Key Takeaways:
Pop Mart reported H1 net profit of RMB 5.04 billion, up 10.1% year-on-year, missing the RMB 6.64 billion consensus as Labubu demand cooled.
"Like an F1 racing car pulling into the pits, we are taking a break, refueling, and changing tires," Wang Ning, founder and chairman of Pop Mart, said at the earnings call, adding the company would not pursue aggressive growth that boosts revenue without lifting profits.
Revenue rose 23.8% to RMB 17.17 billion, below the RMB 19.1 billion consensus. THE MONSTERS family, home to Labubu, posted revenue of RMB 4.45 billion, down 7.5% year-on-year — the first decline since the blockbuster IP's explosive rise. Starry Star, a newer IP, surged 580.6% to RMB 2.65 billion, becoming the company's second-largest core IP.
The results mark a sharp deceleration from fiscal 2025, when revenue surged 2.8-fold. Wang acknowledged the company will likely miss its 20% revenue growth target, calling 2026 an operational adjustment year. The stock has retreated about 58% from its August 2025 peak.
Overseas revenue fell 11% to RMB 4.97 billion, with the Americas down 16.5% to RMB 1.89 billion and Asia-Pacific down 9.7% to RMB 2.58 billion. Online channels were the primary drag: Asia-Pacific online revenue fell 39.8%, while Americas online revenue dropped 45.6%. China revenue rose 47.3% to RMB 12.2 billion, with its share of total revenue jumping to 71%.
A RMB 720 million foreign-exchange loss eroded earnings, compared with a RMB 120 million FX gain in the prior-year period. Gross margin edged down to 69.7% from 70.3%, and adjusted net margin declined to 30.0% from 33.9%. Inventory turnover days lengthened from 123 to 201, driven by advance stocking for overseas markets.
Plush products generated RMB 9.82 billion, up 60%, accounting for 57.2% of total revenue and overtaking figurines as the largest category. Figurine revenue was essentially flat at RMB 5.19 billion. Six IPs surpassed RMB 1 billion in revenue during the period, with 11 exceeding RMB 100 million. CRYBABY, DIMOO, and SKULLPANDA each grew between 27% and 47%, while MOLLY fell 33.7% to RMB 901 million.
Deutsche Bank channel checks found Labubu's June "Retro Barbershop" series sold at only 30% to 50% of prior major IP launch rates on e-commerce platforms on day one, with inventory not selling out immediately. Meanwhile, Miniso's original IP YOYO surpassed RMB 100 million in single-month China sales in June, intensifying competition in the trend-toy sector.
The board declared no interim dividend. Management announced a share buyback program of RMB 2 billion to RMB 5 billion over the next six months. The company held RMB 12.44 billion in cash with zero bank borrowings as of end-June.
The earnings miss forces a reassessment of valuations premised on high growth. Investors will watch whether Starry Star can sustain momentum and whether overseas markets recover in the second half, when management expects pressure to intensify.
This article is for informational purposes only and does not constitute investment advice.
