Pop Mart H1 2026 Earnings Live Stream
[AI Key Takeaways]
Financial Performance
- Revenue in the first half of 2026 reached RMB 17.17 billion, a year-over-year increase of 23.8%
- Gross profit was RMB 11.97 billion, up 22.6% year-over-year, while the gross margin declined from 70.3% to 69.7%
- Net profit amounted to RMB 5.1 billion, an 8.9% year-over-year increase, with the net profit margin decreasing from 33.7% to 29.7%
- Adjusted net profit reached RMB 5.16 billion, up 9.5% year-over-year, with an adjusted net profit margin of 30%
Business Progress
- Global registered members exceeded 100 million, reflecting the continuous expansion of brand influence
- "The New Emerging Figures" became the fastest-growing IP, with sales reaching RMB 2.65 billion, a year-on-year increase of 580.6%
- Labubu generated sales of RMB 4.45 billion, remaining the top-selling IP
- Plush toy revenue reached RMB 9.83 billion, up 60% year-on-year, contributing 57.2% of total revenue
Next Quarter Guidance
- Management expects pressure in Q3 to be greater than in the first half of the year, and the initial annual growth target of 20% may not be achieved
- The company will adjust its annual positioning, prioritizing long-term development over short-term performance metrics
- Overseas business is expected to continue facing year-on-year pressure in the second half of the year
- Plans to launch a share buyback program worth RMB 2-5 billion
opportunity
- The brand-upgrading strategy is being steadily advanced, with global brand awareness and reputation continuously improving
- New innovative businesses such as desserts and theme parks have exceeded expectations, providing new momentum for future growth
- The dual-core strategy of globalization and group integration is exploring more long-term growth opportunities
- Our IP platform capabilities continue to strengthen, enabling the continuous creation and operation of high-quality IPs.
Risks
- Overseas markets faced pressure from a high base effect last year, while online channels were significantly impacted by declining traffic.
- Inventory pressures persist, with a slight increase in the proportion of inventory aged over two years.
- Global geopolitical instability has led to rising raw material costs and increased logistics expenses.
- Global economic conditions and geopolitical factors have adversely affected consumer spending.
[AI Conference Transcript]
Operator
Pop Mart International Group Limited 2026 Interim Results Conference Call. I am Li Hongxuan, Joint Company Secretary of Pop Mart, and I will serve as the moderator for this conference call. First, allow me to introduce the management representatives attending today’s call: Mr. Wang Ning, Chairman of the Board and Chief Executive Officer; Mr. Si De, Chief Operating Officer; Mr. Wen Deyi, Chief Growth Officer; Mr. Yang Jinbin, Chief Financial Officer; and Mr. Chu Yin, Senior Vice President. Welcome, everyone.
I would now like to invite Mr. Wang Ning to deliver the opening remarks. Mr. Wang, please.
Ning Wang
Hello everyone. I see many friends joining us online today, and I sincerely thank you all for attending our earnings conference call. The first half of this year was quite unique for us. Indeed, we faced significantly more pressure than anticipated, encountering numerous difficulties and challenges that were previously unforeseen.
However, as you can see from our semi-annual results today, there are areas where we fell short, but also many aspects where we performed better than expected. Overall, I am deeply grateful for the efforts of all our colleagues. I believe we have delivered a result that I find very satisfactory.
While the figures reveal certain shortcomings and growth areas, there are also intangible efforts not immediately visible in the numbers. Today, I will first ask my colleagues to provide a brief overview of our performance over the past six months. Later, during the Q&A session, I will share our detailed perspectives on these results, our outlook for the future, and our strategic considerations. Thank you all.
Li Hongxuan
Thank you, Mr. Wang, for your wonderful remarks. Next, the company's management team will provide a detailed overview of the financial performance for the first half of 2026 and the operational status of each business segment. Following the management presentation, we will proceed to the Q&A session. First, I would like to invite Mr. Yang Jinbin, our Chief Financial Officer, to review the company's financial performance for the first half of 2026. Please welcome Mr. Yang.
Yang Jinbin
Hello everyone. I will briefly report on Pop Mart Group's financial results for the first half of 2026. In H1 2026, the Group's revenue reached RMB 17.17 billion, representing a 23.8% year-over-year increase compared to H1 2025. The Group's gross profit was RMB 11.97 billion, up 22.6% year-over-year. The gross profit margin decreased from 70.3% to 69.7%.
