POP MART, once elevated to a pedestal by the market, has now formally entered a period of consolidation and recalibration.

On August 20, at the company's 2026 interim results conference call, founder Wang Ning delivered a bombshell in an opening statement that lasted barely a minute and spanned just over 300 words: "There's a high probability we won't achieve the '20% growth' target we set at the beginning of the year." He added, "The pressure in the first half of this year has been significantly greater than we anticipated, presenting many difficulties and challenges we hadn't foreseen."

This isn't the first time Wang Ning has shared candid observations that defy market sentiment. Five months earlier, he had already set a target of "no less than 20% revenue growth for 2026" during an earnings call—a figure far below institutional expectations of 40% growth, which rattled the capital markets, sending shares down 22.8% the following day. Given that precedent, his latest cautious remarks have once again poured cold water on investor enthusiasm.

Behind this downward revision of the annual target lies a half-year report that failed to meet market expectations. In the first half of 2026, POP MART recorded revenue of RMB 17.173 billion, up 23.8% year-on-year; net profit attributable to shareholders was RMB 5.038 billion, up 10.1%; adjusted net profit reached RMB 5.16 billion, with an adjusted net margin of 30% and a gross margin of 69.7%. While these figures appear solid on the surface, they fell short of analyst forecasts, which had projected revenue closer to RMB 20 billion and net profit exceeding RMB 6.6 billion for the period.

The profit volatility can be partly attributed to exchange rate fluctuations, which resulted in a foreign exchange loss of RMB 720 million. However, the market's deeper concern lies in the noticeable contraction of POP MART's overseas operations: revenue in the Asia-Pacific region declined 9.7% year-on-year, the Americas saw a 16.5% drop, and inventory turnover days stretched from 123 days to 201 days. In response, COO Si De acknowledged that beyond the fading of traffic dividends, overseas supply chain issues, store location choices, and in-store facilities have all impacted the user experience.

While the domestic business demonstrated resilience with a robust 47.3% revenue surge, the negative growth in LABUBU revenue has also sparked investor anxiety. During the earnings call, Wang Ning admitted: "Last year involved a degree of luck and unexpected traffic that drove rapid growth, but it also exposed many internal management issues." He defined 2026 as "a year of internal adjustment," emphasizing that sales are not the company's primary objective at this stage.

Sources close to POP MART revealed that over the past year, Wang Ning has shifted his focus inward, dedicating most of his energy to overseas store site selection, store inspections, and scrutinizing operational details, with organizational restructuring also a key priority. Wang Ning stressed that the company will not adopt aggressive sales or expansion strategies merely to hit numbers, and simultaneously announced a share buyback plan of no less than RMB 2 billion and no more than RMB 5 billion over the next six months.

On August 21, POP MART's stock opened at HKD 141.1, plunging 8%. Compared to its historical peak in August 2025, the stock has retreated approximately 58.5%, erasing around HKD 264.5 billion in market value.

Examining the Post-Peak LABUBU Phenomenon

Looking at the scorecard, POP MART's first-half 2026 revenue of RMB 17.17 billion, up 23.8% year-on-year, would be considered respectable for any consumer company. The standout highlight of the financial report was the performance of China's offline channel: as of June 30, the company operated 455 stores in China, adding only 10 net new stores in the half-year, yet revenue grew 38.2%, indicating a significant improvement in per-store operational efficiency.

On the online front, during the first half of 2026, POP MART's WeChat mini-program "Draw Box Machine" saw revenue surge 83.3%, while Douyin channel growth reached 74.0%. The company's online growth has never relied on traditional e-commerce platforms, instead being driven by a dual-engine model of private domain traffic (Draw Box Machine) and content e-commerce (Douyin). The strong growth of the Draw Box Machine also demonstrates that its "social + gamified" private domain strategy continues to expand.

What dragged POP MART down was more on the profit side. Net profit of RMB 5.1 billion grew only 8.9% year-on-year, creating a nearly 15-percentage-point "scissor gap" between revenue growth and profit growth—the most striking signal in the interim report. Where did the money go? CFO Yang Jingbing broke it down during the conference call: foreign exchange losses of RMB 720 million in the first half, compared to a gain of RMB 120 million in the same period last year—a swing of RMB 840 million. Selling and administrative expenses also increased by RMB 890 million year-on-year, as the company added 105 net new offline stores across major global markets over the past 12 months, with labor, rent, and renovation costs all consuming real capital.

Market sentiment was further strained by a sharp divergence in IP revenue performance. In the first half, POP MART had six IPs generating over RMB 1 billion in revenue, and 11 IPs exceeding RMB 100 million. CRYBABY posted revenue of RMB 1.63 billion, up 34%; DIMOO reached RMB 1.62 billion, up 46.5%; SKULLPANDA generated RMB 1.55 billion, up 27.1%; and Hirono Xiao Ye brought in RMB 1.01 billion, up 38.5%. MOLLY, now two decades old, showed signs of aging with revenue of RMB 900 million, down 33.7% year-on-year.

