirdly, our asset-light business model enables us to form a win-win partnership with our retail partners because it aligns their interest on both sides and creates mutual benefit. By leveraging our asset-light model, MINISO has quickly expanded the store network in a prime location with consistent brand image and consumer experience. Having the support from our strong partner network makes it easy for us to enter the other sectors of the retail industry. Our fourth key strength lies in digitalization. Retail industry is a closed loop of merchandise flow, information flow, and cash flow. The key to success lies in whether or not these three flows can be well-controlled, and that highlights the importance of the strong IT system.
For example, our supply partners are able to access our SCM system to monitor real-time sales figures so that they can make quick and effective decisions in procurement and production. Our smart store system enable us to track consumer profiles, in-store behavioral patterns, and product sales trends, and using algorithms to customize store-level inventory mix. In line with this IT advantage, our system also enable us to pay our retail partner with daily revenue sharing in China, which is extremely attractive for partners. As with other core strengths, our digital capability can also be leveraged into our new initiatives. To conclude, our core strength creates a potent flywheel effect. Using this flywheel, the momentum of our satisfied customer drives more referrals and repurchases. The momentum of our suppliers' success drives our sustainability.
The momentum of our satisfied retail partner enable us to expand our store network on the global front. That is why we have been successful in MINISO in the past. More importantly, they are all replicable by ourselves into other sectors, but hard for others to copy. Let me share with you some of our first move of X strategy. Firstly, we plan to strengthen our core MINISO business by expanding store network, not only in China, but also in overseas market. For China, we estimate a net addition of 500 stores in current year 2021. In particular, we see strong demand in low-tier cities and high returns for our partner compared to more mature markets in high-tier cities. We are excited about the huge potential and believe we are pursuing the right strategy over there. For overseas market, we believe there is incredible long-term value there.
Before the outbreak of COVID-19, MINISO has accumulated abundant localized experience from team building, product verification, clearance to market research by entering over 80 countries and areas. With that solid foundation, it will be easy to replicate hundreds of new stores and achieve rapid growth in this market. However, we also recognize that such operations may experience a challenge caused by COVID-19 in the near term. We and overseas partners have agreed that our major task should be destocking and reduce operational risk in the next few quarters. At the same time, we will closely monitor the development of the pandemic and adjust our store expansion plan accordingly and dynamically. Secondly, we plan to invest in our new growth initiatives, which will help us to accelerate our progress along the path to become a global leading new retail platform. Take TOP TOY as example.
We observed a structural imbalance between the supply and the demand side of the Art Toy market, and that means a great opportunity. Our first step to meet the diverse demand of younger people is to leverage our strong supply chain to provide eight categories of products. In the near future, we plan to launch more co-branded products by sharing MINISO's IP library. We will also have TOP TOY's own IP product development and operation. It may take some time, but worthwhile. All in all, we will leverage MINISO's core strengths to increase our offering as much as possible while reducing our dependence on any single category. Today, we have opened nine TOP TOY stores in five different cities in China. Although still early, we have seen encouraging preliminary results and received positive feedback from our stakeholders. Thirdly, we are also focused on omni-channel strategy.
In this quarter, online take account about 7% of MINISO's revenue, there is plenty room to growth in the next few years. We plan to follow a more sustainable rate of development in our online initiative, rather than burning money to juice up our GMV, which is a common practice for e-commerce players. Our target is to provide customers with a more convenient, accessible, and personalized shopping experience with our omni-channel strategy, especially for those customers who are used to shopping online. Based on this idea, TOP TOY launched its official online store and a vending machine network at the very beginning, which made a good supplement to offline stores. To conclude, we were able to achieve past success because our core competitive strategy. Those core strengths have laid a solid foundation for our exit strategy, which has put a higher demand on our operational ability and agility.
