Having passed its peak, POP MART has begun a bumpy descent.

On August 20, POP MART released its interim results. For the first half of the year, the company generated revenue of RMB 17.17 billion, up 23.8% year-on-year, with adjusted net profit of RMB 5.16 billion, up 9.5%. Both revenue and profit fell short of market expectations.

The strongest hit product is indeed waning. Revenue from the THE MONSTERS series, home to LABUBU, reached RMB 4.45 billion, a year-on-year decline of approximately 7.5%.

Overseas markets are under visible pressure, with revenue in the Americas dropping 16.5% and the Asia-Pacific region falling 9.7%. The overseas online channels, which absorbed substantial traffic last year, have also seen a marked pullback.

Management has acknowledged that, due to a high comparison base and operational adjustments, the company will likely miss its previously set 20% revenue growth target this year.

Where the LABUBU Cycle Shift Leaves the Company

The shift in the LABUBU cycle is a new phase POP MART cannot avoid, and its impact goes beyond just slower growth.

During the explosive period of 2025, POP MART enjoyed the positive operating leverage brought by a super IP. As management reflected during the earnings call, the past year included a stage where "one strength masked many flaws."

Now that growth has returned to a normal cycle, the issues once hidden by the glow of traffic—such as sustained IP operations, global organizational efficiency, and supply chain and inventory management—will be re-examined without the support of super-charged traffic.

Following the earnings release, POP MART's stock price dipped. Compared to its all-time high set in August 2025, the share price has now retreated by roughly 58%. In response to market volatility, the company announced a share buyback program of RMB 2 billion to RMB 5 billion over the next six months.

But buybacks do not answer the most critical question the market is watching.

When a super IP no longer delivers sustained high growth, does POP MART rely on a one-off wave of traffic luck, or does it have a business model that can consistently create, operate, and monetize IPs?

The First Ripple: Rising Difficulty in Demand Forecasting

The first impact of the LABUBU cycle shift is that demand forecasting has become more difficult.

As of the end of June, the company's inventory reached RMB 6.102 billion, up from RMB 5.473 billion at the end of last year. Inventory turnover days also lengthened from 123 days in 2025 to 201 days.

The inventory pressure does not stem from products completely losing demand, but rather reflects a mismatch between supply chain predictions and actual demand changes during the super-hit product cycle.

In 2025, LABUBU rapidly broke through in global markets. Social media buzz, celebrity endorsements, and the chase by overseas consumers jointly amplified demand in a short period. But for IP consumption, such surges are highly non-linear.

The secondary market performance of new LABUBU products has already weakened noticeably compared to the explosive period last year.

A Deutsche Bank channel check at the end of June indicated that on the first day of the LABUBU 4.0 "Retro Barbershop" series launch, e-commerce platform sell-through rates were only 30% to 50% of what major IP launches saw previously in 2026, and inventory did not sell out immediately.

The FIFA collaboration series, launched earlier, also failed to fully match sales expectations.

During the earnings call, management reviewed that the project started early, the marketing cycle was drawn out over a longer period, and ultimately some inventory was left over.

However, the company does not believe the FIFA partnership itself failed. Management still affirmed the role of World Cup exposure in boosting LABUBU's global recognition, but noted that for an IP, the journey from gaining attention to generating sustained consumption requires a longer period of cultivation.

"Fans need time to accumulate and settle; everyone needs time to understand each IP more deeply. IPs need to be nurtured slowly."

The inventory build-up is not solely due to changing sales momentum of a single IP; it is also tied to the complexity of the overseas supply chain.

Compared to the domestic market, overseas operations require earlier inventory planning and bear longer transportation lead times.

When demand shifts faster than the supply chain can adjust, a mismatch is more likely to emerge: increasing pressure to clear old stock while new product replenishment lags.

Last year, POP MART's overseas offline network was not yet fully established, so the sudden demand from LABUBU was primarily absorbed by online channels. As traffic cooled, online became the fastest segment to decline.

In the first half of 2026, POP MART's Americas revenue was RMB 1.89 billion, down 16.5% year-on-year, while the Asia-Pacific region (excluding Greater China) brought in RMB 2.58 billion, a decline of 9.7%.

Breaking it down, Asia-Pacific online revenue fell 39.8%, with the Shopee channel plunging 62.1%. Online business in the Americas also dropped 45.6%.

This has pushed POP MART to pivot toward physical stores, membership programs, and localized merchandise operations to absorb demand.

The "overseas infrastructure" management refers to is precisely aimed at addressing these gaps: advancing overseas factories, regional warehousing, and international logistics to shorten product launch cycles.

