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spk02: Ladies and gentlemen, thank you for standing by and welcome to Minnesota group holding limited early conference call for the second quarter of fiscal year 2022 that ended December 31, 2021. At this time, all participants are in a listen-only mode. After the manager 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. Ethan Zhang, Director of Capital Markets. Please go ahead, Ethan.
spk04: Thank you. Hello, everyone, and thank you all for joining us on today's call. The company has announced its quasi-financial results earlier today. An earnings release is now available on our investor relations website at ir.minasol.com. Today, you will hear from our Chairman and CEO, Mr. Guo Huye, who will start the call with an overview of our business. He will be followed by our staffer, Mr. Steven Zhang, who will address our financial results in more detail before we take your questions. 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 follow-up statements. Please also note that we will discuss non-IFRS measures today, which we have explained and reconciled to the most comparable measures reported under the International Financial Reporting Standard in the company's earnings press release and filings with the SEC. With that, I will now turn the call over to Mr. Cisco Hassler.
spk00: Hello, everyone. Welcome to the 2021 MingTang YouPing Foundation. Thank you. Hello everyone and welcome to Minnesota's December quarter 2021 earnings conference call. On today's call,
spk04: I will share major developments of our business and then talk about the strategic upgrades of the Minnesota brand.
spk00: One hundred and ninety-one. One hundred and seventy-four. One hundred and twenty-one. I will begin with business review. During this quarter, we added 191 stores to our global store network.
spk04: including 174 Minnesota stores and 17 top toy stores. Revenue reached RMB 2.77 billion, up 21% year-over-year, exceeding the high end of our guidance range. Adjusted net profit was RMB 214 million, up 155% year-over-year, Adjusting that margin of 7.7% was the highest in recent seven quarters since the pandemic broke out. During calendar year 2021, we added 615 stores to our global store network, including 531 minisale stores and 84 top toy stores. Revenue reached remain be 10.13 billion, up 34% year-over-year. Adjusted net profit was about RMB 690 million, up 90% year-over-year. Adjusted net margin was 6.8%, compared to 4.8% in calendar year 2020.
spk00: China China China China In December quarter, Minsk Brand recorded a revenue of RMB 2.6 billion.
spk04: Up 17% year-over-year, revenue from China was RMB 1.88 billion, up 6% year-over-year. Revenue from overseas market was RMB 717 million, up 55% year-over-year. In China, our offline stores recorded a higher recovery rate than industry average in October. Total sales increased by 9% year-over-year from the high water mark of last October and increased by 16% from the same period in 2019. Sales recovery rate was about 97% of the same period in 2019. among which Tier 1 and Tier 2 cities recovered to 95%, and Tier 3 and below cities recovered to more than 100%. However, this growth was interrupted by the new wave of the pandemic in November, when total sales was down 6% year-over-year and 7% compared to the same period in 2019 separately. Total sales in December was down 7% compared to the same period in 2019. But thanks to the operating measures for two and the year-end promotion campaign, total sales was down by only 1% year-over-year.
spk00: In 2021, the total number of customers increased by 400, which is more than 225 in 2020. This shows the company's strong business expansion capability and the firm confidence of the business owners. We continue to firmly promote the power down payment. This quarter, the added power supply is about 60% from the three-line and one-line cities. The power supply of the three-line and one-line cities has exceeded 1,300.
spk04: Minnesota added 133 stores on net basis during this quarter and ended December with 3,168 stores in China. With a net addition of 400 Minnesota stores in calendar year 2021, we have successfully completed our store expansion plan and nearly doubled the number of 225 in calendar year 2020. which demonstrates our arrival extension ability and retail partners' strong confidence in our business. As we continue to penetrate into Tier 3 and below cities and unlock these new markets, approximately 60% of newly added stores in this quarter were from there.
spk01: This meeting is being recorded.
spk04: By the end of December, we had more than 1,300 stores located in tier 3 and below cities.
spk00: to provide users with a comprehensive all-round consumer experience, as well as to enhance user connectivity and retrofit. This is our user operation strategy content. During the development process of this season's successful strawberry group app, we first invited users to participate in it. The product design draft and samples were voted by the users, and based on the supply, delivery, return, manufacturing, production, and power supply of the community, the strawberry group related products were exposed to social media as soon as they were released. and more than 12 million users. The success of Parmigian AP's product is one of the main reasons why we invite young people to be the co-founders of the product, so that young people can get an immersive and friendly new consumer experience. We will carry out more detailed operations for consumers in order to increase user contact and fans' loyalty, and create a beautiful way of life for the new consumer community all over the world.
