Buyback Wednesdays – MINISO Announces a $100 Million Buyback

Buyback activity edged up a little last week with 14 companies announcing buybacks. AutoZone (AZO), an uber cannibal, announced an additional $2.5 billion buyback representing around 6% of its market cap at announcement. Since the start of the repurchase program in 1998, and including the above amount, AutoZone’s Board of Directors has authorized $33.7 billion in share repurchases. The company has bought back more than 24% of its outstanding shares in the last 5 years.

The buyback that topped our list this week was a $200 million new buyback by DiamondRock Hospitality Company (DRH), a REIT that owns a portfolio of geographically diversified hotels. The buyback represents about 13% of its market cap at announcement. We have also been seeing an uptick in insider purchases at REITs after the asset class was crushed in a rising interest rate environment.

The buyback that caught my attention was the $100 million buyback by the China-based retailer, MINISO Group Holding Limited (MNSO). On September 29, Miniso announced a $100 million buyback that represents around 6.25% of its market cap at announcement. The company also announced a $200 million stock buyback in December 2021.

I first came across MINISO during a trip to Southern California last year. The store was filled with interesting knick-knacks, mostly targeted towards kids but I was able to find a good quality travel neck pillow at a great price. I initially though that the store was run by a Japanese company like Uniqlo because of the similarity of their logos and the overall feel of the store. When doing research on the company following this buyback, I realized that the Japanese inspired look was intentional. MINISO’s founder came up with the concept after visiting Japan and hired Japanese designer Miyake Junya as its Chief Designer. The company recently started experiencing backlash on social media from its Chinese customers and has decided to ditch its Japan inspired styling, at least in the company’s Chinese stores.

I was surprised to find a MINISO store while walking down a street at a popular shopping destination in Mumbai this summer. Founded in 2013 by Ye Guofu, the retailer has seen tremendous growth in overseas revenue because of its international expansion. This higher-margin international business is now growing far faster than domestic sales in China. In the company’s first quarter of fiscal 2022, revenue from international markets jumped 78% year-over-year, more than four times its domestic growth. MINISO plans to open four new stores in Italy this year, bringing its total to 14 since its start in April. Across Europe the company has nearly 170 stores. As of June 2022, the company had 5,199 stores with 3,226 stores in China and the rest across nearly 90 overseas markets. Recently on October 1, 2022, the company opened its 2,000th international store in France. The table below shows how the company has expanded globally in a short span of time.

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