We will continue to build a highly competitive team by creating opportunities for employees to grow and develop internally and attracting more talents to join us. Thank you. This concludes the remarks of Mr. Ye. As the CFO of MINISO, I will now provide a financial review for the quarter. I will start my remarks with a review of the December quarter results and then provide some additional color regarding the March quarter. Please note that for operating expense, I will be referring to our non-IFRS measures, which have exclude share-based compensation expense. Revenue was RMB 2.3 billion for the December quarter, around the midpoint of our guidance, and represent a decline of 18% year-over-year. In comparison, our revenue showed a significant sign of improvement from the previous quarter. During this which, revenue declined by 31% year-over-year.
This same trend was also reflected in our revenue from overseas markets, in which revenue showed a decline of 51% year-over-year as compared to a decline of 71% year-over-year in the previous quarter. Revenue from domestic market was flat year-over-year. Sequentially, our revenue increased by 11%, with overseas revenue increased by 32%, and domestic revenue 7%. The sequential increase of revenue is also due to 4% growth in store count, and a 7% growth in revenue per MINISO store in this quarter. Our ability to achieve sequential revenue growth further demonstrates the effectiveness of our expansion strategy in lower tier cities and the business recovery of both domestic and overseas operations. Gross profit was RMB 643 million, representing a decrease of 28% year-over-year, and an increase of 23% quarter-over-quarter.
In addition, gross margin was 28% in the December quarter, compared to 31.6% a year ago, and 25.2% a quarter ago. Such fluctuation in our gross margin was primarily due to the fluctuation in revenue contribution from international operations, which typically has a higher gross margin than that of our domestic operations. During this quarter, revenue from our overseas operations account for 20% of our total revenue as compared to 34% a year ago and 15% a quarter ago. Selling and distribution expense was RMB 306 million compared to RMB 317 million a year ago, and RMB 230 million a quarter ago. The quarter-over-quarter increase was primarily attributed to an increased logistic expense, which was in line with the recovery of the company sales during the December quarter, as well as the increase in marketing expense as we continue to strengthen brand recognition for MINISO and TOP TOY.
G&A expense was RMB 160 million, generally flat year-over-year and quarter-over-quarter. Other net loss was RMB 55 million compared to other net income of RMB 24 million a year ago, and other net loss of RMB 16 million a quarter ago. Other net loss was mainly comprised of RMB 67 million in net foreign exchange loss, which was in line with the appreciation of renminbi against the U.S. dollar in December quarter. Turning to our profitability. Operating profit was RMB 54 million compared to RMB 330 million a year ago, and operating loss of RMB 2 million a quarter ago. The year-over-year decrease in operating profit was due to revenue decline in overseas operating caused by the negative impact of COVID-19 in the period, despite our fixed costs and expense remaining stable.
Nevertheless, we are pleased to see an excellent improvement in our operating profit on a sequential basis. Adjusted net profit was RMB 84 million compared to RMB 390 million a year ago, and RMB 102 million a quarter ago. As mentioned earlier, our adjusted net profit in December quarter includes a net foreign exchange loss of RMB 67 million. Excluding this one-time effect of foreign exchange loss, adjusted net profit was around RMB 150 million in December quarter, and increased by 25% quarter-over-quarter. We expect our margin level will normalize over the coming quarters as the pandemic abates. Basic and diluted earnings from continued operations per ADS were RMB 0.08, compared to a loss of RMB 0.8 a year ago and a loss of RMB 7 a quarter ago.
Adjusted basic and diluted earnings per ADS was RMB 0.28 compared to RMB 1.52 a year ago and RMB 0.4 a quarter ago. Turning to our balance sheet. As of December 31, 2020, combined balance of the company's cash equivalent, and restricted cash was RMB 6.8 billion, compared to RMB 3 billion as of September 2020. This increase was primarily due to proceeds we received from our IPO and the cash flow generated from the operation. Turnover of inventories and trade receivables remained flat sequentially. Considering the sequential recovery of revenue and the store expansion, this is a strong proof of our effective working capital management. Looking ahead into March quarter of 2021, we expect our total revenue to between RMB 2.2 billion and RMB 2.4 billion, which represents an increase of 35%-47% year-over-year.