spk04: Moving to our online business. Revenue from e-commerce was RMB 117 million. Revenue from O2O business was around RMB 130 million, up 130% year-over-year. In total, online business including e-commerce and O2O contributed 11% of our revenue. In terms of user operations, sales contribution from members exceeded 50% for the first time in calendar year 2021. Meanwhile, we continue to strategically focus on private traffic and reach admin program. Our reach admin program had nearly 7.8 million MAUs in December and our private traffic had accumulated over 14 million consumers. Minso is strategically committed to depending consumer engagement and driving repurchase by providing improved omni-channel experience to them. Take our very successful IP products in this quarter, Lotso as an example. For the first time, we managed to invite consumers to participate in the product development process. Consumers involved were asked to vote for their favorite product design. We also launched pre-sales for these IP products online. The statistics from the pre-sales were found very useful in production projection and merchandise preparation for offline stores. The loss of IP products went viral on social media, attracting more than 12 million page views on Xiaohongshu. The secret to this success is to invite young people to become co-creators of our products so that young people can have immersive and more friendly new shopping experience. Like what we did in Lasso's case, we shall keep testing this tactic while driving users' sickness and repurchases, and eventually help to create a wonderful lifestyle for young consumers globally.
spk00: In terms of foreign business, the revenue of this quarter has reached 7.17 billion yuan, which is 5.5% of the total growth rate and 15% of the total growth rate. Overall, GMV in the overseas market rose to a level of nearly 80% in 2021, with a growth of 26%. The recovery rate of the agency countries is 80%, while the country's response rate is 70%. For example, GMV in the U.S. market rose to 40% in 2021, with a growth of 60% in Europe, while the growth of 60% in Asia, where the previous epidemic was serious, has also improved significantly. The overall recovery trend in the overseas market is to actively expand business information for the company after the epidemic.
spk04: Moving to overseas operations. Revenue for December quarter reached RMB 717 million, up 55% year-over-year, and 15% quarter-over-quarter, thanks to the recovery from the pandemic and holiday spending. Overall, GMV recovered to about 80% of the same period in 2019, up 26% year-over-year, with distributor markets recovered to 80% and directly operated markets 70% of the same period in 2019. GMV in the U.S. market, for example, increased by 40% from the same period in 2019 and Europe increased by about 60%. Asian countries as a whole also delivered significant improvements from previous quarters. The positive trend in overseas markets has enhanced our confidence to actively expand our business out of the pandemic.
spk00: This quarter's single-storey performance increased by 10% in 2016. Canada returned to 100%. Mexico returned to 80%. This quarter, the number of overseas stores has increased by 41, which is 1,877. The total number of stores has increased by 131 this year. China and Russia have completed the opening plan. At the end of December, the number of stores in overseas markets that have stopped operating has increased by 76, which is much lower than the number of stores in the previous quarter. This also reflects the
spk04: Average sales per store in overseas market in this quarter recovered to 70% of the same period in 2019, up 20% year-over-year, and 30% quarter-over-quarter. In the U.S. market, sales per store surpassed the level in the same period in 2019 and increased by 10%. after it recorded a recovery rate of 90% in the previous quarter. Sales per store recovered to 100% and 80% in Canada and Mexico separately. Total number of overseas stores reached 1,877 by the end of December, with net addition of 41 stores during the quarter. In calendar year 2021, we have surpassed our store expansion targets and delivered a net addition of 131 minso stores. There were 76 suspended stores in overseas markets by the end of December, down from 157 such stores a quarter ago. Top Toy celebrated its first anniversary in December. As the first sub-brand incubated on the X strategy, Top Toy has made remarkable achievements in its first year. Established a brand image as a global collection store of art toys, forged a set of promising omni-channel capabilities, enlarged product offerings of our toys, and built a team of high potential talents. Revenue of top toy was remaining 130 million, up 20% quarter-over-quarter. Total number of top toys offline stores was 89 by December, including 13 DreamWorks stores and 76 collection stores. Through its continuous efforts in online channels, TopToy has accumulated nearly 3 million fans and 1.5 million members.
