Pop Mart International Group Ltd's business in China remained its biggest growth engine in the first half, with revenue in its home market climbing 47.3 percent even as the collectible toy maker warned that its breakneck expansion is likely to moderate after last year's Labubu-driven boom.
The company's revenue in China rose to 12.2 billion yuan ($1.82 billion) in the six months ended June, while the company added just 10 net new stores, bringing its network to 455 outlets. The results suggest the company is generating more sales from existing stores and its expanding membership base rather than relying on rapid store openings.
Registered members increased to 82.4 million from 72.6 million at the end of last year. Members accounted for 92.9 percent of sales during the period, while the repurchase rate reached 51.6 percent.
Group revenue rose 23.8 percent to 17.17 billion yuan during the first half, while adjusted net profit increased to 5.16 billion yuan. Gross margin improved to 69.7 percent and adjusted net margin reached 30 percent, reflecting continued profitability despite slower growth than last year's record pace.
The shares fell as much as 8 percent in early trading on Friday after the earnings release as investors focused on management's more cautious outlook.
Founder and Chief Executive Wang Ning said the company may not achieve its previously announced target of 20 percent annual revenue growth, citing a much tougher comparison with the second half of last year when Labubu, Pop Mart's best-selling collectible character, became a global phenomenon.
"Last year's third quarter set an exceptionally high base, so the pressure in the second half will be greater than in the first," Wang told analysts on the earnings call. "We will not adopt aggressive strategies simply to pursue growth."
Instead, the company is prioritizing operational improvements after a year in which explosive demand exposed weaknesses across its supply chain, store operations and inventory management, he added.
"Last year was a case where strong sales masked many underlying problems," Wang said. "Consumers were constantly facing sold-out products, long queues and rush buying. That shouldn't be the norm."
Looking ahead, Wang announced a share repurchase program worth between 2 billion yuan and 5 billion yuan over the next six months.
Globally, Pop Mart now operates 676 stores and 2,827 Robo Shops, adding 46 stores and 190 vending machines during the first half. The company has established operations in more than 20 countries and regions and employs more than 12,000 people worldwide.
Overseas growth began to normalize after last year's surge, with performance diverging across regions. Revenue in the Asia-Pacific market fell 9.7 percent to 2.58 billion yuan in the first half, while revenue in the Americas declined 16.5 percent to 1.89 billion yuan. Europe and other markets bucked the trend, with revenue rising 5.9 percent to 505.7 million yuan.
Co-Chief Operating Officer Si De said online sales overseas have slowed as traffic returned to more typical levels following last year's Labubu frenzy. While offline sales growth has also moderated, single store productivity and customer traffic remain healthy, he said.
Rather than rolling out larger flagship stores broadly, Pop Mart plans to focus upgrades on key markets while maintaining its standard overseas store size of about 150 to 200 square meters.
