Ladies and gentlemen, thank you for standing by, and welcome to MINISO Group Holding Limited Earnings Conference Call for the Second Quarter of Fiscal Year 2021 that ended on December 31, 2020. [Operator Instructions] Please note this event is being recorded. Now I'd like to hand the conference over to your host speaker today, Mr. Eason Zhang, Director of Investor Relations. Please go ahead, Eason.

Thank you, Rob. Hello, everyone, and thank you all for joining us on this call. The company has announced its corporate financial results for this day. A press release is now available on the Investor Relations website at ir.miniso.com. Today, you will hear from our Chairman and CEO, Mr. Guofu Ye, who will start to cover with an overview of our business and growth strategy. He will be followed by our CFO, Mr. Steven Zhang, who will address our financial results in more detail before we take your questions. Before continuing, I'd like to refer you to the safe harbor statement in our earnings press release, which also applies to this quite well as we will be making forward-looking statements. Please also note that we will discuss non-IFRS matters today, which we have to spend and reconcile to the most comparable measures reported under the International Financial Reporting Standard in the company's earnings release in accordance with the SEC. With that, I will now turn the call over to Mr. Steven Zhang to speak on behalf of Mr. Ye. Please go ahead, sir.

Thank you, Eason. Hello, everyone, and thank you for joining us today. In today's call, I will give you an update on MINISO in December quarter and then share with you our new active strategy. For MINISO, we are pleased to see our domestic operation record an encouraging performance, while our overseas operations move further along the path of recovery. During this quarter, we add 184 new stores to our global store network. While the pandemic create offline retailer globally in calendar year 2020, we add 303 new stores during the year, demonstrating our partners' confidence in our resilient building model and a faster-than-average recovery speed. As for our domestic operations, we delivered a net addition of 135 new stores in China in this quarter, accounting for around 60% of the total net addition in calendar year 2020. Besides, we continue to unlock opportunities across China's low-tier cities at about around 60% of new stores opened in this quarter are located in this market. As for overseas operation, we entered 2 new countries and opened 49 new stores in this quarter, accounting for 63% of net addition in calendar year 2020. Despite 153 overseas stores were temporarily closed by year-end and the many other overseas stores being forced to reduce their business hours due to the impact of COVID-19, revenue generated from overseas operations increased by 32% sequentially. In terms of sales recovery, in China, while occassionally case of COVID-19 happened from time to time in this quarter, we reached an overall recovery rate at about 95%. Some stores in low-tier cities cover to 100% or even pick up growth. In overseas markets, the average recovery rate 1 reached to around 60%. Yet with the pandemic fluctuation several times and the holiday social gathering increased the difficulty of recovery in…

[Operator Instructions] Today's first question comes from Michelle Cheng with Goldman Sachs.

First, should I ask questions in English or in Mandarin? Yes. Sure.

Okay.

Yes. Sure. I have 3 questions here. So first, you mentioned about these new retail X strategy. And can you elaborate a little more regarding like what categories or what target customer or geography you are going to explore in the first stage in addition to Toptoy? And my second question is regarding the overseas expansion. So it's not that you tend to be a little bit cautious on the short term trend. So can you give us some highlights about the guidance for this year again? And which area did you see the -- do you see the biggest risk for the overseas expansions as of now? And my third question is about Toptoy. So since we just mentioned that we have 9 stores in 5 cities. So do we have any more concrete plan for the expansion for this year? And how should we think about the average sales per store for this year?

Michelle, would you please translate yourself before we answer questions? Please repeat them.

Yes. Sure. [Foreign Language]

[Foreign Language]

[Foreign Language]

[Interpreted] Okay. Michelle, thank you for your question. For your first question is on the strategy about our X strategy. First, as Mr. Ye showed for Toptoy's, our first initiative impact strategy, and there will be more initiatives to follow. But at this moment, Toptoy is definitely the most important one, and we will focus our resource to develop it into our second curve, I think. And then as Mr. Steven Zhang showed, during the past 7 to 8 years, MINISO has leveraged its core strength, core competitive strengths to develop into a global network within our retailers. As we mentioned in our prepared remarks, we have a competitive strength in our supply chain management and retail know-how and obviously in digital capabilities and our asset-light business model. All these cost streams that we can leverage to build our future success for our X strategy initiative. Although it's still early is that we can now also share things about Toptoy now. During the last several months, we have not found something [indiscernible] such as we have extend our [indiscernible] offering from 7 to 8. We have included the structure category because we think it's very important, and we think it's better potential. In terms of our pricing strategy for Toptoy, it will be much higher than MINISO. Absolutely. Not even the average ticket sales, but also the average size for our product. It is about 2 to 5 times of that of MINISO or even higher to 10 times. In terms of target customers, absolutely we reach our generation because they have -- these guys have so much strong abilities and willingness to consumers in this part of our market. In terms of geography, firstly in Toptoy, we are absolutely focused on Tier 1 consumers and we -- there's no [indiscernible] at the moment at least in 1 year. We are not going to go into countries into lower tier cities. But however things Toptoy has adopted being omnichannel basis from day one. So our brands and our type of customers in the local cities can still enjoy the fun experience of Toptoy through our other channels such as online channels.

