MINISO Group - Q3 2023
May 16, 2023
Transcript
Operator (participant)
Ladies and gentlemen. Thank you for standing by, and welcome to MINISO's earning conference call for the third quarter of fiscal year 2023 that ended March 31st, 2023. At this time, all participants are in a listen only mode. After the management's prepared remarks, we will conduct a question and answer section. Please note this event is being recorded. We have announced our quarterly financial results early today, and earnings release is now available on our investors relationship website at ir.miniso.com. Joining us today are our founder and CEO, Mr. Guofu Ye, and our CFO, Mr. Eason Zhang. Before we continue, I would like to refer you to the safe harbor statement in our earnings press release, which also applies to this call, as we will be making forward-looking statements.
Please also note that we will discuss non-IFRS financial measures today, which we have explained and reconciled to the most comparable measures reported under the International Financial Reporting Standards in the company's earnings release and filings with U.S. SEC and Hong Kong Stock Exchange. In addition, we have prepared a PowerPoint presentation for today's call.
Speaker 7
[crosstalk] This meeting is being recorded.
Operator (participant)
Which contains financial and operational information for this quarter. If you're using Zoom, you should be seeing it right now. You can also revisit it on our IR website later. I'd like to hand the conference over to Mr. Ye and Mr. Zhang will translate for Mr. Ye. Please go ahead, sir.
Guofu Ye (Founder, Chairman, and CEO)
[Foreign Language]
Eason Zhang (CFO)
I'll now walk you through business updates for our three major segments, MINISO China, MINISO Overseas, and TOP TOY. I will start with MINISO brand China business, which recorded RMB 2 billion in revenue for the March quarter, a year-over-year increase of 19%. Within MINISO China business, revenue from offline stores totaled RMB 1.83 billion, a year-over-year increase of 12%. Of 25%.
Guofu Ye (Founder, Chairman, and CEO)
[Foreign Language]
Eason Zhang (CFO)
As we shared during last earnings conference call, January was the best month in terms of domestic offline sales in MINISO's history. In February and March, as the pent-up demand from the pandemic gradually dissipated and the Chinese New Year holiday ended, the pace of recovery in retail industry moderated to a certain extent. That said, our performance continued to outperform the industry. According to data from the National Bureau of Statistics, retail sales consumer goods in China increased by 4.9% year-over-year in the March quarter, while MINISO China's offline business recorded over 25% year-over-year. Our personal GMV in the March quarter has essentially returned to the same level of the period in 2021, reaching around 85% of the pre-COVID level in 2019.
Guofu Ye (Founder, Chairman, and CEO)
[Foreign Language]
Eason Zhang (CFO)
Entering April, we have seen sustained strong performance and even marginal improvement in store level performance. Total offline GMV increased by 80% year-over-year, higher than the 16% of sale growth in retail sales of consumer goods reported by the National Bureau of Statistics just today. Per store sales increased by 50% year-over-year, reaching 85% of pre-COVID level in 2019, representing a substantial sequential improvement from the previous two months of February and March. During the Labor Day holiday, total offline GMV increased by 75% year-over-year. Personal GMV increased by 45% year-over-year and to a comparable level of 2019.
Guofu Ye (Founder, Chairman, and CEO)
[Foreign Language]
Eason Zhang (CFO)
We opened 58 new stores on a net basis during the March quarter, double the figure from the same period last year. More than 53% of new stores were in Tier 1 and Tier 2 cities. In addition, store closure rate was 0.6%, a record low. The strong performance further bolstered the confidence of our retail partners, and we are quite confident now that we will meet and exceed our strong store opening target of 250-350 in calendar year 2023.
Guofu Ye (Founder, Chairman, and CEO)
[Foreign Language]
Eason Zhang (CFO)
We are firmly committed to pursuing high quality growth, as we stressed in our previous quarters. In addition to maintaining a steady pace of store openings, we continue to improve store performance with better merchandise and operations in 2023.
