Pop Mart expands IP empire with debut dessert store in Hebei province

Chinese toymaker Pop Mart is set to open its first official physical Pop Bakery store in the coastal community of Aranya in Qinhuangdao, Hebei province. The outlet will mainly sell desserts, as the company continues to diversify its business portfolio to sustain the value of its intellectual property (IP) and generate income beyond pop toys. The plan comes as the Hong Kong-listed company announced strong first-quarter growth on Tuesday, with total revenue surging 75 to 80 per cent year on year. In the first three months, revenue in China alone surged 100 to 105 per cent, while growth was 25 to 30 per cent in Asia-Pacific, 55 to 60 per cent in the Americas, and 60 to 65 per cent in Europe and other regions. Offline sales grew 75 to 80 per cent year on year, while online revenue surged 150 to 155 per cent. The company did not announce net profit or revenue figures for the quarter. Pop Bakery, an independent dessert brand under Pop Mart, would sell desserts and tea drinks, with desserts as its core business, according to people familiar with the matter. The product line will include Skullpanda ice cream, Labubu butter cookies and Molly chocolate. “We think Pop Mart is keen on diversifying its revenue streams beyond pop toy products through leveraging the high popularity of its IP, particularly Labubu and the Monsters,” said Jeff Zhang, an equity analyst at Morningstar. “Over time, we foresee further expansion in Pop Mart’s dessert store counts and product portfolio, including pop tarts that are well received in the US. We expect Pop Mart to replicate the playbook of peers such as Disney and Sanrio to keep developing IP-themed leisure offerings,” Zhang said. He expected the firm’s IP-related entertainment businesses, such as films, theme parks and food products, to remain pivotal in generating income beyond pop toys. Pop Bakery was previously operated in the form of pop-up dessert carts. The first such store was launched at the Beijing Capital International Airport in December. So far, the brand has opened more than 20 pop-up stores nationwide, including in Qingdao, Shandong province and Chengdu, Sichuan province. The toymaker has continued to diversify its business strategy. It rolled out a home appliance business on April 30, launching limited-edition Labubu-themed mini refrigerators, which sold out immediately and were popular on second-hand platforms. In late March, Pop Mart announced a collaboration with Sony Pictures Entertainment to produce a feature film centred on Labubu, its most popular IP character. The company also operates a Pop Land theme park in Beijing, the sole venue currently, but plans to develop more parks at home and abroad. Gross profit margins in Pop Mart’s home appliances business were expected to stay above the industry average, and generate sales of about 490 million yuan (US$72 million) this year, accounting for roughly 1 per cent of the company’s total annual sales, according to a recent report from Guosen Securities. While the home appliances business might contribute limited revenues in the short term, it was expected to see repeat purchases among core Labubu fans and draw new customers in the medium to long run, thereby offering substantial strategic value to Pop Mart, the report said.