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

Pop Mart International

13/05/2026 04:21

Update to move profit margin pressure up to paragraph 1; updates share reaction in first bullet

SHANGHAI, May 13 (Reuters) - Pop Mart 9992.HK, the Beijing-based maker of collectible "blind box" toys, warned on a call with analysts Wednesday that profit margins in the near term will be squeezed by higher production costs for new products driven by rising raw material prices, which have been impacted by Iran-related energy price shocks.

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 around 2% to HK$159.50 by Wednesday afternoon. Pop Mart reported a 75% to 80% rise in revenue for the first quarter after market close Tuesday, beating expectations for growth in China, though it experienced a deceleration in growth overseas.

Fuel prices will also weigh on the international business' gross profit, the company said Wednesday, 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.

 (Reporting by Casey Hall in Shanghai and Sophie Yu in Beijing; Editing by Muralikumar Anantharaman and Thomas Derpinghaus)

 ((Joe.Cash@thomsonreuters.com;))