Guofu Ye (Founder, Chairman, and CEO)
[Foreign Language]
Eason Zhang (CFO)
From a merchandise perspective, we adhere to our IP strategy as a core and focus our efforts in strategic categories. This paid off in the past quarter as our merchandise gross margin increased by nearly 7 percentage points from a year ago. Let me first address our IP strategy. As scheduled, we launched a highly anticipated series of Pokémon IP products in March quarter. We collaborated with Pokémon to design multiple high-quality products featuring four classic characters. These products generated a great response from consumers and sold out soon after their release. As we emphasized last quarter, we are going to surprise and delight our consumers with an exciting series of IP collaborations in 2023. In upcoming quarters, we will be unveiling collaborations with blockbuster IPs.
Guofu Ye (Founder, Chairman, and CEO)
[Foreign Language]
Eason Zhang (CFO)
We remain focused on strategic categories, which we define as categories with emotional resonance, global peer, and high growth potential. Take perfume as an example. We believe this category exemplifies MINISO's value pro-proposition of better life and has strong emotional resonance with consumers. In China, we have identified perfume as our most important strategic category. In the March quarter, sales of perfume products increased by 60% year-over-year. Sales contribution increased by 1 percentage point. Furthermore, sales of 70% of perfume related SKUs met our internal standards of best sellers, indicating a significant increase in the success rate of product development.
Guofu Ye (Founder, Chairman, and CEO)
[Foreign Language]
Eason Zhang (CFO)
Accessories is another strategic category we devoted a lot of resources to this year. We believe it has strong global peer. We had a solid foundation in this sector and will continue to strengthen it by setting up a new warehouse in Zhejiang Yiwu and strengthen our designer team. We hope to forge this category into a signature category in overseas markets by high frequency product launch and more efficient logistic. The preliminary results have been very promising, with its sales increasing by over 80% year-over-year, and sales contribution increased by 2 percentage points.
Guofu Ye (Founder, Chairman, and CEO)
[Foreign Language]
Eason Zhang (CFO)
Let's move on to our overseas business, which continued to maintain strong momentum in March quarter in the following aspects.
Guofu Ye (Founder, Chairman, and CEO)
[Foreign Language]
Eason Zhang (CFO)
Revenue from overseas markets was RMB 800 million, an increase of 55% year-over-year. Another record for the March quarter.
Guofu Ye (Founder, Chairman, and CEO)
[Foreign Language]
Eason Zhang (CFO)
GMV in overseas markets increased by 45% year-over-year, with both the direct operated and distributed models achieving a similar GMV growth rate of around 45%, primarily driven by a 30% growth in personal GMV and an increase of 12% in our store number. All of our major overseas markets continue to experience rapid year-over-year growth in GMV, including 100% in North America, over 60% in Latin America, and about 30% in both Europe and Asian countries excluding China.
Guofu Ye (Founder, Chairman, and CEO)
[Foreign Language]
Eason Zhang (CFO)
Thirdly, I want to stress that personal GMV increased by about 30% year-over-year in March quarter, recovering to around 80% of where it was in same period of 2019. North America increased by 90% year-over-year and was 50% higher than in the same period of 2019. As we continue to see impressive growth in this region, the U.S. market has been our largest overseas market in terms of revenue contribution for two consecutive quarters, while Canada is also among our top 10 markets.
Guofu Ye (Founder, Chairman, and CEO)
[Foreign Language]
Eason Zhang (CFO)
In North America, we continue to enjoy tailwinds from merchandise, brand and operations. That said, as a company which operates globally will inevitably face geopolitical challenges. However, I am pleased to see that our business in North America is increasingly integrated into local communities, providing value for money products to local consumers under such a high inflation environment and contributing to local involvement, employment and tax revenue.
Guofu Ye (Founder, Chairman, and CEO)
[Foreign Language]
Eason Zhang (CFO)
I believe that only through sufficient globalization can companies in our position effectively mitigate country-specific risk. I'm pleased to see that in March quarter personal GMV recovery was also quite positive in a range of our overseas markets. For example, Latin American markets saw year-over-year growth of over 40%, including a 60% growth in Mexico. Asian market recorded a year-over-year growth of 15%, including a 90% growth in Singapore and 50% for both the Philippines and Thailand.
Guofu Ye (Founder, Chairman, and CEO)
[Foreign Language]
Eason Zhang (CFO)
Finally, let me provide an update on TOP TOY. Revenue was RMB 114 million, a 24% year-over-year increase. As of quarter end, there were 116 TOP TOY offline stores, up 24 from a year ago.
