Pop Mart (Trans): FY growth of 20% is only a 'maybe'; buybacks to provide a floor.

Below is Dolphin Research's compiled transcript from Pop Mart's FY26 mid-year earnings call

I. Key Financial Takeaways

1. Shareholder returns: The company plans a RMB 2–5 bn buyback over the next six months. Management cited growing conviction in long-term prospects and confidence that near-term challenges are solvable.

2. Full-year guidance: The initial target of ~20% revenue growth is 'likely achievable.' H2 will be tougher than H1 as Q3 laps a high base, and the company will avoid overly aggressive sales or expansion to chase numbers.

3. H1 scale and margins

Revenue was RMB 17.17 bn (+23.8% YoY); GP was RMB 11.97 bn (+22.6% YoY).Net profit was RMB 5.10 bn (+8.9% YoY); Adj. net profit was RMB 5.16 bn (+9.5% YoY), adjusting for share-based compensation.

GPM fell to 69.7% (vs. 70.3%, -60bps YoY). Group net margin dropped to 29.7% (vs. 33.7%; the call vocal transcript referred to 'OPM'); Adj. net margin was 30%.

4. H1 revenue mix and store footprint

By region: China RMB 12.2 bn (71%); APAC RMB 2.58 bn (15%); Americas RMB 1.89 bn (11%); Europe RMB 0.51 bn (3%). After rapid growth in 2025, overseas normalized and declined YoY.

By category: Plush RMB 9.83 bn (+60% YoY), contributing 57.2% of group revenue. Figurines remained stable at RMB 5.19 bn.

By product attribute: Self-developed products rose to 99.3% of revenue (+24% YoY). Artist IP products reached RMB 15.29 bn (89% of revenue, +25% YoY).

Stores: As of 30 Jun 2026, there were 676 stores and 2,827 Robo Shops globally. Net adds were 105 offline stores YoY across major global markets.

5. Margin drivers and overseas OPM

GPM -60bps bridge: Lower overseas mix dragged -90bps; raw material inflation amid global instability dragged -70bps; lower licensing fees contributed +100bps.Net profit bridge: GP increase contributed RMB 2.2 bn; S&M expenses rose RMB 890 mn YoY; new-store labor, rent, fit-out and taxes, plus other items impacted RMB 890 mn.

Overseas OPM will decline in FY26. 'LABUBU' cooled overseas, driving an 11% YoY revenue drop, weakening scale and per-store efficiency; the overseas network remains in expansion, with many new stores opening in H2 FY26, front-loading lease and staffing costs.

II. Detailed Call Highlights

2.1 Management remarks

1. IP portfolio

Six IPs generated over RMB 1 bn each in H1, and eleven exceeded RMB 100 mn. LABUBU remained the top-selling IP at RMB 4.45 bn, over 25% of group revenue, and management views this mix as healthy.

Starry (Xingxingren) is the fastest-growing IP, with H1 sales of RMB 2.65 bn (+580.65% YoY), becoming a phenomenon in China and much of Asia.

SKULLPANDA is the second most popular IP in Western markets after LABUBU. Its 'My Little Pony' collaboration sold strongly worldwide, exceeding RMB 600 mn, and in Jul appeared on the Paris haute couture runway, blending couture with Eastern art.

CRYBABY's 'Sea of Tears' series was among H1's best performers. Plush and peripherals set a new sales peak for the IP.

MOLLY held a 20th anniversary exhibition; DIMOO's collaboration with Pixar performed well and will hit its 10th anniversary next year; HIRONO opened its fourth brand store in Seoul after Bangkok and London.Global registered members exceeded 100 mn.

2. LABUBU operations

Pop Mart entered a deep collaboration with the FIFA World Cup across the U.S., Canada, and Mexico, launching themed products and appearing at the opening ceremony and multiple matches. This extended LABUBU's presence on the global stage.

LABUBU's 10th anniversary exhibitions rolled out in Paris, Tokyo, and New York. Relevant areas in the park also debuted anew.H2 will see continued product introductions, leveraging varied quality tiers, fresh play patterns, and co-brands to attract consumers worldwide.

3. China market

Supported by long-built infrastructure, teams, and fan bases, growth remained steady after last year's surge. Brand equity continued to strengthen.

4. Overseas markets

After last year's spike, traffic normalized, creating heavy YoY pressure this year that is likely to persist into H2. Management is focused on fundamentals rather than chasing short-term sales.

