Pop Mart Unveils Up to US$740 Million Share Buyback as Overseas Demand and Labubu Momentum Weaken

Pop Mart reported revenue of 17.17 billion yuan for the first half of 2026, an increase of 23.8 per cent from the previous year. Reported net profit, however, rose by only 10.1 per cent to 5.04 billion yuan, while adjusted net profit increased by 9.5 per cent to 5.16 billion yuan. Gross profit reached 11.97 billion yuan, but the gross margin slipped to 69.7 per cent from approximately 70.4 per cent a year earlier. Operating profit grew by a relatively modest 11.3 per cent to 6.73 billion yuan, while the company declared no interim dividend. A foreign-exchange loss of about 720 million yuan, compared with a gain in the previous-year period, also contributed to the slower profit growth. The results prompted Pop Mart’s shares to fall as much as 8.9 per cent in Hong Kong trading as investors reassessed the sustainability of its previously exceptional growth.

The most important weakness was the sharp divergence between domestic and overseas performance. Revenue in mainland China surged 47.3 per cent to 12.2 billion yuan and accounted for 71 per cent of group sales, up from 59.7 per cent a year earlier. Overseas revenue, by contrast, declined 11.1 per cent to approximately 5 billion yuan. Sales in the Asia-Pacific region fell 9.7 per cent to 2.58 billion yuan, while revenue in the Americas dropped 16.5 per cent to 1.89 billion yuan. Europe and other markets delivered limited growth of 5.9 per cent to 510 million yuan. The decline is particularly significant because overseas markets had been central to Pop Mart’s valuation story and generally offered stronger pricing and margin potential. Management said 2026 would be a year of operational readjustment as it reorganised international teams and strengthened internal management after the rapid expansion of 2025.

The company’s intellectual-property portfolio also showed a major shift. The Monsters franchise, which includes Labubu, remained Pop Mart’s largest IP but generated revenue of 4.45 billion yuan, down 7.5 per cent from 4.81 billion yuan a year earlier. Its contribution fell to approximately 26 per cent of group revenue from more than one-third in the comparable period. Twinkle Twinkle emerged as the strongest alternative growth engine, with revenue jumping 580.6 per cent to 2.65 billion yuan, equivalent to 15.4 per cent of total sales. By contrast, Molly revenue declined 33.6 per cent to about 901 million yuan. Six IPs generated more than 1 billion yuan each and 11 exceeded 100 million yuan, indicating that Pop Mart has developed a broader character portfolio. Nevertheless, the varying performance of individual franchises illustrates the short product cycles and unpredictable consumer preferences inherent in the collectible-toy market.

The planned buyback, ranging from 2 billion yuan to 5 billion yuan, represents a significant commitment relative to first-half earnings. The minimum amount equals roughly 40 per cent of reported first-half profit, while the maximum is almost equivalent to the entire 5.04 billion yuan earned during the period. The programme can support market confidence and signal that management considers the shares attractive after their substantial decline, but it does not resolve the operational challenges behind the weaker outlook. Pop Mart must demonstrate that Twinkle Twinkle and other characters can become durable global franchises, stabilise its overseas business and protect margins from currency and operating-cost pressures. Its expansion into entertainment, theme parks, bakeries and a Labubu film project with Sony Pictures may extend the commercial life of its characters, but these initiatives introduce new execution risks. The company’s next stage will therefore depend less on viral demand for a single product and more on its ability to build a diversified and consistently profitable global IP platform.