Saiyin Zhang
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 some countries. We saw an unstable and fragile recovery trend for the overseas market as a whole.
Product-wise, we stick to our 7-1-1 philosophy as a core of our product strategy, provide a customer with operation and amazing trader hunting experience. In addition, we continue to seek cooperation with new IT partners. For example, by cooperating with Bilibili, we launched a series of new products and activities that were warmly received by our customers. This cooperation has laid on the foundation of a highly realized user base between MINISO and Bilibili.
Besides our sponsorship of -- to one of Bilibili's gala for Chinese Lunar New Year enhanced our communication with young customers and refreshed MINISO's brand image. IT initiative is an important component of our product strategy. And we will remain committed to launch more IT products in the future.
As a young public company, MINISO announced our X strategy in December, further illustrating our vision of becoming a global leading new retail platform. Today, I would like to take this opportunity to talk about our strategy into COVID. One, why active strategy; and the second, how do we achieve our vision.
So why active strategy? We celebrated the 7th anniversary of MINISO brand in 2020. Our team has accumulated a core strength in supply chain management, retail know-how, asset aligned business model and digitalization. As we realize a huge potential in many sectors in new retail, we believe it is right to expand this core strength into this new sector.
Let me share with you in detail and discuss why they are very [ political ]. Locally, efficient supply chain is our core comparative advantage. We operate with more than 600 highly qualified supplier partners who are able to meet our sophisticated demand. By connecting their unmatched manufacturing ability with our unique customer insight and massive data, we pioneered the C2M in industrial long before e-commerce player. As a part of our effort to optimize the supply chain, we build a mutually beneficial relationship with them by procuring product in larger volume, being punctual with our payment to them and guided them towards better product efficiency and enhanced cost control, thus creating a virtuous cycle in which our supply partner can focus their attention and energy thoroughly on continuous improvement of product quality. And we can enjoy benefits of improved quality in a cost-effective way.
In addition, our efficient supply chain system, together with our ability to offer frequently refreshed products, help us balance faster product innovation with a healthy inventory level and make us more competitive among products. We can further leverage this efficient supply chain into our new initiatives.
Secondly, we have accumulated in-depth retail know-how from our operational experience and a deep consumer insight. We played strong emphasis and optimize every key aspect of store operation using such know-how to create a trader hunting shopping experience. The standardized layout, decoration, lighting, volume supplies products and friendly staff in our store contribute a welcome environment for our store visitors.
And they will also find the store easy to navigate due to our optimized product arrangement and display. We have done this so well that most of the people that visit our stores are going to be impressed by the difference between us and [ per ] and we believe the same way applies to our newly opened to Toptoy store.
Thirdly, our asset-light business model enables us to form a win-win partnership with our retail partners because it aligns their interest on both sides and create a mutual benefit. By leveraging our asset-light model, MINISO has quickly expanded the store network in a prime location with a consistent brand image and the consumer experience. Having the support from our strong partner network makes it easy for us to enter the other sector of retail industry.
Our fourth key strength lies in digitalization. Retail industrial is a closer look of merchandise flow, information flow and the cash flow. The key to success lies in whether or not these 3 flows can be well controlled. And that highlights the importance of the strong IT system.
For example, our supplier partner are able to access our FCM system to monitor real-time sales figures, so that they can make a quick and effective decision in procurement and production. Our smart store system enable us to track consumer profile, in-store behavioral patterns and product sales trends and using algorithms to customize store level inventory mix. In line with this IT advantage, our system also enable us to pay our retail partner with daily revenue sharing in China, which is extremely attractive for partners, as with other core strength, our digital capability can also be leveraged into our new initiatives.
To conclude, our core strength creates a patent flywheel effect. Using this flywheel, the momentum of our satisfied customers drives more referral and repurchase. The momentum of our supply success drives our sustainability as the momentum of our satisfied retail partners enable us to expand our store network on the global front. That is why we have been successful in MINISO in the past. More importantly, these are all very replicable by ourselves into other sectors but hard for others to copy.