Online was the largest pullback: last year, limited offline coverage diverted heavy traffic to online, pushing online sales and mix far above normal. This year, mix is reverting toward normal levels.Offline sales declined YoY, but most overseas stores remained healthy in absolute terms. Near-term focus is on foundational build-out: internal systems, team formation, logistics, workflows, and cross-region collaboration to support long-term growth across APAC, the Americas, and Europe.

5. Stores and channels

Pop Mart upgraded stores in global mega cities and opened larger, high-identity stores in places like Australia and Singapore. These delivered solid returns in traffic, sales, and brand impact, and similar upgrades will continue in priority markets.

Large-format openings will be selective, not the norm. Most stores will remain 150–200 sqm.Older stores will be optimized by relocating from weaker sites to better positions and right-sizing to 100–200 sqm. This enhances brand experience while maintaining store profitability at target levels.

Livestreaming, marketplace e-comm, the official site, and the APP keep iterating globally. Membership and operating logic are being unified across online and offline to build a seamless journey spanning 'offline stores—Robo Shops—livestream—marketplace e-comm—park.'

6. Supply chain, inventory, and infrastructure

Inventory pressure was heavy in recent months due to forecast errors following last year's hyper growth. Pop Mart will push more granular merchandise management to raise global merchandise ops efficiency.

In Europe and the Americas, long logistics lead times caused delays in new launches or instant stockouts once launched, elevating first-leg freight and missing sales opportunities. The solution is optimizing from product concept timing through R&D process.The company is reviewing global product progress and will adjust prices in select countries.

IT build-out is a core focus over the next 1–2 years. The goal is finer production control to optimize cost and reduce the risk of redundant capacity at the source.

Warehouse and logistics networks have been established across more than a dozen countries and regions. Operations will be optimized in warehousing, store replenishment, and online reservations, while integrating project teams across the four regions to improve inventory management efficiency.

7. Organization and talent

Pop Mart has over 10,000 employees globally, with offices in 20+ countries and regions. The aim is deeper localization of teams and strategies in each market.

Headquarters will continue to strengthen international perspectives, while building internal talent and culture systems.

8. Park and new biz

After a year-long revamp, the park fully reopened this summer with a night tour. Operating metrics are strong.

Stage performances incubated in the park will be applied in global IP marketing and development, including World Cup-related shows.Bakery (desserts) has opened in Australia and Singapore; HIRONO opened its fourth brand store in Seoul after Bangkok and London.The film project is progressing, but timelines are longer.

2.2 Q&A

Q: Given this is an adjustment year and sales are not the primary goal, what does full-year revenue growth look like based on H1?

A: We said at the start of the year that sales are not our top pursuit; 2026 is an adjustment year. Last year saw luck and unexpected traffic, driving hyper growth but exposing internal management issues.Our priority is to fix these first for long-term development. In decisions this year and in H1, we favored long-term over aggressive sales or expansion to chase high prints.

Challenges have proven tougher than expected by Aug, both globally and domestically. Macro and geopolitics weighed on consumption worldwide, and internal fixes were harder than anticipated.H1 growth was 20%+, but Q3 faces a very high base, so H2 pressure will exceed H1. We will not pursue aggressive tactics merely to hit numbers; the ~20% full-year target is 'likely achievable.'

Governance and overall health are better than last year. Yes, the pressure is heavier this year and in H2, but the company is healthier.H1 growth was 20%+, with LABUBU contributing over 25%, a healthy IP distribution. Last year's hit flow impacted overseas, especially online, so overseas online is down sharply YoY this year.On the positive side, China grew 40%+ in H1, showing long operating foundations and potential. Overseas offline stores are largely performing well, which is critical for long-term growth and supports confidence.

We have improved many operating teams and details. The park remodel exceeded internal expectations and will keep iterating, and some new businesses are showing pleasant surprises.With store upgrades and refined brand ops, brand awareness and favorability are rising globally. We acknowledge this year's difficulties but still may reach ~20% growth; we will avoid strategies that harm long-term value.Given growing clarity on the long-term trajectory, we plan a RMB 2–5 bn buyback over the next six months.

Q: How do you evaluate the ROI of LABUBU's global collaborations this year (esp. World Cup marketing), what is next, and how do consumer insights inform LABUBU's long-term ops?

A: World Cup marketing ran from product tie-ins to on-field events. LABUBU's opening ceremony performance spread rapidly, topping China’s trending lists despite the late-night slot, and also trending in multiple countries.It expanded our brand reach quickly. The collaboration spanned the whole tournament, with LABUBU present at many matches to reinforce recognition, and the cost was likely lower than the market assumes, yielding high ROI.