spk00: China China China China China China China Product-wise,
spk04: TopToy continued to make breakthroughs. Proprietary products have contributed 8% of offline sales and 30% of online stores in December separately. Merchandise gross margin of our proprietary products reached about 65% and plays a positive role in improving overall gross margin. Top Toys managed to combine esports, another popular pop culture element among young people, with our toys in an effort to attract consumers from different segments. Our partnership with EDG, Edward Gaming, in January highlighted Top Toys' leadership in the industry. Those of the co-branding products from this corporation were encouraging and far exceeded our expectations, for example. The 1,000-person Umazo Plus EDG figures were sold out in 48 hours, again demonstrating TopToys' strong abilities of rapid product development and IP co-branding. Behind this collaboration is TopToys' never-ending exploration to capture various trendy topics among young people, to reshape consuming environments, and to enlarge addressable markets of art toys. Next, I would like to introduce the strategic upgrade of Minnesota Brand. During the past eight years, Minnesota Brand has become a global household name, demonstrated by our entrance into 99 countries and regions and our massive network of more than 5,000 stores worldwide. enabling hundreds of millions of consumers around the world to enjoy lives with a surprise every year. It is very important for us to keep our strategy and brand positioning up to date. And after careful deliberations, we have made the decision that 2022 will be the first year of an era to strategically upgrade the minisale brand.
spk00: In the domestic market, we will insist on minisale products In China, we plan to further upgrade the Minnesota brand with a value proposition of Wonderful Life.
spk04: On the basis of our established advantages in product quality and affordability, with the call of our brand upgrade strategy being from product recognition to brand recognition, we'll make efforts in the following three aspects closely around the topic of interest-based consumption. Product-wise, the upgrade does not necessarily mean raising prices of all of MinSource products. We currently estimate that prices of about 70% of our products will remain stable. and Minnesota's brand promise to offer consumers value and affordability is not going to change. For our new products, we'll be more focused on interest-based consumption by offering more appealing, usefulness, and playfulness than we used to. We believe the strategic upgrade in product velocity will drive a steady offering of such new products. We each have higher premium and will fuel our future growth. We are also building a robust pipeline of new blockbuster products of strategic importance to effectively capture more consumer mindshare.
spk00: Marketing wise,
spk04: We plan to take a systematic approach and first launch our branding campaigns in Tier 1 and Tier 2 cities to enhance our brand image as a global brand by leveraging our edges in appealing, usefulness, and playfulness products and sticking to our core strategy of product-driven brand upgrades. And we strive to build a value proposition and brand image representing one for life among consumers. Channel-wise, we'll continue to penetrate into low-tier cities. In tier 1 and tier 2 cities, we'll focus on optimizing the margin profile of Minnesota stores with key initiatives such as product mix optimization, brand image upgrade, and price range extension. We are also committed to omni-channel strategy. enhance our operations in private traffic and WeChat mini program, and ultimately drive business growth across online and offline channels.
spk00: In 2013, when I founded this brand, even the domestic e-commerce industry was developing, and the real retail industry was going through a tough time. Today's retail industry is facing difficulties and challenges. At the same time, the epidemic has changed the consumption of consumers. Thank you. This is my speech.
spk04: When I founded Minnesota Branding in 2013, it was a time when e-commerce was booming and the brick and mortar retail industry was experiencing a cold water, just like today. The pandemic has changed consumers' shopping patterns and habits. But neither the rising of e-commerce nor the pandemic will change consumers' pursuit of wonderful life And it is the promise of Minnesota's brand and reason behind our pasta success that we enable consumers to enjoy life's little surprise. Looking ahead in post-pandemic era, we are more capable and highly competent in constantly delivering long-term values to consumers and investors with our constant offerings of products that are more appealing, useful, and playful. That concludes my remarks. I will now turn the call over to our CFO for financial review.