Guofu Ye (Founder, Chairman, and CEO)
[Foreign Language]
Eason Zhang (CFO)
In the March quarter, our exclusive products made greater sales contribution and helped increase TOP TOY's gross profit margin by more than 2 percentage points year-over-year. China Bricks, the most important strategic category for TOP TOY, continued to play a key role in driving sales and accounted for more than 25% of TOP TOY's total sales during the period. The strong performance of China Bricks was the key driver for the increase in TOP TOY's gross profit margin during the quarter.
Guofu Ye (Founder, Chairman, and CEO)
[Foreign Language]
Eason Zhang (CFO)
Our designer talent pool continue to enlarge and mature. Churning out a stream of highly popular products in toy bricks category including co-branding products with Sanrio's Kuromi, Rapid Breaking the Future, Dawn Astronauts, Luban No. 7, Tamago Neo Bricks and others. We are particularly excited about Dawn Astronauts, the latest IP product of TOP TOY's cooperation with China Aerospace. This self-developed series is designed to educate young consumers about space and cultivate pride in China's strong national aerospace industry. We are as firm as two years ago in the long-term prospects of our toy market, especially in China Bricks, which is TOP TOY's number one strategic category. We are long-termists on TOP TOY business and will work very hard in product innovation as its key focus. We aim to grow this business further and establish it into an influential brand in this industry.
Guofu Ye (Founder, Chairman, and CEO)
[Foreign Language]
Eason Zhang (CFO)
2023 marks MINISO's tenth anniversary as well as the first year of our journey to become a super brand. On May 20th, we will celebrate the grand opening of MINISO's global flagship store in New York City, marking another milestone in our history as MINISO will become the first Chinese consumer brand to open a flagship store in Times Square, a global crossroads. We remain committed to executing on our roadmap to transform MINISO into a great Chinese brand, a consumer brand. We'll firmly anchor our focus on the three transformations and continue to serve every consumer with the happiness philosophy. Thank you all very much. That concludes my prepared remarks. I'll now turn the call to Eason for a review of our financial performance in March quarter.
Thank you, Mr. Ye. Hello, everyone. Thank you again for joining us today. I will walk you through our financial results for the March quarter. Please note that all numbers are in RMB unless otherwise stated. I will also refer to some non-IFRS measures which have excluded share-based compensation expenses. Revenue in the March quarter was RMB 2.95 billion, an increase of 26% year-over-year, driven primarily by an 80% year-over-year increase in revenue from China and a 55% year-over-year increase in revenue from overseas markets. Revenue from China was RMB 2.15 billion, including RMB 2 billion from MINISO brand and RMB 152 million from other business, including TOP TOY. Revenue from MINISO brand increased by about 19% year-over-year, driven by a year-over-year increase of 25% in revenue from offline store, a year-over-year decrease of 23% in other small channels.
The 25% year-over-year increase in offline revenue is primarily due to a 19% year-over-year increase in personal revenue and 5% increase in store number. On a single store basis, average store number, average number of orders, and the average order value both increased by 8% year-over-year. We were seeing quite healthy performance improvements across all of our operating metrics, including traffic, ASP, and store number in March quarter. Revenue from overseas markets was RMB 800 million, increasing by 55% year-over-year. This growth was primarily driven by a 38% year-over-year growth in the average revenue per MINISO store in overseas market and 12% year-over-year increase in average store count. Revenue from distributor model was RMB 430 million, an increase of 47% year-over-year.
Revenue from directly operated model was RMB 317 million, an increase of 64% year-over-year, and accounted for more than 46% of total overseas revenue as compared to 44% last year. Gross profit was RMB 1,162 million, representing a 64% year-over-year increase. Gross margin was 39.3% compared to 13.2% in the same period of last year. The year-over-year increase was primarily due to three reasons, as we have explained in earnings release. I want to make some supplementary notes here. First, we have seen positive growth in GP margin in all of our business segments. As Mr. Ye shared earlier, merchandise gross margin in China increased by nearly 7 percentage points from a year ago.