There are areas to improve. Products hit shelves in Mar, which was early and extended the cycle, partly due to partner requirements.We were optimistic on demand; sales were strong but left some inventory. Long-term, we have amassed users and fans, but many only saw headlines and don’t yet understand LABUBU.Fans need time and deeper emotional bonds with each IP, so we will build patiently. We will keep doing large-scale global promotions, use graduations and celebrity interactions, and moderate release cadence to allow more digestion time.We will invest in park, film, and content to deepen LABUBU’s narrative and world-building. Over the next decade, we aim to evolve LABUBU through disciplined, long-term operations.

Q: As an adjustment year, what progress have you made, especially overseas, and what remains to be solved?

A: Last year’s headline metrics masked many operational issues. Customers had to apply, rush, or queue for long periods, which shouldn’t be the norm.Issues spanned supply chain, store ops, and people management across regions. This year we are addressing these granular issues; progress is meaningful, and we will remain patient in resolving them.

By region: Merchandise was the biggest pain point in the Americas in the past year and H1, with volatile sales, forecast errors, and insufficient system and market understanding.Longer logistics further challenged China-tested approaches. We are refining forecasting models and strengthening product teams, with good progress.

Engineering faced pressure in the U.S. and Europe. Difficulties included flagship and large-store supply chain complexity, budget vs. actual gaps, and construction quality.The latest Western openings show improved build quality and cost control.

Logistics timing was not the core issue. The bigger problem was insufficient product development lead time, leaving too little for production and logistics.Sea freight volume was constrained, forcing costly and limited air shipments, causing asynchronous launches or instant stockouts. We are aligning product, supply chain, and regional ops to lower freight and ensure ample stock at launch.In Europe, we reviewed all open and upcoming stores, found issues from commercial terms to site selection, renegotiated some, abandoned others, and traded slight delivery speed for healthier store economics.

Warehousing and logistics were under pressure last year. We are upgrading teams, adding new suppliers and cooperation models, and optimizing warehouse networks to better support offline and online.In APAC, the focus is team build-out. Management spent significant time on hiring to backfill key roles, and the team is largely reset to drive better execution.We will also tackle legacy store upgrades in early-entry markets, where small footprints or weaker sites need adjustment to elevate brand and improve sales and profitability.

Q: China demand and heat remain solid. How do you view growth potential and what are this year's operating priorities?

A: We are driving omnichannel integration, differentiating experience advantages by channel while coordinating operations. We aim to guide multi-channel spending and extend customer lifetime value.Offline remains the core acquisition engine, still high double-digit in new-account contribution even after 10+ years. Online breaks physical limits, expanding reach.More members are buying across channels, with high growth in members using two or more channels. Stickiness is rising, and the market is developing healthily beyond single channel or single category.

For IPs, the top seven all grew in H1. Starry maintained fast growth; others also rose. China faced high bases from last year’s traffic spike, evidencing a balanced IP portfolio.

Offline ops will be more refined. Traffic kept rising in H1, with double-digit growth in Jan–May; Jun was flat to slightly down due to a high base, and Jul–Aug normalized.In owned channels, blind-box machines saw higher new-customer share, better existing-customer mix, higher basket sizes, and improved conversion in H1. We aim to sustain these trends into H2 as a base for growth.

E-comm faced challenges around major promotional events in H1. But new-customer acquisition and first-party-channel repurchases were strong, e.g., Tmall and Douyin saw triple-digit growth in repurchasers.Existing-customer repurchase improved markedly, with high double-digit growth in Tmall and Douyin member repurchases YoY. Excluding blockbuster effects (e.g., plush), Tmall’s daily sales still rose double digits YoY in H1, showing we are not solely hit-driven. We will keep deepening daily-sales operations in H2.

Q: After organizational changes, what are the most notable shifts, what issues emerged, and what is the next adjustment?

A: Organization is paramount, as all operations rest on a healthy org. We invested heavily to enhance management and attract talent.Two years ago we split into four regions; now these are unified under a central platform. We appreciate the 0-to-1 work done by the regional teams, but the company and brand are at a different stage.We now require stores to deliver a stronger brand feel, including service and detailed ops. Centralization is improving many issues, and store experiences are increasingly consistent worldwide.