As we continue to operate in a time of significant uncertainty, specifically in regard to the severity and the duration of COVID-19, and especially in the context of overseas markets, this forecast only reflects our current and preliminary views on the market and operation conditions, which is subject to change. Finally, I would like to reiterate that we remain proud of our team's consistent execution and commitment to going above and beyond in the service of our customers. Such perseverance in the face of uncertainty has enabled us to remain on track despite the unexpected and challenging environment. Going forward, our financial strategy will be to remain disciplined in our budgeting, cost controls, and allocation of capital as we focus on the consistent delivery of solid financial performance. Moreover, we will not become complacent and will continue to invest strategically for future growth.
These initiatives may affect individual financial metrics in short term. We firmly believe that such effort will continue MINISO's sustainable and long-term growth. Looking ahead, we are highly confident in the strength of our underlying business model and remain steadfast in our commitment to solidifying our leadership at home and expanding our market share abroad and delivering long-term shareholder value. This concludes our prepared remarks for today. Operator, we are now ready to take questions. Thank you.
Thank you. We will now begin the question and answer session. To ask a question, please press star then one on your touchtone phone. If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Today's first question comes from Michelle Cheng with Goldman Sachs. Please go ahead.
Hi. Thank you management for taking my questions. Sorry, should I ask questions in English or in Mandarin? Yeah, sure.
Okay, please.
Yeah, sure. I have three questions here. Firstly, you mentioned about this new retail strategy, can you elaborate a little more regarding what categories or what target customer or geography you are going to explore in the first stage, in addition to TOP TOY? My second question is regarding the overseas expansion. It sounds that you tend to be a little bit cautious on the short-term trend. Can you give us some highlights about the guidance for this year again? Which area do you see the biggest risk for the overseas expansions as of now? My third question is about TOP TOY. Since we just mentioned that we have nine stores in five cities, so do you have any more concrete plans for the expansion for this year? How should we think about the average sales per store for this year?
Thank you.
Hi, Michelle. Would you please translate yourself before we answer the question? Thank you very much. This is Eason.
Yeah, sure. [Non-English content]
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Okay, Hi Michelle. Thank you for your question. For your first question on the strategy about our X strategy. First, as Mr. Ye shared, TOP TOY is our first initiative in X strategy, there will be more initiatives to follow. At this moment, TOP TOY is definitely the most important one, we will focus our resource to develop it into our second curve, I think. As Mr. Steven Zhang shared, during the past seven to eight years, MINISO has leveraged its four strengths, core competitive strengths, to develop into a global network of retailers. As we mentioned in our prepared remarks, we have competitive strengths in our supply chain management, retail know-how, ability in digital capabilities, our asset-light business model.
All these core strengths that we can leverage to build our future success for our X strategy initiatives. Although it's still early, we can now, as Steven shared, think about TOP TOY now. During the last several months, we have found something very new, very interesting, such as we have extended our category offering from seven to eight. We have included the sculpture category, because we think it's very important and it has potential. In terms of pricing strategy for TOP TOY, it will be much higher than MINISO, absolutely. Not even the average ticket sales, but also the average sale for our product. It is about 2x -5x times that of MINISO, or even higher, to 10 x. In terms of target customers, absolutely we target Generation Z, because they have so much strong ability and willingness to consume in this Art Toy market.
In terms of geography, in the first year of TOP TOY, we will absolutely focus on Tier 1 and Tier 2 cities. There's no plan at the moment, at least in one year, we are not going to penetrate into lower cities. However, since TOP TOY has adopted the omni-channel strategy since day one, our fans and our target customers in those districts can still enjoy the fun experience of TOP TOY through our other channels, such as our online channels.