Net profit for the Group in H1 2026 was RMB 5.1 billion, an 8.9% increase year-over-year. The net profit margin declined from 33.7% to 29.7%. Adjusted net profit for H1 2026 was RMB 5.16 billion, up 9.5% year-over-year. The adjusted net profit margin stood at 30%, with adjustments primarily related to share-based payments for equity incentives.
Let's look at revenue. From a regional perspective, China operations benefited from refined operations and further enhanced brand awareness, achieving sales revenue of RMB 12.2 billion, accounting for 71% of the Group's total revenue. Overseas businesses, after rapid growth in 2025, saw a slight moderation compared to the same period but maintained relatively high resilience. In H1 2026, sales revenue in the Asia-Pacific region was RMB 2.58 billion (15%), in the Americas RMB 1.89 billion (11%), and in Europe RMB 510 million (3%).
As of June 30, 2026, there were a total of 676 stores and 2,827 robots globally. In terms of IP product distribution, the sales proportion of proprietary products further increased to 99.3% in H1 2026, a 24% increase year-over-year. Within proprietary products, sales revenue from artist IP products reached RMB 15.29 billion, accounting for 89% of sales, representing a 20% increase year-over-year.
In H1 2026, 11 IPs generated revenue exceeding RMB 100 million each. Among them, the emerging character 'Ren' achieved sales revenue of RMB 2.65 billion, a significant 580.6% increase year-over-year. By product category, plush toys generated sales revenue of RMB 9.83 billion in H1 2026, a 60% year-over-year increase, contributing 57.2% of the Group's total revenue. Sales of figurines remained relatively stable, reaching RMB 5.19 billion in H1 2026.
Let's examine gross profit. The Group's gross profit margin in H1 2026 was 69.7%, a decrease of 0.6 percentage points year-over-year. This was mainly due to a 0.9 percentage point decline caused by the reduced proportion of overseas revenue. Additionally, rising raw material costs, influenced by global geopolitical instability, led to a 0.7 percentage point decrease in gross margin. Conversely, a reduction in licensing fees and other items contributed to a 1 percentage point increase in gross margin.
Let's look at profits. In H1 2026, the Group's net profit was RMB 5.1 billion, an 8.9% increase year-over-year. The increase in gross profit contributed RMB 2.2 billion to the net profit growth. However, selling and administrative expenses increased by RMB 890 million year-over-year. Compared to the same period last year, we added a net total of 105 offline stores in major global markets in H1 2026, resulting in higher personnel, rent, and renovation costs. Other factors, including income tax expenses, led to an RMB 890 million decrease in net profit.
That concludes our brief overview of the financial results. We will now dedicate more time to the business introduction and Q&A session. Thank you for your attention.
Li Hongxuan
Thank you, Mr. Yang, for your professional insights. Next, we invite Mr. Si to review the operational performance of each business segment for the first half of 2026.
Sidi
Hello everyone. I will now provide a detailed overview of our business performance in the first half of the year. We continue to focus on IP as our core business, operating across three major segments: consumer products, services and experiences, and entertainment. Overall, the global momentum of our IP portfolio continues to rise steadily. In terms of revenue for the first half, six of our IPs generated over RMB 1 billion each, and 11 IPs generated over RMB 100 million each. The overall performance of our IPs has been outstanding, with a healthier and more balanced distribution across individual IPs.
Labubu remains the most beloved IP among global consumers and continues to be our top-selling IP, with sales reaching RMB 4.45 billion in the first half. To sustain Labubu's growth, we have launched multiple global marketing campaigns centered around this IP. For instance, we engaged in deep collaboration with this year's FIFA World Cup hosted by the US, Canada, and Mexico. Whether through launching World Cup-themed products or featuring Labubu at the opening ceremony and during various matches, we successfully captured the attention of fans worldwide.
We held Labubu's 10th-anniversary exhibitions in Paris, Tokyo, and New York, helping local consumers gain a deeper understanding of Labubu's history, rich worldview, and character narratives. Our new Labubu zone in the theme park also made its debut, offering fans a more surprising and immersive experience. In the second half of the year, we will continue to launch new Labubu products, leveraging diverse categories, innovative play patterns, and highly anticipated collaborations to continuously attract global consumers.