spk05: Thank you. Hello, everyone. I will start my remarks with a review of December quarter financial results and then provide additional color regarding March quarter. Please note that I will be referring to non-IFRS measures which have excluded share-based compensation expense and certain non-recurring items. Revenue in December quarter was 2.77 billion MB, increased by 21% year-over-year and 5% quarter-over-quarter, above the high end of our guidance range of 2.5 billion MB to 2.7 billion MB. The year-over-year increase was primarily driven by the growth of our domestic operations and the recovery of our international operations. Revenue generated from our domestic operations was 2.06 billion MB, increased by 12% year-over-year. Revenue generated from the domestic operation of Miniso Brand was 1.88%, meaning billion RMB increased by 6% year over year. Revenue generated from PopToy was 131 million RMB compared to 3 million RMB in the same period of 2020. Revenue generated from our international operations was 717 million RMB increased by 55% year-over-year, reflecting a consistent improvement of our sales recovery in overseas markets as a whole. From a quarter-over-quarter perspective, revenue from our domestic operations remain flat. We estimate that the GMV loss for those influence store in China during this quarter was comparable to that in the previous quarter. Revenue from international operation increased by 15% sequentially. Gross profit was 863 million RMB, increased by 34% year-over-year and 19% quarter-over-quarter. gross margin was 31.1% compared to 28% a year ago and 27.4% a quarter ago. Both of the year-over-year and quarter-over-quarter increase was primarily due to, one, revenue recognition, a contribution of international operation increase from 20.1 percent in the same period of 2020 to 25.9 percent in this quarter as you know international operation typically has higher gross margin than domestic operation and the number two our expanding co-brand ip product offerings and its associated high gross margin in this quarter Selling and distribution expense were 371 million MB, increased by 21% year-over-year and 15% quarter-over-quarter. The year-over-year increase was primarily attributed to increased personnel-related expense, licensee expense, and the marketing expense that were in line with the year-over-year revenue growth and the brand awareness improvement for both Miniso and Top Toy. The quarter-over-quarter increase was primarily attributed to increase in license expense and the rental related expense. G and A expense were 215 million RMB increased by 34% year-over-year and 7% quarter-over-quarter. Both the year-over-year and the quarter-over-quarter increase was primarily due to increased depreciation and amortization expense of land-use rights related to our headquarter building project. And to a lesser extent, increased personnel-related expense and professional service fee. turning to our profitability. Operating profit was 255 million B, increased by 371% year-over-year, and 20% quarter-over-quarter. Operating margin was 9.2%, compared to 2.4% a year ago and 8% a quarter ago. Adjusting net profit was 214 million B, increased by 155% year-over-year and 16% quarter-over-quarter. Adjusted net margin was 7.7%, the highest in recent seven quarters, compared to 3.7% a year ago and 6.9% a quarter ago. Adjusted basic and diluted earnings per ADS were $0.72 RMB in this quarter, compared to $0.28 a year ago and $0.60 a quarter ago. Turning to our balance sheet, as of December end, the combined balance of our cash, cash equivalent, restricted cash, and other investments was 5.3%. 37 billion RMB compared to 6.14 billion RMB as of end of September. Turning to working capital, turnover of inventories and the trade receivable remain stable on both year-over-year and quarter-over-quarter base. Looking ahead into March quarter of 2022, we expect our total revenue to be between 2.4 billion RMB to 2.7 billion RMB, which represents an increase of 7.7% to 21.1% year-over-year. In current year 2022, we currently expect to open about 400 meaningful stores in China and about 350 stores in overseas markets. As we continue to operate in a time of significant uncertainty in regard to the timetable of pandemic recovery in our major markets, We remain cautious in our outlook in terms of sales and the store expansion and may update and adjust this operational plan based on the latest development of the pandemic. We are encouraged by our efficient working capital management and the strong recovery in both the top line and the bottom line in this quarter. Before we move to Q&A section, I would like to reiterate our financial strategy, which has led us to the above-mentioned results and the idea of a disciplined investment run through it. The same idea will also apply to the strategic update of Minnesota Brand. We have developed a thorough financial plan on this project, and we will have this plan quickly tested in a small scale before it is implemented nationwide. We will also closely monitoring the performance and gather feedback from the consumers throughout the process to ensure we remain committed to Minnesota brand promise of enabling everyone to enjoy life's little surprise with products that are more appealing, more useful, and more platform. That concludes our prepared remarks. Operator, we are now ready to take questions.
spk02: Thank you. We are now beginning the question and answer session. Your first question today comes from the line of Ms. Xiang Cheng from Goldman Sachs. The line is open. Please go ahead.