That translates into a higher increase in our accounting gross GP margin, say, 10%, considering our revenue share percentage with retail partner is fixed. For e-commerce, its GP margin improved significantly, thanks to its operational optimization. Meanwhile, we took a series of measures to optimize TOP TOY's product mix and store operations, which helped increase its accounting gross profit margin by nearly 9 percentage points year-over-year. Let me remind you here, TOP TOY's business model is now progressing towards the profit model we have planned two years ago. Second, when we look at the shift in our revenue mix, I think there are two major shifts here, notable. The first one is the increased contribution from overseas market as a whole.
The second is the increased revenue contribution from our directly operating model from, you know, 44%-46%, which has the highest GP margin among our business segments. Selling and distribution expense were RMB 432 million, representing a year-over-year increase of 23%. This increase was mainly attributable to increased licensing expense in relation to our IP products, increased personnel-related expense and logistic expense in relation to the growth of our business. To a net lesser extent, increased promotion and advertising expense, primarily in connection with our strategic brand upgrade of MINISO brand in China. GND expense were RMB 151 million, representing a decrease of 21% year-over-year.
The decrease was primarily due to, you know, decreased personnel-related expense in relating to our cost control measures among our corporate crew and decreased depreciation and amortization expense due to the capitalization of our, you know, depreciation of land use right in construction cost of headquarters building. Other net income was RMB 3 million compared to RMB 0.5 million in the same period of 2022. Other net income mainly consists of net foreign exchange loss, investment income from wealth management products and others. The year-over-year increase was mainly attributable to an increased investment income and a decrease in other losses. Turning to profitability, operating profit was RMB 576 million, a year over increase of more than 300%.
Net finance income was RMB 25 million, representing year-over-year increase of 445%, mainly due to an increase in interest income from bank deposits. Adjusted net profits was RMB 483 million, a year over increase of 336%. Adjusted net margin was 16.4% compared to 4.7% in the same period last year. Adjusted basic and dilute earnings per ADS was RMB 1.52 for quarter, increasing by 322% year-over-year. Turning to cash position, as of quarter end, our combined balance cash position was approximately RMB 7 billion, compared to RMB 6.2 billion and RMB 5.8 billion as of December 31st, 2022 and June 30, 2022 respectively.
Turning to working capture, turnover of inventories and trade receivables remained stable. As Mr. Ye commented, we delivered a strong start to this year with the best March quarter performance in our history, shaking off three years of uncertainty. Looking forward into June quarter, we expect our sales will continue to grow strongly on a year-over-year basis, driven by better store level performance and the store network expansion. Meanwhile, our margin profile will continue to improve on year-over-year basis. Despite various challenges raised by external environments, we'll continue to focus on those elements of the business that are under our control and remain focused on our long-term strategic goals, delivering on our globalization strategy, fostering the strengths of our product offerings, and optimizing our store network. Thank you. This concludes our prepared remarks. Operator, we are now ready to take questions.
Operator (participant)
Now is Q&A section. The first question comes from the line of Michelle Cheng from Goldman Sachs. Line's open, Michelle.
Michelle Cheng (Managing Director and Co-Lead of the Asia Consumer Research Team)
Ye Zong, Eason. [Foreign Language] I have two questions for management. Firstly, it is for growth margin. Given growth margin continue to be driven by brand upgrade strategy, can management comment the growth margin upside and also the product mix adjustment progress? Related to this question is for the IP product, can management share the IP product contribution right now and also the future targets? That is my first question. Second question is regarding the overseas operation. Can management comment different markets, the upside and also the improvement progress for some countries like North America. What are the key drivers that we can do better?
For certain regions, especially Asia, where is the pressures coming from and also how we are going to adjust this? Thank you.
Guofu Ye (Founder, Chairman, and CEO)
[Foreign Language]
Eason Zhang (CFO)
Thank you, Michelle. This is Jack here. You know, maybe you still remember, we firstly introduced our MINISO brand strategic upgrade in last March. Then we give the market guide outlook that about 30% of MINISO's products will be interest-based. The other 70% of our products will still be of high value proposition. In terms of the whole project progress, we estimate that by the end of, you know, June quarter this year, our merchandise gross margin will close to 60%. If we look at the March quarter, I would say that we are a little bit ahead of this, you know, estimated timetable.
