China's Pop Mart warns of 2026 profit margin pressure from higher costs

Pop Mart (9992) the Beijing-based maker of collectible "blind box" toys, reported a 75 percent to 80 percent rise in revenue for the first quarter, beating expectations for growth in China, though it experienced a deceleration in growth overseas. 

As explosive growth worldwide for the viral, toothy-grinned Labubu cools, the company has moved to standardise its global retail and operations, as well as expand its entertainment and cultural credentials. There is a Labubu movie in the works, as well as an extension of its Beijing theme park Pop Land which opened late last month. 

• Shares of Pop Mart slipped 2.9 percent to HK$158.10 on Wednesday, on track for the biggest one-day percentage fall since April 17.
• Executives on Wednesday warned on a call with analysts that profit margins in the near term will be squeezed due to higher production costs for new products driven by rising raw material prices, which have been impacted by Iran-related energy price shocks.
• Fuel prices will also weigh on the international business' gross profit, the company said, adding that revenue from higher-margin regions has also declined.
• The company is also navigating market concerns regarding the longevity of its core intellectual properties. While recent collaborations, such as the Labubu x FIFA World Cup 2026 series, have seen high demand, analysts note a cooling in the secondary market for some new releases.

Reuters

 

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