Can Pop Mart sustain the Labubu juggernaut as China sales cool?
An Argentine fan shows an art toy character "Labubu" ahead of the 2026 World Cup Group J football match between Argentina and Algeria at the Kansas City Stadium in Kansas City, June 16(local time). AFP-Yonhap
Chinese toymaker Pop Mart recorded its first year-on-year decline in domestic online sales since 2024 in May, raising fresh questions about the sustainability of demand for its intellectual property (IP) portfolio, including its blockbuster Labubu character.
Domestic online sales fell 5 percent from a year earlier and 14 percent from April, according to Moojing e-commerce data tracking transactions across Tmall, Taobao and Douyin. Sales were also 25 percent below the average monthly level recorded in the second half of last year.
"This confirms our earlier prediction of mounting sales pressure in Pop Mart's domestic market from the second quarter of 2026 onwards," said Deutsche Bank analyst Sammi Xu. "We believe this pressure could intensify in the second half of the year, driven by a higher comparison base and waning IP popularity in China."
Shares of the Hong Kong-listed company fell 2 percent to close at HK$171.30 on Wednesday.
"We think the earlier frenzy surrounding Labubu has cooled, while intensifying competition is likely to weigh on revenue growth in 2026," said Jeff Zhang, an analyst at Morningstar.
Since the beginning of the year, Pop Mart has accelerated the roll-out of new products, which Deutsche Bank said was the main driver of sales growth.
In the first quarter, revenue in mainland China surged between 100 and 105 percent year on year, although overseas markets recorded a quarter-on-quarter decline. The company did not disclose quarterly revenue or profit figures.
"As the base effect intensifies in the second quarter and the impact of fashion fatigue becomes more significant after such an intense launch schedule and increased product supply, we believe Pop Mart will enter a clearer downcycle in the second half of the year in both China and overseas markets," Xu said.
The company nevertheless continues to pursue overseas growth opportunities. Its partnership with Fifa saw Labubu appear at last week's World Cup opening ceremony, marking the first appearance by a Chinese original IP at the event and generating positive discussion on Chinese social media.
The collaboration has fuelled optimism among southbound investors that the World Cup could help accelerate sales in Western markets.
Dancers, including a performer in a Labubu costume, perform at Pop Mart's Pop Land theme park on its reopening day following an upgrade, in Beijing, China, April 30. Reuters-Yonhap
Deutsche Bank, however, noted that Google Trends data in the U.S. remained relatively subdued and that previous Fifa and Olympic sponsorships by Chinese brands had generally had a limited impact on product sales.
Looking ahead, Pop Mart was expected to launch Labubu 4.0 in the second half of the year, according to management's annual results briefing in March.
"We expect Labubu 4.0 to provide a modest boost to sales growth and online search activity," Zhang said. "The company is also preparing new products for other IPs, while the World Cup collaboration could boost Pop Mart's popularity and expand its overseas fan base."
Beyond new toy releases, Pop Mart is focusing on upgrading existing stores rather than pursuing rapid network expansion, aiming to improve the customer experience. Morningstar said the company's diversification into theme parks, bakery businesses and home appliances could also provide additional earnings support over the longer term.
Read the article at SCMP.