After our product is upgraded, you know, different from the past, our margin gross, our gross margin of different product categories now varies. That said, you know, our future growth room of gross margin will come from the change of the product categories. For example, I just mentioned accessories. This product category's sales contribution increased by about 2 percentage points in the March quarter. On the other side, for accessories, this category, its gross margin increased high single digits compared to the same period last year. It contributed positive contribution to our, you know, increase of GP margin as a whole. This is the first part. The second part, don't forget that we still have the, you know, efficiency improvement project from our, you know, whole supply chain.
I currently estimate that we still have some room in reducing or optimizing our in-product cost structure going forward in this year. To your question about IP product contribution, I would say, the March quarter, we still see about, you know, 20-ish, IP-related product contribution. I would say it's flat quarter-over-quarter and a little bit higher than last year. We do not have a specific sales target of IP-related product. But we will, you know, try to keep a very competitive product portfolio in terms of IP products. For your questions about the overseas market situation. We have divided our overseas market into, you know, five major markets.
That is North America, Latin America, Asian countries excluding China, Europe, Middle East, and North America. I will address them one by one. For North American markets, total GMV increased by more than 100%, and the fastest among our overseas markets. Now, we have around 120 stores in North America, accounting for 6%, but its GMV contribution is nearly 10%. In terms of GMV per store, this quarter, we saw 9% year-over-year growth. It has also recovered to, you know, 150% of the pre-COVID level. If you look at Latin America, total GMV increased by, you know, 62% year-over-year and the second fastest in overseas markets.
We have about 22% stores in this area, but its GMV contribution is close to 40%. In this quarter, we saw, you know, stores in Latin America, its average sales per store increased by 42%, and its sales per store is the highest among its peers. If you look at Asian countries, in this quarter, total sales, total GMV increased by about 30%, right? It accounted for about 45% of our total overseas stores, but its GMV contribution is relatively low, at about 30%. If you look at the pre-COVID same period, I would say the GMV contribution from Asian markets still have a lot of room to grow in this year or in next year. If you look at the per store GMV this quarter, it increased by about 15%.
If you look at Asian markets, you will see that this is very different. It's a large market with, you know, different countries with a lot of population. The country-specific recovery rate varies. As I just mentioned, if you look at Singapore, it recovered to, it increased by about 9% year-over-year. The Philippines and Thailand also saw 50% year-over-year growth. In Asian, we also have Indonesia, one of our largest overseas market. It increased by 21% in this quarter, faster than the average. If you look at countries like India, it was slower than other peers, primarily due to, you know, the short of inventory in this quarter, and we are trying to solve this problem now, and we will solve it.
If you look at Europe, GMV increased by 34% in this quarter, and Europe, European stores accounted for about 10%, but its GMV is also comparable to that level. The per store GMV in Europe recovered to about 85% of pre-COVID. Most Middle East and North America, GMV increased by 10% this quarter, and its GMV per store increased by single digits in this quarter. We have 7% of stores there, and the GMV contribution about 4%, 10%. In terms of our, you know, store opening target in calendar 2023, we at this moment do not want to adjust our, you know, target. We want to have some time to observe more and then decide. Thank you.
Michelle Cheng (Managing Director and Co-Lead of the Asia Consumer Research Team)
Yeah. Thank you. It's very clear. Thanks.
Operator (participant)
Okay. The next question is from the line of Lucy Yu from Merrill Lynch. Lucy, please go ahead.
Lucy Yu (Equity Research Analyst)
[Foreign Language] Hey. Domestically, we mentioned that store opening is going to exceed our previous expectation. How many stores have we opened in the second quarter so far or year to date so far? Which part of the China are we seeing accelerating expansion pace? Second question is on the domestic consumption pattern. Have we seen any change in terms of shopping frequency, type of consumed products, ASP, as well as consumer like normal shopping consumer in our stores. Lastly is on the overseas. Although we are not revising our full year guidance at the moment, but, we have seen in the first quarter store opening is still lagging. It's slightly lagging behind our expectations.
Could we please share the reason behind that as well as second quarter quarter to date store opening in the overseas market? Thank you.