Xinxinren was our fastest-growing IP image in the first half of the year and has become a phenomenal IP in China and most Asian countries. Its sales reached RMB 265 million in the first half. We observed that Xinxinren's mascot performances are deeply loved by fans, while its related software, hardware, and merchandise have also seen strong market demand.
In the second half of the year, we will bring Xinxinren's mascot performances to Singapore and other countries and regions. We hope that through these high-engagement interactive and content formats, Xinxinren can rapidly build brand awareness and a fan base in overseas markets. Meanwhile, we are actively preparing additional marketing campaigns for Xinxinren in Europe and the Americas, aiming to replicate its success in more countries and regions.
In addition to maintaining strong momentum and growth in China, Scorpana and Herono have become the most popular IPs in Western markets, second only to Labubu. Notably, the co-branded series between Scarpana and My Little Pony has gained widespread popularity globally, becoming our best-selling product line in the first half with sales exceeding RMB 600 million.
In July, Skulpana also made its debut on the Paris Haute Couture runway, blending high fashion with trendy art toys to create a unique dark romantic aesthetic. Xiao Ye and Kodak also launched a co-branded collection, creatively merging retro styles with contemporary trends. Xiao Ye’s fourth branded store opened in Seoul, and Cry Baby continues to gain popularity among fans across more countries and regions.
Cry Baby’s 'Tears Flowing into a Sea' series was one of the best-selling collections in the first half of this year, with its plush and merchandise products reaching historic sales highs for the IP. Molly’s 20th-anniversary exhibition is being held in various locations, inviting fans to experience the artistic journey of Kenny and Molly. Dimo’s co-branded products launched in collaboration with Pixar this year achieved remarkable results. As Dimo approaches its 10th anniversary next year, we are preparing richer content to share with our audience.
Our global registered membership has exceeded 100 million, fully demonstrating our brand’s global influence. Our core global users remain influential young people who love beauty, art, and sharing. We will continue to strengthen our global membership system, enhance member engagement strategies, and attract new fans. Our brand will grow together with our fans, leveraging their increased sharing to further expand our global brand influence.
Next, let’s discuss our performance in global markets, starting with China. As shared during this year’s Q1 earnings call, thanks to our accumulation over the past decade-plus in China—whether in infrastructure, team building, or fan base—we have maintained steady and stable growth this year following last year’s high growth. Meanwhile, our brand strength continues to rise, details of which will be shared in greater depth in subsequent segments.
After last year’s high growth in overseas markets, traffic has returned to normal levels, resulting in significant year-on-year pressure this year, a trend we expect to continue in the second half. Online channels abroad bore the brunt of the traffic decline, as incomplete offline store layouts last year drove substantial traffic and purchase demand to online platforms, causing online sales and their proportion to exceed normal levels.
This year, ratios are gradually returning to normal. While same-store sales growth for offline stores has declined noticeably, the stores themselves remain in very healthy condition in terms of sales revenue and profitability. Store traffic remains robust, giving us greater confidence in the future.
This year, we are placing greater emphasis on infrastructure, including internal systems, team building, logistics, workflows, and cross-regional collaboration. We hope these efforts will support long-term, stable growth in the Asia-Pacific, Americas, and Europe regions.
As mentioned, physical stores remain our core focus. We aim to build closer relationships with fans through our stores, allowing them to immerse themselves in the brand’s culture and atmosphere. Recently, we have upgraded stores in key global cities. For instance, the stores you see in the photos in Wuhan, Aranya, and Singapore feature striking visuals and larger floor areas.
These stores have delivered strong returns in terms of foot traffic, business performance, and brand equity. We will continue to upgrade key stores in major countries and regions. However, it is important to note that opening large-format stores is not our overall strategy; this approach is targeted at key markets. The majority of our stores remain in the 150–200 square meter range.
Additionally, for some earlier-established overseas stores, we are actively optimizing and adjusting their locations, moving them from less ideal spots to better ones, and upgrading their sizes from under 100 square meters to 100–150 or 200 square meters. This approach aims to enhance the overall brand experience while ensuring store operating profits remain at desirable levels.
Synergy with offline channels has always been a key focus for us. Across all online channels—including live streaming platforms, e-commerce official websites, vending machines, and mobile apps—we are continuously iterating our strategies company-wide. Simultaneously, we are making significant efforts to integrate online and offline operations across countries and regions globally. Whether through our membership systems or operational logic, we aim to achieve as much integration as possible.
