Pop Mart Revenue Falls 45% to 50% as Overseas Slump Tests Growth Beyond Labubu

Overseas sales lead a sharp reversal

Pop Mart disclosed on October 27, 2026, that its unaudited revenue for the third quarter fell 45% to 50% from a year earlier, with sales in the Americas dropping 70% to 75%. The maker of Labubu collectibles is now trying to reduce inventory, protect profit margins and build demand for more characters after the extraordinary sales surge of 2025.

The decline reached every major region. China revenue fell 25% to 30%, Asia Pacific revenue outside China dropped 65% to 70%, and Europe and other regions recorded a fall of 50% to 55%. Asia Pacific in the update covers other Asian markets and Oceania.

China's stores held up much better than its online business. Revenue from physical channels fell 5% to 10%, compared with a decline of 45% to 50% online. For a company whose rapid expansion had been powered partly by internet demand for Labubu, the gap makes store performance central to its response.

Chief operating officer Si De said China could still achieve revenue growth for the full year and that customer traffic in most overseas countries and regions had become steadier. Management expects the fourth quarter holiday season to bring an improvement from the third quarter, while banks have lowered forecasts for sales and earnings.

The immediate challenge is concrete: Pop Mart has more stock to sell, a larger international store network to operate and a much stronger previous year to match. Its film, animation and theme park projects remain longer term plans rather than immediate sources of relief.

Why the comparison with 2025 is so demanding

Pop Mart's third quarter revenue in 2025 grew 245% to 250%, making it the strongest third quarter in its history. China revenue increased 185% to 190%, while overseas revenue rose 365% to 370%, as Labubu became a global collecting phenomenon.

A high comparison base means the starting point for measuring growth was unusually large. Using the published ranges, revenue that stood at 100 in the third quarter of 2024 would have reached roughly 345 to 350 in 2025. After the latest decline, it would stand at approximately 173 to 193 in 2026. That calculation puts the current quarter about 73% to 93% above the equivalent period in 2024, despite the sharp annual fall.

The longer growth record shows how quickly the business changed scale. Annual revenue rose from 13.038 billion yuan in 2024 to 37.120 billion yuan in 2025, an increase of 184.7%. THE MONSTERS, the character family that includes Labubu, generated 14.161 billion yuan in 2025, up 365.7%.

Growth continued early in 2026 before weakening. First quarter revenue rose 75% to 80%. Revenue for the first six months reached 17.173 billion yuan, up 23.8%, while profit attributable to company owners rose 10.1% to 5.038 billion yuan. Adjusted net profit, a separate measure that excludes certain accounting items, increased 9.5% to 5.156 billion yuan.

China's stores and online sales pull apart

China entered the third quarter after revenue growth of 47.3% in the first half, including 62.7% growth online. The subsequent decline was especially steep on digital channels, which had also expanded by 300% to 305% in the third quarter of 2025.

Senior vice president Chu Yin said stores remained the main contributor to China's third quarter business and that store customer traffic continued to grow from a year earlier. She also described pressure on traffic from ecommerce platforms for more than a month during the quarter.

Rising visits and falling store revenue can occur together because sales also depend on how many visitors buy and how much they spend. Pop Mart's update gave revenue ranges, while management's traffic comments described customer visits. Both measures will matter as the company tries to convert continued interest into purchases.

Chu expected fourth quarter activity to remain steady or improve, and management maintained its expectation of positive annual growth in China. That regional outlook sits alongside a more cautious group outlook: founder and chief executive Wang Ning had already said at the August interim results meeting that the company was unlikely to meet its original annual growth target of 20%.

Inventory becomes a central operating task

Pop Mart's inventory increased from 5.473 billion yuan at the end of 2025 to 6.102 billion yuan at the end of June 2026, a rise of about 11.5%. Inventory turnover days increased from 123 days for 2025 to 201 days in the first half of 2026.

Inventory turnover days estimate how long goods remain in stock before they are sold. The increase of 78 days means more money was tied up in merchandise for longer, making decisions about production, replenishment and stock transfers more pressing.

Management said inventory levels peaked in May and began declining in August, with the reduction becoming more apparent by the end of September. Its response includes adjusting replenishment, changing the mix of products and moving goods between regions. No updated total inventory value for September was given.

Executives said overseas demand forecasting had improved but remained less accurate than in China. The large swings in sales during 2025 and the first half of 2026 made historical figures less useful when deciding how much merchandise to order.

Pop Mart does not currently plan a large promotional clearance. Management said new product supplies for the fourth quarter were relatively sufficient and described efforts to find large retail chains in the United States as partners. Such cooperation would create another sales route for licensed products and help move some existing stock.

Pricing changes put pressure on margins

Pop Mart has lowered prices for some products in the United States while raising prices on a smaller number. Management said tariff costs had influenced the launch prices of some products over the previous year, leaving differences between otherwise comparable items.

The company expects its gross margin in the second half to fall by no more than two percentage points from the first half's 69.7%. That guidance implies a margin of at least about 67.7% if the forecast holds. Gross margin measures the share of revenue left after the direct cost of the goods sold, before expenses such as store rent and administration.

The first half gross margin was already 0.6 percentage points below the previous year. The adjusted net profit margin fell from 33.9% to 30.0%, showing that the portion of sales retained after a wider range of expenses had also narrowed.