Eason Zhang (CFO)
Thank you, Lucy. This is Eason. I will answer your question. For first question, yes, you are right, and we are highly confident that we will surpass our, you know, previous guidance of 250-350. Currently, we estimate that we can open 350-450 stores in China market on net basis in calendar year 2023. We will absolutely adjust dynamically according to, you know, the recovery of the whole market in China. If you look at the structure, I would say Tier 1 and Tier 2 will have a lot of opportunities in this year.
Maybe you have read from news report that we have opened a lot of flagship stores in China's top Tier cities in recent months. If you look at first quarter, if you look at March quarter, about 53% of new stores come from Tier 1 to 2 cities. This is a new, you know, new things that we have never seen during the past three years. If you look at our retail partners, yes, they are highly confident. We can tell from our, you know, strong pipeline in terms of new stores. Both new and our, you know, old retail partners have opened stores in this quarter.
Especially in March quarter, we see a lot of our, you know, old partners, they have opened a lot of new stores because of their stores recovered very quite well. By the end of the quarter, by quarter end, on average, our retail partners have 3.4 MINISO stores in China, and that is comparable to historical average. Your second question about the customer behavior. Let me take April as an example. As Mr. Ye just shared, total GMV increased by about 8%. Personal GMV increased by about 50%. I would say this 50% yearly increase come from high single digit of ASP hike and, you know, about another 40% or so increase in our, you know, orders. This has been the trend year to date.
In terms of product categories, I would say interest-based related products are among the best sellers. As you can see in the PPT now, this is some examples of our best sellers in this quarter. Many of them are IP related products. We have seen that in this quarter, no matter in China or in overseas market, our, you know, co-branding, IP related blind box or plush toys increased very fast. Maybe we can share more in next quarter about, you know, our overseas blind box business. In terms of customer profile, I would say there's no change. We still focus on, you know, young people, and most of our customers are females.
In terms of your sort of questions about overseas store expansion plan, yes, we want to, you know, wait for a while to see if we have to adjust this plan. If you look at historical numbers, the majority of our annual addition happens in, you know, the second half of calendar year. I would say this will be the case in this year. If you look at March quarter, originally, our, you know, plan was about 40 stores. Then we, at quarter end, we added about 20.
I would not say that this is a very, you know, bad case because, you know, considering that in April we still add a lot of new stores in overseas markets, I would say we are still, you know, on track for new store openings in overseas market. Thank you.
Operator (participant)
Thank you. Okay. The next question is from Anne Ling from Jefferies. Anne.
Anne Ling (Equity Analyst)
Thank you. Thank you, [Foreign Language]. Now, my question is, first, you know, what is the mix of the best-selling item? What is the definition of the best-selling item from MINISO? What is the mix, you know, for this quarter versus in the previous quarter? The second question is regarding the overseas as well as the domestic market. What is the operating margin mix for this quarter? What has been driving these, like, improvement in terms of margins? Like, you know, this lead to another question is regarding the selling expense, you know, the SG&A.
Moving forward, you know, are we going to increase our selling expense ratio, so as to drive higher sales, you know, when the market is fully opened? Thank you.
Eason Zhang (CFO)
Thank you. This is Eason. I will answer your question. In terms of, in terms of, you know, best-selling items, yeah. Yes, we have internal definitions and standards that we have a certain threshold that when, you know, a certain SKU sales contribution in, you know, a certain time period surpassed that threshold, we call it best sellers. In March quarter, we still see that, you know, a lot of our best-selling SKUs comes from the strategic product categories, as Mr. Ye mentioned. Let me share some numbers. In this quarter, about 40% of our total sales in China comes from these, you know, this, these strategic categories. In terms of year-over-year growth, these best-selling SKUs, they re-achieved about 120% year-over-year growth, these best-selling SKUs.
I'll say these results are quite promising. In terms of your question about segment margin, I would say we now have, you know, different distinct business segment, including MINISO China and MINISO Overseas. If you look at MINISO China, I would say it's above the company level operational margin, as you can see in our P&L in this quarter. For MINISO Overseas market as whole, because we still have, you know, the directly operated model in hand and it's ramping up. We still see that overseas market as whole, its OP margin is lower than the corporate level. Hopefully we have seen that TOP TOY's margin profile increased significantly. As Mr. Ye just shared, its gross margin increased by 9%, right?