We also aim to craft a seamless user journey. A customer might see our physical stores and experience our products in person, then unexpectedly encounter our robotic stores while taking the subway. Later, they might come across our live streams while scrolling through short videos, gaining a deeper understanding and appreciation of our products, which leads to a purchase on an e-commerce platform. Finally, they might visit our theme parks or exhibitions while traveling.
When they revisit our physical stores, they are likely to develop a stronger and deeper affinity for and identification with the brand, products, and IP. This synergy across different online and offline channels and experiences helps us build stickier and more profound connections with our fans. We have consistently followed this approach in the Chinese market and hope to further enhance these efforts in overseas markets in the future.
Now, let me highlight the status of our merchandise. Over the past six months, we have faced significant inventory pressure. This pressure largely stemmed from deviations in sales forecasts caused by last year's rapid growth, which ultimately accumulated into excess inventory. In the coming months, we will continue to advance more refined end-to-end merchandise management to improve the operational efficiency of our global product portfolio.
We will continue to optimize processes and efficiency in product development. Currently, in markets with longer logistics lead times, such as Europe and the Americas, we still face challenges where new products fail to launch on schedule or sell out immediately upon release. This has, to some extent, increased our air freight costs and caused us to miss certain sales opportunities. We plan to address this by optimizing the timeline from product conceptualization through the entire design and R&D process.
We are also reviewing our global product pricing strategy and are currently adjusting prices in select countries. The digitalization of our supply chain will be a core focus over the next one to two years. Through digital transformation, we aim to achieve leaner production, optimizing costs on one hand and reducing the likelihood of new inventory buildup at the source on the other.
We have established warehousing and logistics systems in more than ten countries and regions globally. Moving forward, we will continue to optimize execution in key areas such as warehouse operations, store distribution, and online fulfillment in major markets. We have also made further adjustments to our team structure, fostering tighter integration among merchandise teams across four regions. We hope that enhanced regional collaboration will improve overall inventory management efficiency.
To date, we have over 10,000 employees worldwide and have established local offices in more than twenty countries and regions. We aim to deepen our brand presence in different countries and markets through more localized teams and business strategies. At the same time, we will continue to strengthen the international capabilities of our headquarters team to better support our global market expansion.
Meanwhile, we are continuously building our internal talent and cultural frameworks. Regardless of where our employees are based or where they come from, we want them to embody the same 'Pop Mart spirit.' We believe this spirit will help us go further and last longer.
Finally, let me update you on our theme parks and new business initiatives. After more than a year of renovations, our theme park officially reopened fully this summer, introducing night-time touring experiences. I believe recent visitors have already noticed the refreshed atmosphere. Operational metrics for the park have been outstanding. We hope that by continuously optimizing the park experience, we can foster stronger emotional connections between consumers, our IPs, and our brand within the park environment.
Meanwhile, the mascot costumes and various performances incubated within our theme parks will also be leveraged for the marketing and development of our global IPs. For instance, as mentioned earlier regarding the World Cup and other performance events, we expect to see more mascot IP appearances across the globe, fostering more engaging interactions with fans worldwide.
Our innovative businesses continue to explore and advance. The Bakery business has sequentially opened stores in Aranya and Singapore. Following locations in Shanghai, Bangkok, and London, Xiao Ye has opened its fourth store in Seoul. Our home appliance and video businesses are also progressing steadily according to plan. Film projects are advancing smoothly as well, although their development cycles tend to be relatively longer.
We hope that through continuous exploration in our innovative businesses, we can further integrate our IPs into more aspects of our fans' daily lives, building stronger connections that go beyond transactions to encompass emotional engagement. Thank you all.
Li Hongxuan
Thank you, Mr. Si, for the detailed introduction. Based on the sharing just now, I believe everyone has gained a more comprehensive understanding of the company's operational performance for the first half of 2026. We will now proceed to the Q&A session. Online participants are welcome to ask questions. Please state your name and affiliated institution when asking. Due to time constraints, please limit your questions to two per person. Thank you for your cooperation.
For participants joining via phone who wish to ask a question, please press the '*' key followed by the number '1' on your keypad. For online participants, you may type your question in the chat area of the live stream or click the 'raise hand' button to request to speak. Thank you.