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Okay. In terms of your second question on our global expansion strategy. You know, the pandemic has been going on for the past several months, and I think that China has been the only exception globally, and especially in the past holiday season since December, the social gatherings seems to have made the recovery of this market as a whole has been making it unstable and fragile. From the perspective of our store, there are more stores closed, and the closed hours for the open stores have increased. In conclusion, we think that the pandemic is still early and hard to tell when the pandemic is completely over. During the past months, we have communicated with our partners globally, and we are aware that our task at this moment and in the coming quarters should still be reduced operation risk and inventory stocking. Okay. Okay.
At the same time, we can still say that we are confident in our global expansion future because even in the pandemic has hit offline retailers, we have built at about 90 stores in this year. At this moment, we currently expect that we will add 200 new stores in our focus market in 2021. That is about half of our international areas of the countries we have business. To give you some colors on that, for example, 70 in Europe, 60 in Asia, about 50 in America, including North America and South America, and 10 in Russian-speaking countries and 10 in Middle East countries. That's it.
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For your third question about the expansion plan of TOP TOY as we shared earlier in keeping our focus there. This business is still at a very early stage. At this moment, we do not have nothing to share, and we will definitely share with you when we have a new development for it. Thank you.
Thank you. Today's next question comes from Lucy Yu with Bank of America. Please go ahead.
[Non-English content] So the question is first on the GMV recovery. In January, both China and overseas have been partially impacted by COVID-19, as you just explained. How have the things been developing in February so far? The second question is on the store opening. For China part, store expansion has been ahead of the expectation, especially in the second half of last year. For 2021 calendar year, we guided for over 500 new stores. In January and February, how many stores have been opened so far? Will we revise up our full year guidance? Thank you.
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Okay. Thank you for question, Lucy. If you cannot hear me clearly, you can anytime. Okay. For the business recovery, I think in this quarter, we have observed a worse recovery than the December quarter. As we shared before, in the December quarter, the recovery rate was once reached 60%-70%. After entering 2021 quarter one, as we mentioned earlier, due to the social gathering in the holiday season, the recovery rate was down at least 10% to 50%-60%. We expect this situation to continue for a while.
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For your second question about the store expansion plan. Generally, we have maintained our previous guidance to open 500 new stores in China this year. As we observed and shared in the prepared remarks, as we expand into lower cities in China, and we have seen the online sales are better and the demand from customers and partners is strong. Thank you.
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Thank you. Our next question today comes from Wenhui Song with CICC. Please go ahead.
[Non-English content] Thank you, management. This is Song Wenhui from CICC. My first question is about TOP TOY. I hope to know how much extra selling or marketing expense will TOP TOY bring in the whole year. The next question is some news mentioned about you hope to open Art Toy and some self-service store. Could you give me some color on these two new initiatives? Thanks.
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OK, Wenhui, thank you very much for your question. For your first question of the TOP TOY spending expansion budget. Our target for TOP TOY is to capture the Generation Z's mindshare and their desktop. In this first year, we think that it's necessary to spend some marketing dollars. We currently expect to spend no less than RMB 50 million in marketing dollars in 2021 for TOP TOY. It will include our budget in advertisements and our event operation and participation in exhibitions, and so on. This budget will be adjusted dynamically based on the development of TOP TOY. For your second question about the online stores. Let me make it clear that for MINISO, we have such plans. For TOP TOY, as we mentioned that from day one, we will adopt this omni-channel strategy. For TOP TOY, there will be a dedicated channel network as we have said.
Thank you very much.
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Thank you. Ladies and gentlemen, it appears that we have lost our speaker connection. Please stand by while we dial back in. I will place a music in the call and will ask you to please stand by. Hello, everyone. This is the operator. Thank you for holding. I've joined the speaker line back to the conference. Once again, ladies and gentlemen, star then one if you have a question. I'm showing no questions at this time, I'd like to turn the conference back over to the management team for any final remarks.
Okay. Thank you very much for joining us today. We'll see you next quarter. Bye.
Thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.