Overseas stores bring continuing rent and staffing costs even when sales slow. JPMorgan expects the second half net profit margin to decline to about 21%, reflecting weaker revenue, some gross margin pressure and operating costs that are difficult to reduce quickly. That figure is the bank's forecast, while management's guidance concerns gross margin.

New characters grow as Labubu cools

THE MONSTERS generated 4.454 billion yuan in the first half of 2026, down 7.5%. Its share of group revenue fell from 34.7% to 26%, showing how the business is changing as the Labubu surge subsides.

Twinkle Twinkle, known in Chinese as Xingxingren, moved in the opposite direction. Its first half revenue rose 580.6% to 2.650 billion yuan, making it Pop Mart's second largest character property and accounting for 15.4% of group revenue.

Pop Mart had six character properties each generating more than 1 billion yuan in the first half and 11 generating more than 100 million yuan. Management said six properties together contributed more than 60% of Asia Pacific business in the third quarter.

SKULLPANDA, Hirono and Twinkle Twinkle were gaining traction overseas, according to Jefferies. Pop Mart also introduced products connected with Twinkle Twinkle and Dimoo during the quarter. The operating task is becoming more detailed: managers must match stock to individual characters and products across markets, rather than concentrating primarily on one dominant hit.

Flagship stores continue, with greater selectivity

Pop Mart is continuing with prominent stores despite the sales downturn. Its first New York flagship is expected to open by the end of 2026, with a second planned for the first half of 2027. A Milan flagship is scheduled for the first quarter of 2027, and the London flagship has begun trial operations.

The company opened a European flagship on Boulevard Haussmann in Paris in September and a flagship occupying three floors near West Lake in Hangzhou. These locations give consumers places to see products and encounter a wider range of characters.

Si said online traffic overseas was recovering more slowly than physical retail traffic. He described stores as a way to attract customers and recruit members who may later shop online. Management nevertheless said flagship openings would no longer be a core objective in themselves, with future decisions depending more closely on location and store quality.

Other experiments include desserts, building blocks and accessories. Management planned to open the first standalone dessert shop inside a shopping mall in Beijing at the end of October. Temporary shops will remain a marketing activity rather than a major expansion priority.

Films and parks remain at an early stage

The Labubu film is still in script development. Pop Mart is also exploring a possible Labubu animation project with overseas companies and discussing other character projects with creative teams. Management said it would avoid a large immediate increase in content spending while projects remain at an early stage.

Executives see several possible uses for a successful film beyond ticket sales. Characters, music and settings could feed into new merchandise, licensing and park experiences. Licensing means allowing another business to use a character under an agreed commercial arrangement.

Pop Mart is upgrading its existing Beijing park, where evening activities have extended opening hours. Further plans include improving facilities and expanding some areas. A location for the second park is still being sought, and no opening date was announced.

The operating changes and announced plans span several dates:

• May 2026: Management said group inventory reached its peak.
• August 2026: Inventory began declining, and Wang warned that the annual growth target was unlikely to be met.
• September 2026: The Paris flagship opened, while management saw a clearer reduction in inventory.
• October 27, 2026: Pop Mart disclosed the third quarter revenue decline.
• End of 2026: The first New York flagship is expected to open.
• First quarter of 2027: The Milan flagship is expected to open.

Investors weigh a recovery against lower forecasts

Pop Mart shares closed October 27 at HK$132, down 0.75%. On October 28, they fell more than 6% in early trading before recovering much of the loss. The stock had lost more than 30% since the start of the year and had finished lower in nine of the preceding 12 sessions.

Jefferies had expected a third quarter revenue decline of 30%, less severe than the result, and cut its 2027 and 2028 earnings estimates by 9% to 12%. It forecasts fourth quarter revenue rising 3% from the third quarter while remaining 34% below the previous year.

JPMorgan is more cautious, projecting a quarterly increase of just 1% and an annual decline of 41% in the fourth quarter. It lowered its full year revenue estimate to 30 billion yuan, approximately 20% below 2025, and cut its share price target from HK$110 to HK$100 while maintaining an underweight rating.

HSBC reduced its 2026 revenue forecast from 34.6 billion yuan to 33.2 billion yuan and lowered its 2027 and 2028 revenue estimates by 8% and 9%. Citi expects a 16% revenue decline in 2026 but retains a buy rating and a HK$162 target. CICC cut its adjusted profit forecasts for 2026 and 2027 by 18% and 16%, respectively, while retaining an outperform rating and a HK$160 target.

Other supportive ratings also came with lower expectations. UBS maintained a buy rating with a HK$174 target, while CLSA retained an outperform rating with a HK$156 target. Investor Duan Yongping said on October 21 that he expected to buy more shares, while keeping his holding below 10% of the company.

The fourth quarter will test whether steadier traffic, holiday demand and lower inventory can translate into stronger sales. Even the forecasts for improvement from the third quarter still anticipate substantial declines from 2025. For Pop Mart, recovery now means turning a broader collection of characters and a larger store network into repeat purchases at sustainable costs.

Key Points

• Pop Mart's unaudited third quarter revenue fell 45% to 50% from 2025.
• The Americas recorded the steepest regional decline, at 70% to 75%.
• China store revenue fell 5% to 10%, compared with a 45% to 50% decline online.
• Management said inventory began falling in August and ruled out large promotional clearances for now.
• China is still expected to achieve annual growth, although Wang has warned that the group's original 20% growth target is unlikely to be met.
• Twinkle Twinkle grew rapidly as THE MONSTERS revenue declined in the first half.
• The Labubu film remains in script development, and the second park is still awaiting a location.