Operator
We now invite the investor with the phone number ending in 5261 to ask their question. Please provide your name and institution name first. You may now speak. Thank you.
Dustin
Thank you to management for the opportunity to ask questions. I am Dustin from Morgan Stanley. My first question is regarding this year's guidance. I understand that adjusting sales may not be the primary focus for the company this year. However, based on the current situation in the first half of the year, what level of full-year revenue growth are we expecting?
My second question concerns Labubu. From an operational perspective, we have observed more global operational initiatives for Labubu this year, particularly the World Cup marketing campaign, which has brought Labubu's visibility to new scenarios and reached new fans. How does the company internally evaluate the effectiveness and return on investment of this marketing campaign? What subsequent actions for Labubu's operations can we look forward to? Furthermore, considering consumer insights from last year and this year, how is management thinking about Labubu's future development direction? These are my two questions. Thank you.
Ning Wang
Alright, let me start by answering, and others can chime in later. Frankly speaking, I mentioned during this year's annual report disclosure that sales growth is no longer our primary objective. We have defined this year as a year of adjustment. In fact, we had a clear understanding of this last year. Last year, we benefited from both luck and unexpected traffic surges, which drove rapid performance growth.
However, this also exposed numerous internal management issues. Therefore, from the perspective of long-term development priorities, our main concern is resolving these problems to ensure sustainable growth. Consequently, whether in the first half of this year or overall, we have prioritized long-term development in many of our decision-making processes.
We did not adopt overly aggressive sales or expansion strategies just to hit high performance targets. That said, for the entire first half of the year, and now into August, the challenges we face are greater than we anticipated at the beginning of the year. As everyone knows, global consumption has been significantly impacted by international economic conditions, geopolitical issues, and domestic economic factors.
Indeed, these difficulties have exceeded our expectations, including the internal challenges we encountered while resolving issues. Although we achieved over 20% growth in the first half, we anticipate greater pressure in the third quarter because the corresponding period last year had a very high base. We believe the pressure in the second half of the year will be even greater than in the first half.
Naturally, we will not stick rigidly to our initial plans for the first half or the full year, nor will we resort to overly aggressive strategies in the face of these pressures. It is highly probable that we will miss the 20% growth target set at the beginning of the year. However, I believe the company's overall governance and health have improved significantly compared to last year.
So, if you ask me whether the performance pressure this year is greater than last year, the answer is definitely yes. And I believe the pressure will be even greater in the second half. But if you ask whether the company has become healthier, I would say yes. We maintained over 20% growth in the first half, and looking at our IP data, the contribution from Labubu has dropped to only 25%.
This indicates that our overall IP distribution is very healthy. Last year, the viral popularity of Labubu drove significant traffic, which greatly influenced our overseas online channels. If you look at our overseas data, there has been a substantial decline in overseas online performance this year.
However, there are still some positive indicators that we do not find alarming. Our team has visited overseas markets, and on one hand, our domestic performance in the first half was very strong, with growth exceeding 40%. This demonstrates that given our extensive operational foundation in China, there is still significant potential domestically.
Regarding overseas markets, although online performance has declined significantly, our physical stores remain our core base and a crucial driver for future long-term growth. The overall performance of our offline channels remains quite solid, giving us significant confidence in our sustained long-term development.
Therefore, these are relatively positive aspects. In the first half of the year, focusing on the health of our IP portfolio and organizational structure, we optimized many aspects of our operations, team management, and details. We are continuously improving areas where we identified deficiencies.
This includes some of our new business initiatives, such as the theme parks you have seen. Indeed, performance following the renovation exceeded our expectations. I believe that with continuous iteration, our new business segments will continue to deliver pleasant surprises. Furthermore, regarding our overall brand strategy, if you compare our current standing with last year, we have been pursuing a 'brand elevation' strategy in recent years.
With the upgrade of many of our stores and the refined operation of our brand, I believe that globally, both brand awareness and brand affinity have improved. The market's perception of our 'brand elevation' strategy and our brand reputation have continued to rise, which we view as a very positive development.
Yes. In summary, we acknowledge that the challenges this year are greater than we initially anticipated. We apologize for potentially missing our established 20% growth target. However, we do not wish to adopt strategies detrimental to long-term development merely to meet short-term targets. Instead, we feel more confident about the company's long-term prospects.
