The leading player in trendy toys has encountered a cooling trend in its overseas markets. On May 13th, POP MART held its inaugural quarterly earnings call for Q1, with most senior management in attendance, notably excluding CEO Wang Ning.
For the January-March period, the toy giant's overall revenue grew by 75%-80%. While the Chinese market saw revenue double, the overseas segment registered only double-digit growth, a significant narrowing compared to the previous year. At the meeting, Chief Operating Officer Si De candidly admitted that both overseas users and operational teams remain immature. With a pullback in traffic, performance has seen a retreat, presenting a significant current challenge.
Analysis suggests that the Asia-Pacific region's growth rate decelerating to 25%-30% warrants vigilance. Market penetration in mature overseas markets may have reached a temporary ceiling.
A Sequential Downturn Two months prior, CEO Wang Ning's statement setting a 2026 performance target of "not less than 20%" growth directly triggered a slump in the company's stock price. Compared to this target, POP MART's overall revenue growth of 75%-80% for Q1 2025 exceeded market expectations.
Regionally, revenue in the Chinese market doubled. Si De attributed this to an efficient retail operating system and mature sales channels, with online channel growth soaring as high as 150%. Overseas, revenue in the Asia-Pacific market grew 25%-30% year-over-year, while Europe and the Americas grew 60%-65% and 55%-60%, respectively.
Given that the base for overseas earnings was already higher in the same period of 2025, the year-over-year performance from Wang Ning's team is not considered poor. However, considering the sequential quarter-by-quarter increases last year, especially in the latter two quarters where single-quarter revenue was widely estimated around 5 billion yuan, Q1 overseas revenue has shown a clear sequential decline.
POP MART also indicated that cost pressures are accumulating. Rising prices for raw materials such as crude oil, PVC, and fabrics are expected to increase the cost of newly launched products by 3% to 5%, potentially causing the gross merchandise margin to decline by 0.5 percentage points.
A Grinding Pullback For POP MART, overseas business now accounts for nearly half of its operations. In 2025, its overseas revenue exceeded 16.2 billion yuan, increasing its share of total revenue to 43.8%. Driven by the hit product LABUBU, POP MART's overseas business experienced explosive growth last year but is now showing signs of structural deceleration. In 2025, its overseas revenue grew by 292% year-over-year.
Management admitted that a large influx of new users lacks sufficient understanding of trendy toys and other IPs. Additionally, the company's substantial number of new overseas employees have relatively shallow business experience. This has led to a decline in traffic and significant sales retrenchment.
Analysis suggests the substantial sequential contraction in overseas growth for Q1 is more likely a "U-shaped" grinding bottoming process rather than a "V-shaped" rebound. The noticeable slowdown in growth in Europe and the Americas represents a natural deceleration following increased store density overseas. However, the Asia-Pacific region's growth appears to be reaching a temporary peak.
Management provided an example: a POP MART store in a Jakarta, Indonesia mall, with an area of only 50 square meters, achieves monthly sales of 1.5 to 2 million yuan with considerable profit margins. Yet, they are questioning whether such a store is appropriate—can 50 square meters properly convey the brand's positioning and provide customers with a good consumption experience?
Management believes that at this stage in overseas markets, the focus should shift from merely increasing store count to emphasizing brand image presentation, store design, and operational quality. Analysts note that POP MART needs to complete a transition overseas from being "hit-product driven" to "brand portfolio + channel深耕 (deep cultivation)." This process will require time.
Organizational Reshuffle Regarding overseas operations, Wang Ning has already updated the management structure. In late March, POP MART's Co-Chief Operating Officer Wen Deyi, a key figure who led the expansion into core markets like Southeast Asia, Japan & South Korea, Europe, and the Americas, and built the online-offline overseas sales network, stepped down from overseeing overseas business. He was appointed Chief Growth Officer instead. His overseas operational duties were taken over by Si De.
Si De was originally responsible for the Greater China and Americas regions. The Americas region under his purview performed exceptionally well in 2025, with revenue of 6.806 billion yuan, a year-over-year increase of 748%. Previously, ten mid-office departments at headquarters reported to both Si De and Wen Deyi, leading to coordination issues due to overlapping responsibilities. Now, with Si De overseeing the overall picture and driving international operations across four major regions, efficiency is expected to improve.
A comprehensive adjustment for overseas regions has followed. Si De recently revealed that organizational changes have been made across multiple levels, including artist discovery, IP collaboration, product planning, inventory management, store operations, display design, and global logistics and supply chain. The goal is to enable headquarters to provide more support and empowerment to regional operations, enhancing global operational capabilities.
For instance, small teams responsible for finding IPs and overseas artists, who previously reported locally, are now managed by headquarters. Si De stated the aim is to rapidly empower all major global regions with the proven, mature business model. For example, POP MART's membership system in China is relatively well-developed in terms of both member consumption share and member numbers. Efforts will now focus on perfecting the overseas membership system to support product allocation and operational decisions.
Regarding store openings, management is also striving to establish global unified standards, noting that stores around 200 square meters are their main store format. Since the beginning of this year, POP MART has successively opened flagship stores in Milan, London, Paris, and New York. Management stated they hope these flagship stores will help establish the company's brand image and enhance aspects like experiential culture.
Analysis indicates that in the second half of this year, with the arrival of new product cycles and World Cup collaborations, POP MART's overseas growth rate is expected to stabilize and recover.
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