The biggest surprise within the IP portfolio was Xingxing Ren, which the market had hoped would take over the baton from LABUBU. It generated RMB 2.65 billion in revenue in the first half of 2026, a staggering 580.6% increase, making it the fastest-growing IP. Si De mentioned that Xingxing Ren will be a key marketing focus for overseas markets in the coming period.

Another notable trend is that the plush category generated revenue of RMB 9.82 billion, up 60% year-on-year, accounting for 57.2% of total revenue—marking the second consecutive period (following the full-year 2025 report) where plush products have outsold vinyl figures. Vinyl plush toys combine collectibility with everyday portability, resonating with young consumers' emotional spending through a stronger sense of companionship. With plush revenue now exceeding half of total revenue, POP MART's underlying narrative has shifted from "blind box psychology" toward "emotional companionship with IPs."

In contrast, the once-phenomenal LABUBU is showing signs of cooling. Revenue from the THE MONSTERS family, which includes LABUBU, reached RMB 4.45 billion, down 7.5% year-on-year, with its share of total revenue falling from 34.7% in the same period last year to 26%—marking the first negative growth since LABUBU's explosive rise. Bulls and bears hold differing views on LABUBU's performance. Bulls view the declining revenue share as evidence of POP MART's successful "de-LABUBU-ization" and organizational star-making capabilities. Wang Ning responded on the call: "LABUBU's share is only around 25%, and our overall IP distribution is very healthy, in my view." Zhang Yi, founder of iMedia Consulting, previously analyzed to reporters that "a single IP not exceeding 15%, with mid-tier IPs forming the foundation, represents a healthier state."

Bears, however, question: if even LABUBU is experiencing negative growth, where is POP MART's next growth engine? A Deutsche Bank report dated June 30 concluded that "LABUBU's IP cycle has entered a demand fatigue phase," citing evidence that the June 25 launch of the 4.0 "Vintage Barbershop" series saw first-day e-commerce sales only 30-50% of previous blockbuster launches. The more direct impact of fading traffic is an escalating inventory concern. As of June 30, POP MART's inventory stood at RMB 6.102 billion, up approximately RMB 630 million from the end of last year, with inventory turnover days lengthening from 123 to 201 days.

Overseas Growth Requires Time

Beyond LABUBU's cooling, external observers attribute the interim report's bearish signals primarily to the overseas revenue segment. Morgan Stanley, one of POP MART's biggest bears, wrote in an August 18 research note that the market has already priced POP MART as if its "overseas business has failed." How did a market that surged 291.9% overseas in 2025 decline 11% year-on-year in the first half of 2026? Is it solely due to LABUBU's downturn?

In fact, in 2026, POP MART has become even more high-profile in its overseas marketing. On June 11, LABUBU appeared at the US-Canada-Mexico World Cup opening ceremony, dominating social media trends. Si De admitted the event was "quite successful" and that "the cost was likely far less than people imagine." However, a single high-traffic event cannot quickly translate into revenue growth. During the conference call, Si De reviewed two missteps in overseas operations: on one hand, the announcement of the FIFA co-branded collection in March "stretched the hype period too long"; on the other hand, the company overestimated product demand, "which did leave some inventory." He added, "Fans need time to accumulate and deepen their understanding of each IP; it takes time to nurture."

By region, POP MART's Americas revenue was RMB 1.89 billion, down 16.5% year-on-year; Asia-Pacific (excluding China) generated RMB 2.58 billion, down 9.7%; only Europe and other regions maintained positive growth, with revenue of RMB 510 million, up 5.9%, including a 49.8% increase in offline channels. This suggests that the primary driver of the overseas decline was weak online performance. Specifically, POP MART's Asia-Pacific online revenue fell 39.8%, with Shopee channel plunging 62.1%; Americas online business also dropped 45.6%. Si De explained: "In 2025, overseas store networks were incomplete, so a large volume of traffic and purchase demand flowed into online channels, making online sales and share much higher than normal. This year, it's gradually returning to a normal proportion."

According to observations, POP MART is progressively moving away from relying heavily on low-price influencer livestreams on TikTok to drive sales in North America, prioritizing instead the protection of gross margins. This aligns with Wang Ning's "brand elevation" strategy mentioned on the call. Si De also noted that supply chain and logistics have become significant factors affecting overseas user experience. Citing product launches in European and American markets as an example: "Either products can't launch simultaneously, or they sell out immediately upon release," forcing the company to resort to air freight, which drives up shipping costs and reduces logistics efficiency. On the 19th, Duan Yongping also responded to netizens on the Xueqiu platform: "It might take another two to three years for replenishment to become more refined. Overseas could be even harder because transportation is a major issue."