Yes. While we face some short-term difficulties, we are confident in resolving them and remain even more confident in the company's long-term development. Therefore, we will soon launch a share repurchase program. We plan to initiate a buyback of no less than RMB 2 billion and no more than RMB 5 billion within the next six months, reflecting our growing confidence in the company's long-term growth. Thank you all.
Sidi
Let me provide an update on Labubu. Earlier, questions were raised regarding Labubu's World Cup marketing campaign. This campaign was a comprehensive initiative integrating product launches with the World Cup events themselves. We consider the campaign quite successful. Labubu's performance at the World Cup opening ceremony quickly topped the trending searches and ranked among the top spots on Chinese social media, maintaining this momentum from the early morning hours through the following day.
Beyond China, Labubu also ranked highly on trending lists across social media platforms in multiple countries and regions. This significantly expanded our brand awareness and voice rapidly. Moreover, our partnership with the World Cup spanned the entire duration of the tournament, ensuring Labubu's visibility throughout many subsequent matches.
Through these efforts, we continuously strengthened public recognition of Labubu. The cost of this campaign was likely far lower than anticipated, making it a project with a high return on investment. However, reviewing the project itself, we identified several areas where operational optimization could be further improved.
For instance, our products were launched in March, which may have been somewhat early, extending the peak hype period longer than ideal. This timing was partly due to specific requirements from our partners, which is regrettable. Additionally, our sales expectations for the product may have been overly optimistic. Although sales performance was strong, it did result in some inventory buildup, which we will address in subsequent periods.
From a long-term perspective, how should we operate Labubu? Over the past year, including the first half of this year, Labubu has accumulated a large user base and fan following. Some fans developed an affinity after purchasing products, while others encountered news about the IP without deep understanding. We believe that building a loyal fan base requires time and accumulation. Fans need time to deeply understand each IP, including its companionship value, emotional resonance, and other attributes. Therefore, this is not a matter to be rushed; it requires gradual nurturing.
At the same time, we will continue to launch major global marketing campaigns in the coming period. We hope these initiatives will keep Labubu in the public eye, thereby increasing brand awareness, reinforcing consumer memory, and strengthening emotional connections. Additionally, we plan to engage in interesting collaborations with top-tier IP licensors and celebrity partners, which we believe will help Labubu achieve even greater success in the future.
Regarding our product rollout strategy, we will adjust the pace of new releases to be slightly more moderate. This approach aims to provide both the market and our fans with more time to digest and reflect on each launch. In the long term, we remain committed to investing in theme parks, films, and other content verticals. Through these investments, we aim to deepen Labubu’s accumulation of value within its content universe and world-building.
These accumulations will strengthen public recognition of Labubu. Looking ahead, while Labubu is currently celebrating its 10th anniversary, we can imagine what it will look like twenty years from now. From that future perspective, the next decade represents a new beginning for our operational efforts. We hope that through our operations and long-term persistence, Labubu will truly become one of the world’s leading IPs.
Operator
We now invite the investor with phone number ending in 0662 to ask their question. Please state your name and institution first. You may proceed. Thank you.
Xu Zhuonan
Good afternoon, management team. Thank you for the opportunity to ask questions. I am Xu Zhuonan from CICC. I understand that this year holds significant value and meaning for the company's long-term development. My first question concerns the progress of operational adjustments this year. How does management view the current status of these adjustments? Specifically, how do you assess the achievements of the past six months, particularly regarding the progress of overseas adjustments? What remaining issues need to be addressed? That is my first question.
My second question focuses on the domestic market. We have observed strong demand and robust sentiment in China. How do you view the growth potential of the Chinese market going forward? Could you share any key operational priorities for this year? Thank you, management, for addressing these two questions.
Ning Wang
Alright, I will start by answering. Overall, if we look purely at the numbers, last year saw very rapid growth in total sales, including Labubu. However, I often say that last year's performance masked many underlying issues—a case of 'one white spot covering a hundred flaws.' Beyond the figures, we focused more on the fundamentals of our operations.
For instance, when customers visited our stores, items were either sold out, subject to panic buying, or involved long waiting times. We do not consider this a sustainable or desirable norm. Throughout this operational process, we encountered various challenges across supply chain management, store operations, and personnel management in different regions.
