Why Miniso Stock Is Falling: Key Reasons

Key Takeaways:

• Miniso Group (NYSE: MNSO; HKEX: 9896) reported a net loss of RMB291.5 million for the June 2026 quarter, its first quarterly loss in years, on August 28, 2026.
• Revenue kept growing while profit fell: Q2 2026 revenue rose 17.0% year over year to RMB5,810.5 million, yet the company swung from a RMB489.5 million profit to a RMB291.5 million loss.
• Three items drove the swing: an unrealized mark-to-market loss of RMB597.2 million on an AI-linked investment, a net FX loss of RMB59.9 million, and selling and distribution expenses rising to 27.0% of revenue, up 3.8 percentage points year over year.
• Miniso guided to a 3-4 percentage point margin decline and overseas store closures for the second half of 2026, and Nomura and Citigroup both downgraded the stock to Neutral.
• Chief Executive Guofu Ye cited “a challenging consumer environment in the domestic market during 26H1” in the results release.

On August 28, 2026, Miniso Group Holdings reported its first quarterly loss in years: a net loss of RMB291.5 million, compared with a RMB489.5 million profit a year earlier. Chief Executive Guofu Ye attributed the result to “a challenging consumer environment in the domestic market during 26H1,” and shares dropped as much as 13% to HK$18.58 before closing down roughly 11%, according to MarketScreener’s report on the session.

On September 1, 2026, the shares closed at $9.30, according to Simply Wall St data carried by Yahoo Finance, down 52.28% year to date, down 31.01% over the prior 90 days, and down 61.26% on a one-year total shareholder return basis. The company had just retired 34,773,004 shares, or 11.37% of its share count, under a buyback first announced on August 30, 2024. The price declined despite the buyback.

Miniso still sells plush toys and blind boxes at a growing rate. Revenue increased in every segment. The change came in the profit those sales generate, and the market adjusted the stock price accordingly.

The Drawdown: 52% Year to Date

The decline developed steadily throughout 2026 rather than occurring in a single session. On August 4, 2026, the stock was down 34.1% for the year and traded at roughly 12.8 times earnings, compared with a multiline retail industry average near 19.9 times and a broader peer group near 28.1 times, according to Simply Wall St’s August 4 valuation note. By the September 1 close of $9.30, the year-to-date decline had grown to 52.28%.

Miniso’s negative 61.26% one-year total shareholder return means the stock moved in the opposite direction by a wide margin, while the broad market rose.

The Q2 2026 Loss That Broke the Story

The June 2026 quarter, reported August 28, 2026, is where the numbers changed. These figures come from the company’s 2026 June quarter and interim results release.

Three items caused the swing, and only one is operational. First, an unrealized mark-to-market loss of RMB597.2 million on an investment in a limited partnership holding an early-stage pre-IPO stake in an AI company. Second, a net foreign exchange loss of RMB59.9 million, reversing a RMB35.0 million FX gain a year earlier. Third, selling and distribution expenses rose 35.7% to RMB1,574.1 million, raising that expense line to 27.0% of revenue, up 3.8 percentage points year over year.

The operating picture was weak even before those items. Q2 operating profit fell to RMB118.5 million from RMB836.2 million, and operating margin dropped to 2.0% from 16.8%. Adjusted net profit, which excludes the AI mark-to-market swing and other non-IFRS items, still fell to RMB528.6 million from RMB692.3 million. Excluding FX, adjusted net profit was RMB588.4 million, down from RMB657.3 million.

Quarterly Data: Revenue, Margin, and Profit Trend

The table below uses figures from Miniso’s own unaudited results releases. Revenue continues to grow, but operating and net margins are shrinking. Q1 2026 figures are from the March quarter 2026 release; Q2 and 26H1 figures are from the June quarter release.

The Q1 2026 net profit of roughly RMB1.25 billion was boosted by an RMB874.6 million unrealized gain on the same AI-linked investment that produced the Q2 loss. Adjusted net profit excluding FX in Q1 grew a more modest 8.1% to RMB633.1 million, as we detailed in our June 2026 Miniso analysis. The AI position is a swing factor that makes headline profit unreliable in both directions.

The 26H1 numbers show the same tension. Group revenue for the first half rose 22.4% to RMB11,498.9 million, and gross margin held steady at 44.3%. But operating margin fell to 14.3% from 16.5%, adjusted net margin dropped to 9.4% from 13.6%, and adjusted net profit declined to RMB1,079.1 million from RMB1,279.5 million. Operating profit grew just 6.1% while revenue grew 22.4%.

