Labubu maker Pop Mart shares fall after sales drop in Asia, Americas

Pop Mart's International Headwinds

Pop Mart, the popular maker of collectible toys like Labubu, recently reported its first-half results, revealing a mixed performance that significantly impacted its share price. While the company achieved a robust 23.8% year-over-year rise in overall first-half revenue, reaching 17.17 billion yuan ($2.55 billion), this growth was not evenly distributed across its markets. The primary driver of this increase was a substantial 47.3% jump in revenue within China, indicating strong domestic demand for its products.

However, the company's international expansion efforts faced considerable setbacks during the same period. Revenue in the Asia Pacific region, excluding China, saw a notable decline of 9.7%. Even more pronounced was the drop in the Americas, where sales fell by 16.5%. These figures highlight significant challenges in Pop Mart's strategy to grow its presence outside its home market, suggesting that global consumer preferences or market entry strategies may need re-evaluation.

Citi's Revised Outlook

Following Pop Mart's earnings announcement, financial institution Citi expressed concerns, stating that the results came in below its expectations. The bank specifically pointed to the pressure in overseas markets as a key factor, noting an 11% year-over-year decline in international sales. Citi's analysis further identified several operational hurdles contributing to the company's struggles, including issues with inventory management, supply chain efficiency, warehousing and logistics, and the overall operation of its stores.

In response to these challenges and the disappointing international performance, Citi has revised its financial projections for Pop Mart. The bank now anticipates a group revenue decline of 8% year-over-year for the entirety of 2026. This revised forecast underscores a more cautious outlook on the company's near-term growth prospects and reflects the severity of the issues identified in its overseas operations.

The 2026 Target

The implications of the first-half results and Citi's analysis extend to Pop Mart's own internal targets for the upcoming year. According to Citi, Pop Mart's management now views its initial 20% revenue growth target for 2026 as "difficult to achieve." This adjustment reflects a candid acknowledgment of the unexpected challenges and intensified competitive pressure the company is encountering in the global marketplace.

The revised outlook for 2026 suggests that Pop Mart is bracing for a period of slower growth, potentially requiring a strategic pivot to address the underlying issues in its international segments. Overcoming these hurdles will be crucial for the company to regain investor confidence and stabilize its share price, which saw an immediate drop of over 4% following the announcement, settling at HK$147.70. The path forward will likely involve a concerted effort to optimize its global supply chain and refine its market-specific strategies.