By using supply chain digitalization to integrate forecasting, ordering, production, transportation, and inventory data, the company aims to improve replenishment and global allocation efficiency. At the same time, it is strengthening overseas engineering capabilities in site selection, design, construction, and cost management to improve store quality.

In the first half of the year, POP MART's rental-related expenses grew 43.3% year-on-year to RMB 1.044 billion, and sales personnel costs rose 45.7%. The global sales workforce expanded from 6,219 to 9,734 people.

During the same period, capital expenditures increased from RMB 375 million to RMB 724 million, and right-of-use assets grew from RMB 2.791 billion to RMB 3.603 billion.

Regarding inventory disposal, management stated during the earnings call that the company will reduce new orders and strengthen inventory transfers between regions to improve the efficiency of clearing existing products.

Management emphasized that it does not want to rely primarily on large-scale, low-price promotions to clear inventory, as that could damage the product pricing system and brand image. After preliminary adjustments, the company said total inventory began to gradually decline in July.

Can the IP Relay Race Hold Up?

Just as the traffic halo from LABUBU's explosive period masked some operational issues, the current pressure from LABUBU's cooling popularity may also cause the market to overlook the resilience forming within POP MART's broader IP portfolio.

Excluding THE MONSTERS, the group's other business segments grew revenue by approximately 40% in the first half of the year.

Hirono, which has been cultivated as a key IP for only about two years, is showing strong growth momentum. Its first-half revenue reached RMB 2.65 billion, up more than 580% year-on-year, contributing nearly 70% of the group's net revenue increase.

Other mature IPs such as CRYBABY, DIMOO, and SKULLPANDA posted revenues of RMB 1.63 billion, RMB 1.62 billion, and RMB 1.55 billion respectively, with year-on-year growth of 34%, 46.5%, and 27.1%—all higher than the group's overall growth rate.

If measured by the ability to "consistently and steadily produce high-sales IPs," POP MART's IP operation capability shows no obvious weakness.

But LABUBU's special value lies not only in revenue contribution, but also in proving that a Chinese original designer toy IP can break through its original cultural circle and enter the global mass consumer market. Whether Hirono and other IPs can replicate this remains an open question.

At the same time, differences in growth speed and life cycles across IPs persist. In the first half, MOLLY, an IP with a 20-year history, generated approximately RMB 900 million in revenue, down about 33.6% year-on-year, falling out of the RMB 1 billion tier. Revenue from "other artist IPs" was roughly flat.

Furthermore, the relay and continuation of IPs does not rely solely on the constant emergence of "new characters." It also depends on the company's ability to extend the life cycles of existing IPs and continually expand their commercialization space.

Looking at the revenue structure, POP MART is pushing product formats to extend from traditional figures into more consumer scenarios.

In the first half, POP MART's plush product revenue reached RMB 9.825 billion, up 60% year-on-year, accounting for 57.2% of group revenue. Meanwhile, figure revenue was RMB 5.192 billion, up only 0.3%, while other IP-related product and other revenue declined 15.8%.

Plush is gradually evolving from a hit category for a single IP into a shared tool for operating multiple IPs.

Compared to figures, which carry stronger collection attributes, plush products offer companionship, portability, styling, and social display attributes. They increase the frequency of consumer interaction with IPs and expand the scenarios for IP consumption.

However, the replication barrier for plush is relatively lower than the creation of the IP itself. As more IPs adopt similar product formats, the company still needs to answer how to avoid the trap of "swapping characters without changing the gameplay."

Another track being advanced is the upgrade of retail and consumer scenarios.

Chu Yin, President of China Business, stated at the earnings call that in the first half, more than 20 domestic stores underwent relocation or renovation. Sales growth at these renovated stores was notably higher than the overall national store trend, with both store efficiency and floor area achieving double-digit growth.

According to the plan, upgrades for dozens more stores will continue in the second half of the year.

Within the emerging business segment, the theme park business POP LAND completed a new area upgrade, adding more rides, performances, and interactive content. POP BAKERY is attempting to extend IPs into more everyday lifestyle scenarios through standalone stores.

These new businesses are not yet major revenue contributors, but rather serve functions of experience and IP value extension.

From the domestic market perspective, the cooling of LABUBU has not led to an obvious IP vacuum. Mature IPs, the plush category, and offline scenario upgrades are stepping in to sustain growth.

But for POP MART, which aspires to be a global player, the real test remains overseas: only when overseas consumers begin paying for IPs beyond LABUBU will its global IP relay race be deemed a true success.