Yonghui Superstores: The Stake That Reshaped the Balance Sheet

Miniso’s investment in Yonghui Superstores Co., Ltd. appears in multiple financial lines. In 26H1, net finance costs rose to RMB212.0 million from RMB128.4 million a year earlier, partly due to interest expense on borrowing related to the Yonghui acquisition, alongside higher lease-liability interest and interest on equity-linked securities issued in 2025.

The equity-accounted portion turned positive in 26H1: Miniso recorded a share of profit in Yonghui of RMB60.3 million, compared with a share of loss in the prior-year period, reflecting Yonghui’s return to profitability as disclosed in Yonghui’s 2026 interim report. That income is excluded from Miniso’s non-IFRS measures because it is not part of Miniso’s own operations.

The Q2 picture was less favorable. Miniso recorded a share of loss of equity-accounted investees of RMB20.4 million in the quarter, and the negative effective tax rate of 130.8% was driven by consolidated pre-tax loss, which the company said was mainly impacted by the share of loss in Yonghui and the AI mark-to-market loss. A Seeking Alpha downgrade to Hold cited the Yonghui investment as a capital-allocation concern. The optimistic view is that Yonghui’s turnaround eventually produces a lasting earnings contribution. The cautious view is that Miniso borrowed to buy a stake in a low-margin grocery business while its own core retail margins were shrinking.

China Same-Store Sales and Weak Domestic Consumption

China was the strongest area in the first half, which makes the overall decline more about cost structure than demand. MINISO Chinese mainland revenue grew 26.2% year over year in 26H1, the fastest first-half growth rate in three years, driven by mid-single-digit same-store sales growth, according to the June quarter release. Chinese mainland store count reached 4,665 as of June 30, 2026, up 360 year over year.

Founder and CEO Guofu Ye described “a challenging consumer environment in the domestic market during 26H1” even while reporting that growth. The membership base grew 31.0% year over year to about 130 million members in Chinese mainland, contributing 77.4% of local sales. The domestic business is intact. The margin on that growth is thinner because the company is spending more on promotion, advertising, and licensing to drive it.

In the June quarter specifically, Chinese mainland revenue growth slowed to 22.9% from the 26.2% first-half pace, and the company’s own second-half guidance pointed to mid-to-upper single-digit China revenue growth, a sharp slowdown from the first half. That slowdown, not a collapse in demand, is what the market is pricing.

Overseas Expansion, Store Closures, and Tariff Exposure

Overseas is where the growth engine is slowing. MINISO overseas markets revenue grew 14.9% year over year in 26H1, but with a low-single-digit decline in same-store GMV. In the June quarter, overseas revenue growth slowed further to 9.1%. North America delivered 37.0% revenue growth with mid-single-digit same-store sales growth in 26H1, but that is one region, and the company guided to low-single-digit overseas revenue growth for the second half.

The cost side is the problem. Overseas directly operated stores rose to 795 as of June 30, 2026, from 579 a year earlier, a net increase of 216. Running stores directly, rather than through franchise or distributor partners, raises depreciation, rent, and payroll. The release attributes a 1.0 percentage point rise in selling and distribution expenses as a share of revenue to depreciation and amortization and rental expenses for directly operated stores, and roughly 0.4 percentage points to payroll, mostly from overseas operations.

Tariffs affected the reported numbers in both directions. Gross margin in 26H1 included a benefit of about 0.6 percentage points from tariff refunds, and the June quarter included about 1.2 percentage points. The company estimated about US$4.1 million of additional tariff-refund benefit in coming quarters. That is a refund, not a structural margin improvement, and it improved a gross margin that would otherwise have looked weaker.

Management also guided to overseas store closures in the second half, alongside the 3-4 percentage point margin decline, according to coverage of the guidance. Closing stores indicates that some locations are not meeting return thresholds, which weakens the “expansion is an investment” argument. The company still expects mid-double-digit full-year revenue growth, but at a lower margin.

Share Count: Buybacks Against a Falling Price

Miniso has been buying back stock aggressively, but it has not stopped the decline. The company spent RMB517.6 million on share repurchases in 26H1, more than 90% of the full-year 2025 repurchase amount. In June 2026, the board approved a new repurchase program of up to HK$2.0 billion, with an automatic repurchase plan to allow execution during blackout periods. Total shareholder returns, dividends plus buybacks, reached RMB1.31 billion in 26H1, or 121% of adjusted net profit.