spk03: Mr. Ye, Mr. Zhang, and Mr. Ethan, hello. First of all, congratulations to the company for having a very good performance this quarter. I would like to ask two questions. The first is about the promotion of the brand. Mr. Ye just shared a lot of ideas about our brand promotion. You just mentioned that 70% of the products may have a more stable price, and 30% will have some more premium new products. Can you share more about which type of products are these new and more premium products? In addition, because we are actually a center of development for the lower-end market, how do we balance the first and second-tier cities and the lower-end market in the process of upgrading this brand? This is my first question. The second question is about overseas. You mentioned that you will open 350 stores this year. Can you tell us more about where you will open the stores? These few times, we have emphasized that the situation in the U.S. is very good. The U.S. will actually do it in the way of direct sales. How will this affect the profit? These are my two questions. I have two questions for management. One is for the brand upgrade. Chairman just mentioned that they are focusing on the brand upgrade. Specifically, 70% of the products will be still with stable price, but 30% of the products likely to have a more premium offering. So what exactly are these product lines? And also, since we are penetrating into low-tier cities, so how do we balance these penetration strategies versus the brand upgrade strategy? And second question is about overseas expansion. So we have 350 stores opening target this year. So which areas will be the focus? And specifically in the U.S., what kind of model are we focusing on? And also, what will be the impact on the margins? Thank you.
spk00: Yes. How to balance the problem of brand promotion and continuous cost-effectiveness? We see it this way. Brand promotion and continuous cost-effectiveness are not contradictory. We cannot simply understand the growth of a brand as a product price. For us, it is necessary to maintain the cost-effectiveness, especially in the offline channels. However, it is always emphasized that the cost-effectiveness will fall into the competitive competition, especially in the offline channels. This is not good for the long-term development of the enterprise. Therefore, we must engage in the competitive competition. What is the competitive competition? We think that providing good-looking, good luck, and fun products and these products represent a good way to live. And these unique products and products that are not on the market and other products that are not on the market, this is the difference between the two. The second problem is that the price of the lower market is affected by sales and the problem of pricing strategy. We think so. We will not raise prices all over the market. We will still insist on making products with high cost performance. At the same time, we will not raise prices in a large scale, but we will raise prices We will adjust the price of AP products in 2021, and the results are satisfactory. For example, the consumer's sensitivity to price is lower than that of our star products, and the recognition of AP or brand is higher. But I have shared many times that there is no significant difference between the price of the lower market and the key indicators such as the chain rate and the first and second line. This shows that the lower market consumers choose our products not only because the price is cheap, but also because they like the product itself. Okay. Hi, Michelle. This is Mr. Ye, CEO, and thank you for your question.
spk04: In terms of your questions on how to balance the brand upgrade and maintain all value points, here's my answer. I think brand upgrading is not incompatible with maintaining cost performance or maintaining all product affordability. Basically, the strategic upgrade of municipal brand, it shouldn't be simply integrated as product-wise, product price increase. For me, though, I think it is necessary to maintain our affordability to consumers, especially in offline channels. But simply emphasizing affordability and cost performance will go into homogeneous competition and especially in China's online channels, in e-commerce landscape, which is detrimental to our long-term development of Minnesota brand. So we must differentiate Minnesota brand from the competition. So what can differentiate Minnesota brand? I think we believe that our value lies in providing, as we mentioned, more appealing, more useful, and more playful products and offer consumers the wonderful lifestyle that our products represent. And in terms of your questions on the pricing strategy in low-tier cities, the answer is we will not raise price across all the boards. As we mentioned, currently we only expect about 70% of our products will remain stable in price. And for other new products, we will focus on interest-based consumption and we all have different pricing strategies. So what we want to stress here again that we will not, we will still adhere to our affordability of both products. So we will not significantly increase the price. But we will appropriately adjust pricing strategy for some products. For example, you know, we have adjusted the price of all IP products in 2021. And the preliminary results in the past several quarters is very satisfactory. And for our stock category, for example, such as Profuma, consumers of these products are less sensitive to price and have higher recognition of IP or either brands. And we have shared for a few times that Minnesota's goals in the low-tier cities market have, in terms of cross-selling rate in terms of ESP, they have no significant difference with tier 1 and tier 2 cities. So that means that consumers in the low-taste market, they choose MinSource products not simply because our products are cheap, but because they like the products themselves. So in the implementation process of the strategic upgrade, will conduct partial tests and quick tests for trial and error. And in this whole process, we will constantly adjust and optimize the pricing strategy. So we hope that after brand upgrade is completed. When consumers come to Minnesota stores, they will not feel that we are getting more expensive, but we are getting more, we offer more value than we used to. And in terms of second question about the overseas development, so based on
spk05: Hello, Michelle. I'm Steven. I'll answer the second question you asked. Yes, we have planned to add 350 stores overseas in the natural year from January to December 2022. 35% of them are from Asia. Although Asia has been severely affected by the pandemic in 2021, we have noticed that the recovery of the pandemic in the first quarter of 2021 is still quite promising. Asia is also our largest market, for example, India and other countries. In the past year, we have been continuing to develop. 30% is from Europe, the Middle East and North Africa. The increase in the number of stores in these two regions in the past two years is still very fast. And the recovery of the epidemic is also clearly better than the global average. 30% is from the United States, 20% from Latin America, and 10% from North America. North America will focus on its own 10 under. The remaining 5% is from other zero-sum markets. This is about 350 stores.