Let me share with you some of our first move of X strategy. Firstly, we plan to strengthen our core MINISO business by expanding store network not only in China but also in overseas market. For China, we had made a net addition of 500 stores in calendar year 2021. In particular, we see strong demand in low-tier cities and high returns for our partner compared to more material markets in high-tier cities. We are excited about the huge potential and believe we are pursuing the right strategy over there. For overseas market, we believe there is incredible long-term value there.
Before the outbreak of COVID-19, MINISO has accumulated abandoned localized experience from team building, product verification, client to market research by entering over 80 countries in the area. With that as a solid foundation, it will be easy to replicate the hundreds of new stores and achieved rapid growth in this market.
However, we also recognize that such operations may experience a challenge caused by COVID-19 in the near term. We and the overseas partners had agreed that our major task should be destocking and reduced operational risk in the next few quarters. At this -- at the same time, we will closely monitor the development of the pandemic and adjust our store expansion plan or coordinate dynamically.
Secondly, we plan to invest in our new growth initiatives, which will help us to accelerate our progress along the path to become a global leading new retail platform. Take Toptoy as an example. We observed a structural imbalance between the supply and the demand side of the app toy market, and that means a great opportunity.
Our first step to meet the direct demand of younger people is to leverage our strong supply chain to provide 8 categories of products. In the near future, we plan to launch more co-branded product by sharing MINISO's IP library. We will also have Toptoy's own IP product development and operation. It may take some time, but it's worthwhile.
All in all, we will leverage MINISO's core strength to increase our offering as much as possible while reducing our dependence on any single category. To date, we have opened 9 Toptoy stores in 5 different cities in China. Although still early, we have seen encouraging preliminary results and have received positive feedback from our stakeholders.
Secondly, we also -- we are also focused on omnichannel strategy. In this quarter, online tax account about 7% of MINISO's revenue, and there is plenty room to grow in the next few years. And we plan to follow a more sustainable rate of development in our online initiative rather than burning money to juice up our GMV, which is a common practice for e-commerce player.
Our target is to provide customers with a more convenient, accessible and personalized shopping experience with our omnichannel strategy, especially for all those customers who are used to shopping online. Based on this idea, Toptoy launched its official online store and the vending machine network at the very beginning, which made a good supplement to offline stores.
To conclude, we are able to achieve -- we were able to achieve past success because our core competitive strategy. This core strength has laid a solid foundation for our access strategy, which has put a higher demand on our operational ability and agility. And we will continue to build a highly competitive team by creating opportunities for employees to grow and develop internally and attracting more talent to join us. Thank you. This concludes the remarks for Mr. Ye.
And as the CFO of MINISO, I will now provide a financial review for the quarter.
I will start my remarks with a review of the December quarter results and then provide some additional color regarding the March quarter. Please note that for operating expense, I will be referring to our non-IFRS measures, which have excluded share-based compensation expense.
Revenue was RMB 2.3 billion for the December quarter, around the midpoint of our guidance and represents a decline of 18% year-over-year. In comparison, our revenue showed a significant sign of improvement from the previous quarter, due to which revenue declined by 31% year-over-year. This same trade was also reflect in our revenue from overseas market, in which revenue showed a decline of 51% over -- year-over-year as compared to a decline of 71% year-over-year in the previous quarter. Revenue from domestic market was flat year-over-year.
Sequentially, our revenue increased by 11%, with overseas revenue increased by 32% and the domestic revenue, 7%. The sequential increase of revenue is also due to 4% growth in store count and a 7% growth in revenue per MINISO store in this quarter. Our ability to achieve sequential revenue growth further demonstrated the effectiveness of our expansion strategy in low-tier cities and business recovery of both domestic and overseas operations.