It's, you know, bottom line, its loss ratio significantly narrowed compared to, you know, last year. The third question is about the OPEX trend, right?
Anne Ling (Equity Analyst)
Yeah.
Eason Zhang (CFO)
Yeah. If you look at the OPEX historical average, we are highly confident that we can still control OPEX ratio to about, to within about, you know, within or around 20% as you can see in this page of PBT. That if you look at the pre-COVID times, right? Our SG&A ratio is below 20%. During the three years in the COVID, we have some flux. During the past three quarters, we still managed the whole OPEX ratio within or around 20%. In the future, we still target to control our, you know, OPEX ratio around 20% or so. Thank you.
Anne Ling (Equity Analyst)
Okay. Just to follow up, Eason, you know, as we have like, you know, overseas market growing a lot faster, and then half of it is like, you know, wholesale order. Does it mean that, you know, we have more operating leverage for the overseas market versus the domestic market? Or it doesn't really matter? Or?
Eason Zhang (CFO)
This is still, you know, wait to be seen because, you know, during past two or three quarters we have seen the more significant operational leverage in China business because we are, you know, running our business in a unified market, right?
Anne Ling (Equity Analyst)
Mm.
Eason Zhang (CFO)
costs that you can share, right? For overseas market, especially for distributor business, because we are, you know, have distributors in different markets, different countries, so a lot of costs that we cannot share with.
Anne Ling (Equity Analyst)
Mm.
Eason Zhang (CFO)
You know, I partly agree with you that in the long term that with the increase of the sales of this business overseas market as whole, we still have some potential, you know, in terms of operational leverage. Thank you.
Anne Ling (Equity Analyst)
Thank you.
Operator (participant)
Thank you. Okay. The next question is from the line of Veronica Song from Credit Suisse.
Veronica Song (Research Analyst)
[Foreign Language] My first question is about MINISO's directly operated overseas markets, mainly Indonesia, India, and USA. What's the current store UE and profitability? Is there anything you can share? Also, what kind of profitability shall we expect in the coming quarters? My second question is regarding TOP TOY. The company has been adjusting its store model in the past quarters. You also mentioned that we've been narrowing losses as well for TOP TOY. In the coming year, what will be our key focus for this brand? Also, what kind of profitability shall we expect in the coming quarters? Thank you.
Eason Zhang (CFO)
Thank you, Veronica. Yes, you know, we have some major countries in terms of in our direct operational model, including the U.S. market, including the Indonesia and India market as you mentioned. Compared to the U.S. market, our business in India and Indonesia are more mature and has, you know, a longer history, right? For these two markets, we now are running in a very ideal status. If you look at its operational, if you look at its bottom line, I would say it's very solid, even, you know, even under such a circumstance in which its sales recovery rate, right, is about, you know, 60% or even something like that.
For our U.S. market, if you look at its margin profile, I would say it's still too early to make judgment or, you know, to share with investors this kind of information. As I mentioned, the U.S. market as whole increased by more than 100%, and its personal sales increased by nearly 6%. We are very positive about our future growth in this market and we still need some time, you know, to ramp up the store unit economics and see and check and make plans for next stage of growth.
For TOP TOY, I'll say, we do not have specific target in terms of store opening, in terms of top line or in terms of bottom line for it in this year, because as Mr. Ye just mentioned, China Bricks is its number one priority in this year. We want TOP TOY to make as much as it can in terms of, you know, product innovation and, you know, the whole, you know, team building and so on. That doesn't mean it will still making loss this year. That's not necessarily the case.
If you look at the TOP TOY business, I would say its top line growth, as a new business, will still be higher than the company's overall revenue growth in calendar year 2023. Because of, you know, its sales leverage and its, you know, exclusive products are getting more and more sales, we will reasonably estimate that TOP TOY will significantly narrow its loss status in the coming year. Thank you.
Operator (participant)
Thank you once again for joining us today. If you have any further questions, please contact MINISO's IR team. Our contact information can be found on today's press release. We will see you next quarter. Have a nice day. Thank you.