The completed program retired 34,773,004 shares, or 11.37% of the share count, according to the September 1 Simply Wall St note. Between April 1 and June 30, 2026, the company spent HK$343.33 million to repurchase 13,245,400 shares, equal to 4.36% of outstanding stock.

The buyback supports per-share metrics when profit is stable. It does not help when the earnings base is falling. Diluted earnings per ADS still grew 8.2% year over year in 26H1 to RMB3.16, partly because of the shrinking share count. But adjusted basic and diluted earnings per ADS fell to RMB3.56 from RMB4.16 a year earlier, and the June quarter produced a basic and diluted loss per ADS of RMB0.96, compared with earnings of RMB1.60 a year earlier.

Analyst Downgrades and the Valuation Re-Rating

The sell-side has changed its view. Nomura downgraded Miniso to Neutral from Buy and cut its price target to $11.70 from $18.90. Citigroup downgraded to Neutral from Buy and cut its target to $11.30 from $18.10. Jefferies kept a Buy rating but cut its target to HK$35.30 from HK$44, according to MarketScreener’s downgrade summary. Those targets are above the $9.30 close, but the trend is clear: analysts are lowering their estimates.

The question is whether 12.8 times earnings is cheap or a trap. The August 4 valuation note pointed out that the stock passed six of six valuation checks, with a tailored fair P/E estimated near 19.7 times. But a low multiple on depressed, FX-distorted earnings is not the same as a low multiple on normalized earnings. If the second-half margin guidance of a 3-4 percentage point decline is accurate, the forward earnings base is lower than the trailing one, and the multiple is less attractive than it appears.

What Could Reverse the Decline, and the Risks to That View

The clearest single catalyst is margin stabilization: if the selling and distribution expense ratio stops rising, adjusted net margin can recover from the 9.1% recorded in Q2 2026. The company’s own guidance implies the opposite for the second half, which explains why the stock kept falling after the report.

The second catalyst is overseas unit economics. Overseas directly operated stores grew by 216 year over year to 795. If those stores mature into positive contributors, the depreciation and rent costs currently compressing margins could reverse. The risk is that the guided overseas store closures show the format does not work in every market, and that the company is realizing this after committing the capital.

The third catalyst is the AI and Yonghui investments. The AI limited-partnership position swung from an RMB874.6 million gain in Q1 to a RMB597.2 million loss in Q2. If the underlying AI holding eventually lists or appreciates, that mark could swing positive again. Yonghui returned to profitability in 26H1, producing a RMB60.3 million share of profit for Miniso. Neither is a consistent earnings driver, and both add volatility that makes the headline numbers hard to rely on.

The fourth catalyst is capital return. The HK$2.0 billion repurchase program and the RMB1.31 billion returned in 26H1 give the stock some mechanical support. But the completed 2024 program retired 11.37% of the share count while the stock fell 52% year to date, showing that buybacks alone do not set a floor when the earnings trend is worsening.

The main risks to a reversal are clear. Chinese consumption remains soft, and the company’s own guidance assumes China growth slows to mid-to-upper single digits. Overseas same-store GMV declined in the low single digits in 26H1, and the guided store closures suggest the expansion math is not working everywhere. The AI mark-to-market position can move either way and is outside management’s control. And the Yonghui stake ties up capital and adds interest expense to a business already spending heavily on directly operated stores and IP development.

For readers following this story, the key numbers to watch in the next report are the selling and distribution expense ratio, overseas same-store sales growth, and whether the guided margin decline lands at the low or high end of the 3-4 percentage point range. Revenue growth alone has not supported the stock, and the market is now pricing profit quality, not top-line momentum.

Note: this is an analysis of reported results and market data, not investment advice. It contains no price target and no recommendation to buy or sell any security.

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Sources and References

Sources cited while researching and writing this article:

• MINISO Group Holding (MNSO) Completed Its Buyback, Is The Stock 64% Undervalued?
• MINISO (MNSO) Stock May Sit Below Fair Value As Shares Fell 34%
• MINISO Group Holding Limited: MINISO Group Announces 2026 June Quarter and Interim Unaudited Financial Results
• MINISO Group Announces March Quarter 2026 Unaudited Financial Results