[Foreign Language]

[Interpreted] Okay. In terms of your second questions on our growth expansion strategy. The pandemic has been going full speed in the past several months. And I think that China has been the evolving reception globally. And especially in the past holiday seasons, in December, I think social gathering seems to have to make the recoveries of our overseas market as indicated as unstable and fragile. And from the perspective of our -- their home or stores to and the cost power for the opening stores are having increases. In conclusion, we think that the pandemic -- it is always hard to tell when the pandemic is completely over. And during the past few months, we have connected with our 80 partners covered and read more with that as of this moment in the coming quarters. It should still be reduced our operational risk and inventory destocking. Okay? Okay. And at the same time, we can still say that we are confident in our global expansion future, because even in the calendar year 2020, the pandemic has hit our retailers, but we have still at about 90 stores in this year. So we -- at this moment, we constantly expect that we will add 200 new stores in our overseas market in [indiscernible] since '21. That is about half of our -- in every area as the countries we have business. To give you some colors on that, for example, 70 in Europe, I think in [indiscernible]; about 50 in Americas, including [ Panama ] America and South America; and Chinese-speaking countries and 10 in new countries.

[Foreign Language]

[Interpreted] For your third questions about the expansion plan of Toptoy, as we shared earlier, in our opening remarks. Yes, this business is still at a very early stage. At this moment, we do not have nothing to share, and we will definitely share more when we have a new investment plan. Thank you.

And today's next question comes from Lucy Yu with Bank of America.

[Foreign Language] So the question is, first on the GMV recovery. So in January, both China and overseas have been partially impacted by COVID-19, as you just explained. So how has the things been developing in February so far? And the second question is on the store opening. So for China part, store expansion has been ahead of the expectation, especially in the second half of last year. So for 2021 calendar year, we guided for over 500 new stores. So in January and February, how many stores have been opened so far? And will we revise up our full year guidance.

[Foreign Language]

[Interpreted] Okay. Thank you for your questions, Lucy. if you cannot hear me clearly, you can [indiscernible] any time, okay? For the business recovery, I think the -- in this quarter, as we have seen -- we have observed a worse recovery than the December quarter. As we shared before, in the December quarter, the recovery rate was once within range of 16% to 17%. That's at entering 2020. The calendar year 2021 we -- as we mentioned earlier, due to the recovery rate in COVID season, the recovery was down at least 10% to 50% -- to 60%. And we expect this to continue for [indiscernible].

[Foreign Language]

[Interpreted] For your second questions about the store expansion plan. And generally, we have maintained our previous guidance to open 500 new stores in China this year. As we open them and share in the pre-COVID market -- as we come into [indiscernible] and we have seen the [indiscernible] given the strong customers and partners is strong. Thank you.

Our next question today comes from Jian Song with CICC.

[Foreign Language] This is Jian Song from CICC. My first question is about Toptoy. I hope to know that how much extra selling or marketing expense Toptoy is doing in the whole year? And the next question is some news mentioned about you have to open Toptoy and some self-service store. Could you give me some color on these 2 new initiatives?

[Foreign Language]

[Interpreted] Okay. Well, thank you very much for your questions. For your first question, the Toptoy's expense margin. Our target for Toptoy is to capture the generation Z's mind share and their [ fast talk ] So in the first year, we think that it's natural to spend some marketing dollars. We currently expect to spend no less than RMB 15 million in market dollars in category for Toptoy to hopefully include budgeting in at marketing expense and our balance operation and participation in execution and so on. But this is not -- this budget will be adjusted dynamically based on the development of Toptoy. And for your second questions about the unmanned stores, let me make it clear that MINISO has no such plans. And for Toptoy, as we mentioned, for stage 1, we adopt this omnichannel strategy. And for Toptoy, we'll need a vending machine and [indiscernible] Thank you very much.

I'm showing no questions at this time. So I'd like to turn the conference back over to the management team for any final remarks.

Okay. Thank you very much for joining us today. We'll see you next quarter. Bye.

Thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]