Gross profit was RMB 643 million, representing a decrease of 28% year-on-year and an increase of 23% quarter-over-quarter. In addition, gross margin was 28% in the December quarter compared to 31.6% a year ago and a 25.2% a quarter ago. Such a fluctuation in our gross margin was primarily due to the fluctuation in revenue contribution from international operations, which typically has a higher gross margin than that of our domestic operation. During this quarter, revenue from our operation -- overseas operations account for 20% of our total revenue as compared to 34% a year ago and 15% a quarter ago.
Selling and distribution expense was RMB 306 million compared to RMB 317 million a year ago and RMB 230 million a quarter ago. The quarter-over-quarter increase was primarily attributed to increased logistics expense, which was in line with the recovery of the company sales during the December quarter as well as the increase in marketing expense as we continue to strengthen brand recognition for MINISO and Toptoy.
G&A expense was RMB 160 million, generally flat year-over-year and quarter-over-quarter. Other net loss was RMB 55 million compared to other net income of RMB 24 million a year ago and other net loss of RMB 60 million a quarter ago. Other net loss was mainly comprised of RMB 67 million in net foreign exchange loss, which was in line with the appreciation of RMB against the U.S. dollar in December quarter.
Now turning to our profitability. Operating profit was RMB 54 million compared to RMB 330 million a year ago and an operating loss of RMB 2 million a quarter ago. The year-over-year decrease in operating profit was due to a revenue decline in overseas operating caused by the negative compact -- impact of COVID-19 in the period, despite our fixed cost and expenses remaining stable. Nevertheless, we are pleased to see an excellent improvement in our operating profit off our sequential base.
Adjusted net profit was RMB 84 million compared to RMB 390 million a year ago and RMB 102 million a quarter ago. As mentioned earlier, our adjusted net profit in December quarter include a net operating exchange loss of RMB 67 million. Excluding this onetime expense of foreign exchange loss, adjusted net profit was around RMB 150 million in December quarter, an increase by 25% quarter-over-quarter. And we expect our margin level will normalize over the coming quarters as the pandemic abates.
Basic and diluted earnings from continued operations per ADS was RMB 0.08 compared to a loss of RMB 0.8 a year ago and a loss of RMB 7 a quarter ago. Adjusted basic and diluted earnings per ADS was RMB 0.28 compared to RMB 1.52 a year ago and RMB 0.4 a quarter ago.
Turning to our balance sheet. As of December 31, 2020, combined balance of company in cash, cash equivalents and restricted cash was RMB 6.8 billion compared to RMB 3 billion as of September 2020. This increase was primarily due to the proceeds we received from our IPO and the cash flow generated from the operation.
Turnover of inventories and trade receivables remained flat sequentially, considering the sequential recovery of revenue and the store expansion. This is a strong growth of our effective working capital management.
Looking ahead into March quarter of 2021, we expect our total revenue to -- between RMB 2.2 billion and RMB 2.4 billion, which represent an increase of 35% to 47% year-over-year as we continue to operate in a time of significant uncertainty, specifically in regard to the severity and the duration of COVID-19. And especially in the context of overseas market, this forecast only reflects our current and preliminary views on the market and the operation condition, which is subject to change.
Finally, I would like to reiterate that we remain proud of our team's consistent execution and their commitment to going above and beyond in the service of our customers. Such perseverance in the face of uncertainty has enabled us to remain on track despite the unexpected and challenging environment.
Going forward, our financial strategy will be to remain disciplined in our budgeting, cost control and the allocation of capital as we focus on the consistent delivery of a solid financial performance. Moreover, we will not become complacent, and we will continue to invest strategically for future growth. These initiatives may affect individual financial metrics in short-term. We firmly believe that such effort will continue meaningful to MINISO's sustainable and long-term growth.
Looking ahead, we are highly confident in the strength of our underlying business model and remain steadfast in our commitment to solidify our leadership at home and expanding our market share abroad and deliver long-term shareholder value. This concludes our prepared remarks for today.
Operator, we are now ready to take questions. Thank you.