spk04: Thank you for the question, Michelle. This is Stephen Seifel. You know, based on the latest developments of current overseas pandemic recovery, we expect a net increase of 350 means of stores overseas in calendar year 2022. And about 35% of this will come from Asia, which, well, we have, you know, heavily affected by the pandemic in 2021. But we noted improved recovery in the December quarter. And Asia is also our biggest overseas market. So with countries like India, they have continued to open new stores in the past year. And about 30% of them are from Europe. the Middle East and North Africa. So the number of stores in these two regions have grown very fast in the past two years. And the recovery of the pandemic is also better than other areas. And another 30% from America, including 20% from Latin America and 10% from North America. And yes, we will open more direct open operator stores in the 10 and under new concept in North America, especially in the U.S. And the remaining 5% of this new addition plan will be from other markets.
spk05: Thank you. You just mentioned North America. I'm more concerned about North America. In fact, from the whole GMV scale, North America is said to have increased by more than 10% in 2019. If you want to look at it from the perspective of GMV, it is said that in 2019, it also increased by 10%. Among them, the U.S. has increased by 11%. If you look at the opening progress, in fact, in the past quarter, we have newly added 18 stores in the United States. As of the end of December, there are 53 stores in the United States. Our 10-on-1 store has been operating for almost three months, three full months. Its performance has actually reached our expectations. In addition to the impact of the holiday in December, the sales volume in December in the United States actually exceeded 60% of the original plan. And in terms of your questions on the US market, so in terms of GMV,
spk04: North American market was up more than 10% in December quarter sequentially. And on per store basis, every G sales per store, and it was up 10% from the same period in 2019. including, you know, the United States market up 11% from the same period in 2019. And in terms of the store opening, so in the December quarter, we added 18 stores in the U.S. market. And by end of December, we had about 53 stores open at the U.S., So the performance of the, you know, 10 and under stores in the past several months has exceeded our expectation. So, you know, combined the positive impacts of holiday spending in December, for example, the sales of this month in U.S. markets, it exceeded the, you know, our original plan by nearly 60%. But let's say we'll still wait and see. We need to look or observe longer period and refine the business model. And we are at the present stage. We are not in a hurry to make profits. This strategy is important to us.
spk03: Very clear. Thank you, Mr. Ye. Thank you, Stephen. Thank you.
spk02: Thank you. The next question is from the line of Lucy Yu from Bank of America, Mayor Lynch. The line is open. Please go ahead.
spk01: Mr. Ye, Mr. Zhang, Mr. Ethan, hello, I'm Lucy. I have two questions here. The first question is, can you help us update some of the domestic and overseas situations since this year, including the recent pandemic in China? Can you help us look at the situation in January and February? And then the second question is about the competition pattern. Considering that the epidemic has been going on for more than two years, there have been a lot of changes online and offline. So first question is on the year-to-date recovery rate for both domestic and overseas market. And could you please give us some guidance on 2022 revenue growth? Second question is on a competitive landscape. So the COVID has been going on for two years. Have we seen any changes in competitive landscape in both online and offline markets. Thank you.
spk05: Thank you, Lucy. Yeah. fluctuation. But we believe that the big trend is still recovering. At the same time, we also believe that our e-commerce business can still maintain a high double-digit growth. TopToy is also equivalent to the second year. It will also achieve a growth of more than 100%. The first time, we believe that in 2022, The accounting income should be a growth of more than double in January 2021. In contrast, due to the company's business model, it is still relatively clear. So based on this, I think the profit index in 2022 should also have a good improvement than in 2021.
