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Tencent-backed variety retailer Miniso files for US IPO

Written by Wency Chen Published on 

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The rapid rise of Miniso’s brick-and-mortar store concept goes against the current e-commerce trend, and it also draws backlash from Muji and Uniqlo accusing it of counterfeiting.

Chinese discount store operator Miniso, which is backed by Tencent, on Thursday filed a prospectus to the US Securities and Exchange Commission (SEC) to raise USD 100 million in an IPO and list under the ticker MNSO, at a time when physical retail stores just started to recover from the pandemic.

Miniso, founded in 2013 by retail industry veteran Ye Guofu, says it now operates 4,200 stores in more than 80 countries and regions worldwide, of which more than 2,500 are in China, according to the filing. It directly operates 129 stores, while the remaining are managed by franchisees.

Last year, Miniso’s gross merchandise volume (GMV) reached RMB 19.0 billion (USD 2.7 billion). Revenue added up to RMB 9.0 billion (USD 1.3 billion) in the fiscal year ending June 30, decreasing 4.4% year-on-year (YoY), while gross profit increased 8.8% to RMB 2.7 billion (USD 386.8 million).

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The rapid rise of Miniso’s brick-and-mortar store concept went against the current e-commerce trend, and it also drew backlash from Muji and Uniqlo accusing it of counterfeiting. The stores are located in commercial districts, offering affordable products that include home decor, small electronics, textiles, cosmetics, snacks, perfumes, and gifts. The company says in its prospectus that it launches an average of over 600 stock keeping units (SKUs) on a monthly basis.

The brand initially labeled itself as Japan-inspired and China-made. Its red-and-white logo features a shopping bag, looking uncannily similar to Japanese casual wear brand Uniqlo, and it claims that co-founder Miyake Junya is a famed Japanese designer. Miniso faced claims of cultural appropriation and being a copycat.

However, the low price strategy and frequent co-branding collaborations with trendy intellectual property licensors let consumers flock to its storefronts.

Tencent and Hillhouse step in

In September 2018, Miniso for the first time raised money from outside investors. Tech giant Tencent and private equity firm Hillhouse Capital poured RMB 1 billion (USD 144 million) into the chain, in a bid to enlarge online goods offerings. The two firms each hold a 5.38% share in the company.

Now, physical retail stores feel the pinch of the coronavirus pandemic. The US unit of Muji filed for bankruptcy protection on July 10 as shops were forced to shut down while still paying the sky-high rents for its prime retail locations. Muji joined a string of retail giants such as J.Crew, JCPenney, and Brooks Brothers.

Although the impact of the pandemic is still uncertain, the global variety retail market is growing steadily, Miniso says, citing a Frost & Sullivan report. The aggregate GMV increased from USD 32.9 billion in 2015 to USD 52.0 billion in 2019, and is estimated to continue to expand at a compound annual growth rate (CAGR) of 11.6% from 2020 to 2024.

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