Pop Mart's sales growth decelerated in the first quarter, showing a slowdown from its rapid pace of expansion last year, as the momentum behind its hit Labubu toy line wanes.

The company reported in a Tuesday exchange filing that its overall revenue for the period ending March grew by up to 80% year-on-year, with sales in China increasing by as much as 105%. This compares to the company's overall revenue growth of 185% and overseas sales growth of nearly 300% in 2025, a surge largely fueled by the Labubu frenzy that transformed the snaggle-toothed monster plush into a worldwide collectible phenomenon.

However, the slowdown highlights increasing pressure on Pop Mart to revive its growth momentum, particularly in markets like the United States, as the Labubu craze subsides and the company faces challenges in replicating that level of cultural impact with a new product.

Pop Mart is collaborating with Sony Pictures Entertainment on a Labubu film, an initiative aimed at extending the character's reach beyond merchandise. In a previous interview, Pop Mart CEO Wang Ning stated that the movie could lead to opportunities in theme parks, products, and other experiential ventures.

For the near term, year-on-year growth is anticipated to weaken further over the next few quarters, with full-year revenue growth projected at 13%, according to a Morgan Stanley report issued Monday ahead of Pop Mart's latest update. Deutsche Bank consumer analyst Sammi Xu forecasts a 2% decline in revenue for 2026.

Growing Divergence in Outlook

Both estimates fall below the "at least 20% growth" target that Wang communicated during the company's March earnings briefing, pointing to a widening gap between management's optimistic guidance and analysts' more conservative expectations.

The Beijing-based designer toymaker reported that first-quarter revenue in the Americas and Asia Pacific increased by up to 60% and 30%, respectively, while revenue in Europe and other regions rose by as much as 65%.

Data from Bloomberg Second Measure, which tracks credit and debit card transactions, indicates that Pop Mart's sales in the crucial U.S. market dropped 42% year-on-year in April, following a 45% decline in March. It is important to note that card-spending data represents only a portion of total sales and can be influenced by promotional activities rather than reflecting fundamental demand trends.

Deutsche Bank has lowered its price target for Pop Mart shares to HK$140 from HK$157. Morgan Stanley reduced its target to HK$247 from HK$278 but maintained that Pop Mart's overseas growth narrative remains intact, suggesting that continued offline store expansion could help transform casual buyers into dedicated, long-term fans.

Since reporting its full-year earnings in late March, Pop Mart's Hong Kong-listed shares have declined by 25%.