Challenges evolve yearly. In supply chain, we previously focused on meeting demand quickly.With global expansion and uncertainties like geopolitics, logistics lead times in some regions exceeded expectations, so we must strengthen front-loaded risk mitigation.Despite overseas revenue down YoY off last year’s LABUBU high base, vs. 2023–2024 overseas remains healthy and stable. Even with YoY revenue decline, margins are largely intact, evidencing solid fundamentals. We will continue to prioritize organizational health and operational basics.

Two follow-ups: First, we will further strengthen the central platform and raise the bar for HQ teams in China. Global vision and capabilities must improve consistently.Second, overseas regions now have relatively complete teams for current tasks, but long-term talent reserves are lacking. We completed a talent review and will enhance regional understanding of the business and culture, building teams for the future.

Q: H1 GPM was pressured. What are the margin countermeasures, and how will you improve net margin given headcount changes and new-store costs?

A: H1 FY26 GPM fell 60bps YoY on mix shifts and higher raw material and logistics costs. We are optimizing supply chain and global logistics: first, accelerate overseas supply chains and prioritize local factories supplying local markets to reduce procurement-side margin drag.Second, consolidate global transport resources to improve bargaining power with suppliers, and coordinate sea, air, and rail to lower first-leg logistics costs that affect product cost.

Overseas OPM will decline in FY26. LABUBU’s hype eased overseas, pushing revenue down 11% YoY and weakening scale and per-store efficiency.The overseas network is still expanding, with many new stores opening in H2, and prep-stage lease and staffing costs weighed on H1 OPM.

We are optimizing overseas operating efficiency. We will strengthen localization and fine-tune ops via standardized systems—headcount planning processes, merchandising/display schemes—to lift store ops efficiency and per-store margins.We will also accelerate local warehousing, streamline warehouses, and consolidate suppliers to boost logistics efficiency and bargaining power.

Q: From an IP and brand perspective, what are the key strategies for the next few years?

A: We aim to be an IP platform grounded in our current operating capabilities. While a mega-hit may appear every few years, our ability to continuously create quality IPs is strengthening.Overseas, LABUBU's impact is larger this year, but in China, robust foundations allowed Starry to quickly offset the cooling. We have many IPs we are confident in.

Short-term volatility in LABUBU vs. last year is not negative; we have been through many cycles, and cadence matters.Like global IP companies timing promotions with films, we will keep improving operations for existing IPs, incubating new ones, and enhancing the platform. Confidence in IP ops is increasing.

Q: New businesses, especially desserts, are scaling. Any operating metrics to share, and how do desserts synergize with the core?

A: Desserts started from the park’s F&B. Consumers enjoy IP-linked dining experiences, so we spun it out as a standalone business.We have two formats. First, standalone stores: In Jun, we opened the first domestic dessert store in Anaya, and in late Jul, the first overseas store in Singapore.Both exceeded expectations: the domestic store drew 60,000+ visitors; the Singapore store surpassed A$50 per order within a month, roughly RMB 250.

The second format is themed pop-ups, with over 25 opened domestically. Pop-ups let consumers experience the brand differently.We want visitors to enjoy desserts and build IP-linked memories. We will be disciplined, focusing on product, ops, training, and service before scaling. Once the model is proven, we will selectively expand into suitable markets.

desserts exemplify our 'groupization' strategy. We have two core strategic directions: globalization—taking our IPs, products, and capabilities worldwide; and groupization—finding long-term opportunities beyond the core.Some extend existing capabilities across domestic and overseas markets; others require exploring new directions. We can incubate internally, cooperate externally, or invest.The goal is to assemble Pop Mart’s future portfolio through multiple approaches, prioritizing fit and long-term value over speed or breadth.

Overall, new businesses are performing above internal expectations. After launching the first store in Australia, we will roll out more offline services at our pace.We are focused on operating and product quality. New businesses, including the park, have strong consumer appeal, supporting our confidence in their outlook.

Q: Stores now carry 'useful' products like USB interfaces. Has the creative philosophy shifted from 'useless things' to films as IPs scale?

A: We have long advocated 'the usefulness of the useless.' The point is not whether an item is strictly functional; everything has meaning and value.As the company grows, we will try different forms. But our core remains design and art—emotional value that we consider more meaningful.We are not aiming to launch function-only derivatives without design; that is not our philosophy.

As IPs and artist resources expand, our design capabilities strengthen with 'design overflow.' We will load these into more products we consider suitable.Some categories will be licensed; others we will do ourselves when we can execute well. This may be a broader trend ahead.