spk04: This is Steven. Thank you for the first questions. Yes, we have given this store opening guidance in our prepared remarks. So to conclude, we will re-estimate to open 400 new stores in mainland China on net basis and 350 stores in the overseas market on net basis. And meanwhile, we also currently estimate that in the calendar year 2022, no matter it is in China on overseas markets, it will still continue to recover from the pandemic. Although there may be some fluctuations, but I think the big trend here is the recovery. The topic here is recovery. And at the same time, We also believe that our e-commerce business can maintain high double digits annual growth rate in next year. And TopToy, our toy business, it will be TopToy's second true year. And it will have a growth rate that's more than 100%. So based on all these assumptions, I think, In calendar 2022, our top line will have a double-digit growth compared to calendar 2021. But I want to stress here that we usually do not give the annual guidance a revenue. So this is basically an estimate based on the assumptions I mentioned. According to that, based on our business model, that is quite clear and quite forceful. So I think if we can deliver that kind of top-line growth, our bottom-line growth will be absolutely, will be a very good result in 2022.
spk05: As for the development of some of your recent businesses, from overseas, uh uh
spk04: In terms of your questions on the recent developments of our business, so in terms of overseas markets, basically it's stabilized with the recent quarters. But, you know, considering in December quarter we have, you know, holiday seasons and holiday spendings, And in the March quarter, we absolutely will see, you know, sequential decline in overseas markets. But compared to, you know, normalized years before pandemic, I think the current situation we saw in overseas markets is quite stable. And in terms in China market, and I think as all you may have realized, that in recent months in China the resurgences of local cases of pandemic has influenced the whole offline retail industry and many cities have reported increasing cases. And we have, you know, get food prepared for these, the pandemic resurgence in domestic operations. So that is why we gave this, the top line guidance for the March quarter. I would pretty much based on all these observations.
spk00: In terms of competition, after two years of the epidemic, there have been changes in business ideas and competition patterns. During the epidemic, we have done three things. First, we have adopted a more accurate business strategy. We have actively controlled the expansion of overseas markets. We have adopted many measures, not only to suppress investors, but to actively help them to digest and expand. The seventh is to actively expand the supply chain. We have clarified the direction of development of the supply chain. The current business is currently at a steady level of 11% in the public sector. It is temporarily falling to the low-end cities affected by the epidemic. To bring stable returns to the domestic market. Second, we do these three things to help us. First, we continue to ensure that there are healthy stores every year in China. Second, we ensure that the domestic market has a good investment return in the past two years. Our number of business owners continues to increase. Every business owner's average number remains stable. Secondly, we see a rebound due to the epidemic overseas. In some countries, some competitors have adopted a withdrawal strategy and their business has been seriously affected. After the epidemic, we will definitely occupy a larger market share in these markets.
spk04: And Lucy, this is Mr. Ye. I will answer your second questions about the competition. So during the pandemic, I think we did three things right. The first is that we adopted a more robust business strategy and controlled the expansion rate of overseas. And we did not pressure our overseas distributors. But instead, we took various measures to actively help distributors to clear their inventory. And secondly, we also have actively expanded our online channels. And we have made it clarify that the omnichannel strategy will be one of our key driver in the future. And online now accounts for about more than 10% of companies' revenue for several quarters. And the third thing that we can treat, we can begin to penetrate into low-tier cities in China and to, you know, where the pandemic impacts. is less severe compared to tier 1 and tier 2 cities. And we continue to bring stable returns to our retail partners. So getting these three things done right help us in China. We continue to make sure a relatively healthy stock growth rate every year. And at the same time, we make sure that our retail partners have a good return on their investments. Over the past two years, our retail partners, the total numbers of our retail partners have continued to increase, and the average number per... store, average numbers of store per rental partners has remained stable as we mentioned in previous quarters. So in terms of overseas, we have seen that some competitors in some overseas markets have accessed the markets. We have quit our business, quit the competition because the pandemic has seriously affected their business and operations there. So I think after the pandemic, we will undoubtedly gain a larger market share in these markets. Thank you.
spk02: There are no more questions. Thank you once again for joining us today. If you have any further questions, please contact Minnesota Investor Relations team. Our contact information can be found on today's press release. We will see you next quarter. Have a nice day.
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