Pop Mart May Miss 20% 2026 Growth Target as Overseas Sales Slump, CEO Says

(Yicai) Aug. 21 -- Pop Mart International Group is unlikely to achieve the 20 percent growth target it set for 2026, despite robust revenue growth, as a sharp decline in overseas revenue weighs on the Chinese toymaker’s performance, the company’s chief executive officer said yesterday.

Pop Mart’s overall revenue surged 23.8 percent in the first half from a year earlier to CNY17.1 billion (USD2.5 billion), according to the Beijing-based firm’s semi-annual report released yesterday. But revenue from international markets tumbled 11.6 percent to CNY5 billion (USD740 million).

“Although Pop Mart achieved growth of more than 20 percent in the first six months, the third quarter of last year had a very high comparison base. This suggests that pressure in the second half will be greater than in the first half,” CEO Wang Ning, who is also founder of the firm, said at the earnings call. “We will not adopt an aggressive strategy, so it is possible that the company may not meet the 20 percent annual target set at the beginning of the year. However, I believe the firm’s overall governance and health are much better than last year.”

Revenue from the Chinese market soared 47.3 percent in the six months ended June 30 from a year ago to CNY12.2 billion (USD1.8 billion), accounting for 71 percent of total revenue, according to the mid-year financial report. In terms of overseas markets, revenue from the Asia-Pacific region tumbled 9.7 percent to CNY2.6 billion (USD372 million), that from the Americas plunged 16.5 percent to CNY1.9 billion, while that from Europe and other markets jumped 5.9 percent to CNY506 million (USD75.2 million).

Profitability in Pop Mart’s overseas business has come under pressure this year, said Chief Financial Officer Yang Jingbing. One reason is that the popularity of Labubu, its flagship furry elf-like character, has cooled overseas and another reason is that the company is set to open many new stores abroad in the second half, creating additional rent and staffing costs.

To demonstrate its confidence in the company’s long-term growth prospects, Pop Mart also announced yesterday that it will launch a share buyback program of between CNY2 billion (USD297.5 million) and CNY5 billion over the next six months.

Pop Mart will continue upgrading selected stores in key countries and regions worldwide, Chief Operating Officer Si De said. However, opening large stores is not part of the firm’s overall strategy. Instead, it will open them selectively in key markets.

In terms of the performance of individual intellectual properties, The Monsters family, which includes Labubu, generated CNY4.4 billion (USD654,6 million) in revenue, a drop of 7.5 percent year on year. Its share of group revenue fell to 26 percent from 34.7 percent.

By contrast, Twinkle Twinkle, a cute star-inspired character, delivered explosive growth, with revenue soaring almost seven-fold to generate CNY2.6 billion (USD386.8 million). Its contribution to group revenue jumped to 15.4 percent from 2.8 percent, making it Pop Mart’s second-largest IP.

Twinkle Twinkle has become a phenomenon in China and most Asian markets, Si said. In the second half, Pop Mart plans to bring Twinkle Twinkle’s costumed character performances to Singapore and other countries and regions, with the aim of building brand awareness and a fan base overseas more quickly.

Pop Mart’s share price [HKG: 9992] closed down 3 percent at HKD149 (USD19) in Hong Kong today.

Editor: Kim Taylor