Store location selection also requires time to mature. Conversations with overseas netizens revealed that many of POP MART's stores in the US and Europe are currently situated on top floors or in peripheral areas of shopping malls, struggling to secure prime locations. Si De made clear on the call that future overseas expansion will prioritize "quality over quantity," with underperforming early stores being adjusted, and new stores subject to strict criteria regarding location, size, and commercial terms. "If they don't meet our requirements, we'd rather wait." He mentioned that the European team has re-evaluated the commercial terms of all existing and upcoming stores, "some have been renegotiated, and others have been abandoned."

Duan Yongping publicly supported this approach: "Good locations are usually already taken. But when malls discover your business is thriving, they'll offer you the opportunity first. POP MART may need another three to five years to place most of its stores in better positions." Behind this, a lack of team experience is a deeper issue. Si De revealed that over the past six months, he has "spent a lot of time on interviews" to help fill key positions in the Asia-Pacific region, "and now the team has essentially been completely rebuilt." According to reports, in the first half of 2026, POP MART's HR team launched large-scale recruitment drives for roles such as "English trainers" and "overseas-based talent."

As the traffic wave recedes, every adjustment POP MART makes in its overseas expansion—supply chain, talent, localization, store operations—strikes at fundamental capabilities. "If you visit the majority of our overseas stores, offline remains our core foundation and a critical component of long-term growth—this gives us significant confidence in our sustainable development," Wang Ning said.

The Invisible Offensive

While rationally managing LABUBU's cyclical fluctuations and honing internal capabilities, organizational restructuring has been another major area of focus for POP MART over the past year. One personnel move carries particular significance: Si De's role within the group has grown increasingly important. At this results meeting, he was the primary speaker for both business presentations and investor Q&A.

On March 23, POP MART announced an organizational restructuring: the previous "dual COO" structure with Si De and Korean executive Moon Deok-il was dissolved. Si De became the sole COO, overseeing all platform departments and driving international operations across four major regions, while Moon Deok-il transitioned to Chief Growth Officer (CGO), focusing on IP-centric group-level business innovation. Si De and Wang Ning were MBA classmates, and Si De joined POP MART in 2015 as brand director, later serving as president of China operations and executive director before becoming COO in 2020—making him the group's youngest second-in-command. Known for his fast-paced style, during his tenure overseeing Greater China and the Americas, the Americas generated RMB 6.806 billion in revenue in 2025, a staggering 748.4% surge, with store openings leading the three overseas regions.

As POP MART transitions from "rapid expansion" to "refined operations," Wang Ning needs someone who understands both the fundamentals of the Chinese market and has fought battles overseas. "Organizational issues have been our most important concern in recent years, because all operations are built on a healthy organization," Wang Ning said during the call.

Si De emphasized that in the coming period, POP MART's primary focus will be on building foundational capabilities in product operations, supply chain, and logistics systems—metrics that are difficult to fully reflect in a single financial report. Supply chain is the most fundamental capability. Since 2024, POP MART has been investing in its own supply chain factories, which began gradually coming online in the first half of 2026, operating alongside overseas partner bases in Mexico, Indonesia, and Cambodia. Inventory management is now being directly controlled at the ordering stage. Management revealed on the call that starting in July, total inventory has turned a corner and begun trending downward. The company also made its stance explicit: "Whether for brand protection or the experience of existing consumers, we will not engage in large-scale promotions."

While continuously strengthening fundamentals, POP MART's innovative businesses have also been flourishing, beginning to capture the spillover value of its IPs. At the end of July, Phase 1.5 of POP MART's theme park fully opened, with weekday ticket prices rising from RMB 88 to RMB 178 and peak-day tickets reaching RMB 238—yet visitor numbers increased rather than decreased: following the opening of the new area, foot traffic grew nearly 40% year-on-year, with over 25% of visitors coming for nighttime attractions. Management revealed that the park's "POP Street" will undergo renovation next year, and Phase 2 of the park has entered conceptual design, with construction expected to begin in 2027.

POP MART has also launched a dessert brand called "POP BAKERY." The Aranya flagship store attracted over 60,000 visitors in its first month, and the Singapore store has achieved an average transaction value exceeding SGD 50 (approximately RMB 250) within less than a month of opening. Additionally, the LABUBU THE MONSTERS cooler, priced at RMB 5,999 with a limited run of 999 units, sold out immediately upon release. However, whether these ventures can generate sustainable long-term revenue remains to be validated by the market. POP MART's answer is: "At this stage, the company's priority is to refine foundational capabilities in products, operations, training, and supply chain, and to truly perfect the business model."

When LABUBU's performance exploded in 2025, Wang Ning told reporters at year-end that he needed to proactively slam on the brakes for the company. "We're more on edge than ever, like a novice driver who's suddenly thrust into a Formula 1 car. One moment of inattention and it could be very dangerous." Now, despite earnings pressure, POP MART has officially entered a "repair phase." Yet Wang Ning believes the company's governance and health are far better than last year: "If you ask me whether this year's earnings pressure is greater than last year's, the answer is yes, and it will be even greater in the second half. But if you ask me whether the company is becoming healthier, I believe POP MART is indeed getting healthier."