Q: H1 LABUBU products like the barbershop series saw polarized online reviews. Is this a natural path after an IP goes viral, and how do you view design and innovation as plush iterates and consumer aesthetics rise?

A: Without comparing to the prior blockbuster, each generation still sells fast.We continue to innovate, and the barbershop series lets users participate in design, which is a good attempt.We will keep launching diverse product forms to deliver fresh products that consumers love.

Q: After the park’s new map opened, how are traffic and feedback? Any expansion or new park plans?

A: Traffic more than doubled MoM after the new area opened, and rose ~40% YoY. Metrics are very strong.Experience-wise, most feedback from visitors—including colleagues and friends—is positive. The atmosphere is immersive day and night, and we are fine-tuning further, especially for night tours.

The park is very popular, so some queues are long. We are working on traffic diversion and queue reduction to enhance experience.Beijing’s seasonality is another focus: summers are hot and winters cold, so we need to operate well across seasons to drive repeat visits.Beyond ops, the park has long-term brand value. After seeing our IP performances, visitors understand the platform differently, which helps the company.

We will further remodel existing areas, with major work starting next year. Phase II concept design has begun, and we will add new IPs to the second phase to elevate expectations.

Q: Mid-year inventory rose RMB 600–700 mn vs. end-2025. How healthy is inventory by age and category, and will you adjust production cadence or step up promotions?

A: Several points on inventory status and optimization. First, the share of >2-year inventory rose slightly vs. Q1 2025, but total inventory began turning down from Jul this year.Second, <1-year inventory—including new and pre-launch items across 3–6 months and 6–12 months—rose markedly from Q1 to end-2025 due to global hyper growth, which required more stock. That figure fell double digits by Q1 this year.

The overall trend is stable-to-down. We must also support future performance, ensuring enough new items in all regions, including overseas, and managing inventory by launch timing.We are also executing global cross-region transfers to refine ops. For example, if demand is still strong in Greater China for certain items, appropriate transfers can fulfill local demand and lower global inventory.We will keep acting on such differences as they arise.

We will manage orders from a rational performance baseline in H2, as we will not chase sales for the sake of results. This should prevent re-accumulation of inventory and drive a gradual decline, a trend already visible since Jul with improving structure.We will not run large-scale promotions to protect the brand and consumer experience.

Q: Beyond LABUBU, how are other overseas IPs trending, and which have new potential?

A: HIRONO performs very well in Western markets and in China/Asia, ranking roughly third in the West and occasionally competing for first in some places.This shows Western consumers favor IPs with emotions or deeper ideas beyond pure cuteness. We will expand in that direction.A newly launched IP is performing well across Asia and the West; at a recent designer signing in Germany, queues exceeded our expectations.

Peach Riot is also doing well in the West. Beyond product design improvements ahead, we are creating engaging online content to convey its worldview and deepen affinity.Starry’s growth in China and Asia has been extremely fast, but its heat in the West lags. We will address this via both marketing and product.CRYBABY will see more actions, and we plan to launch breakthrough designs by year-end or H1 next year to show very different forms for MOLLY beyond traditional lines, aiming to improve stores through diverse regional and product mixes.

Q: How is China’s store upgrade and renewal progressing, and what is the remaining runway? Any changes to global flagship count targets and regional opening plans?

A: China’s upgrades are ongoing. In H1 FY26, over 20 stores were relocated/renewed, with sales growing significantly faster than the national trend and double-digit gains in both store efficiency and area.We will accelerate in H2, with several dozen stores undergoing relocations and remodels across Tier-1, new Tier-1, and Tier-2/3 cities, delivering a refreshed experience and comparable store-efficiency averages to H1.

Beyond standard stores, we opened several flagships this year and will continue in H2. Some flagships are in Tier-2/3 cities.In the first 30 days, certain stores exceeded RMB 10 mn in sales, and one or two even surpassed the well-known Shanghai Shimao flagship in foot traffic.We will keep opening flagships to elevate store image and customer experience.

Overseas, quality outweighs quantity more than before. Early development required faster openings to build the framework and teams, which is now largely complete.We will fix underperforming early stores and be more selective, opening only when site, size, and terms meet our standards. Opening speed will not slow materially, but the bar will be higher, and we will start analyzing and adjusting legacy stores in Asia.

<End of transcript>

Risk disclosure and statement:Dolphin Research Disclaimer and General Disclosure