This year, we have been actively addressing these detailed issues across various operational links. We have seen significant progress in resolving or identifying these problems. Moving forward, we intend to exercise more patience, respecting both time and business fundamentals, and dedicate sufficient time to thoroughly resolve these granular operational issues.
Si De
Let me add some specific details, particularly regarding regional differences. For the US market and the Americas team, merchandise has likely been the area under the most pressure over the past year and the first half of this year. Sales volumes have experienced significant volatility, leading to substantial deviations in forecasts. These variances also reflect challenges within our internal systems and our understanding of market dynamics. Additionally, longer logistics lead times have meant that operational models established in China are facing greater pressure when applied to the US market.
Regarding merchandise issues, we are continuously refining our forecasting models and strengthening the merchandise team. We have made good progress across various areas, but we will continue to strive for further improvements in team building. The engineering teams in the US and Europe have also faced significant pressure. Whether for flagship stores or large-format stores, there have been discrepancies between early budget estimates and actual execution costs. Furthermore, the construction quality of standard stores is gradually improving from previously suboptimal levels.
If you look at the stores we have recently opened in Western markets, both construction quality and cost control have reached a satisfactory level. However, as mentioned earlier, logistics lead times have significantly impacted us. You may have noticed that many new products launched in the US and Europe were either not released simultaneously with other regions or faced immediate stockouts. The core issue is insufficient time allocated for product development, leaving limited time for production and logistics. Consequently, the volume available for sea freight was low, necessitating expensive air freight, which further limited shipment volumes.
To address this, we have conducted detailed coordination across product, supply chain, regional operations, and merchandise teams. Our goal is to reduce freight costs while ensuring adequate inventory availability for new product launches. In Europe, we reviewed all existing stores and upcoming openings, identifying various issues related to commercial terms and site locations. As a result, we are renegotiating terms for some stores and abandoning plans for others.
By slowing down the store expansion pace slightly, we aim to achieve healthier store development. Another major challenge in Europe has been the warehousing and logistics system, which faced significant pressure over the past year. We are upgrading our teams and leveraging new suppliers, cooperative models, and warehouse network layouts to enhance warehousing and logistics support for both offline and online channels.
For the Asia-Pacific region, the focus has been on team building. Over the past six months, Justin, Run, and I have dedicated substantial time to interviewing candidates to fill key positions. The team structure is now largely complete. We aim to foster closer collaboration and adaptation between the new and existing team members to drive better business performance in the region.
Additionally, the Asia-Pacific region faces the challenge of upgrading older stores. Since we entered many of these markets early on, numerous stores have smaller footprints or suboptimal locations. We will devote significant effort to adjusting these aspects. Store upgrades are expected to drive brand elevation and improve sales and profitability.
Wen Deyi
Let me introduce the situation in the Chinese market. Domestically, we continue to build and maintain an integrated omnichannel operational ecosystem. We consistently strengthen the differentiated customer experience advantages across various channels and enhance operational synergy. Furthermore, we continue to guide cross-channel customer conversion and extend the lifecycle of our products and services.
Specifically, our domestic offline channels remain the primary source for acquiring new customers. In the first half of 2026, the proportion of new customer acquisitions from offline channels remained in the high double-digit percentage range. Online, by breaking through physical space limitations, we implemented various operational strategies to provide more customers with opportunities to engage with the brand. Consequently, both new and existing customers showed a sales trend of increasing willingness to consume across multiple channels.
In particular, the number of members consuming through two or more channels grew by a high double-digit percentage year-over-year. This significantly helps strengthen brand stickiness. Essentially, the overall market is showing a healthy development trend that does not rely heavily on a single channel or a single product category.
For example, among products in the first half of the year, the overall growth of our top seven IPs exceeded the broader market average. Emerging IPs led this growth trend, while The Monster Labubu continued to maintain positive growth. Last year, the China region also faced an explosive surge in traffic. Other top IPs also showed growth rates higher than the market average, reflecting a relatively balanced performance across our entire IP portfolio.
Regarding offline operations, we continue to implement lean store management practices. In the first half of 2026 (H1), foot traffic continued to grow. From January to May, we achieved double-digit growth. In June, due to the highly effective promotional activities last year which created a very high base, foot traffic was essentially flat or slightly declined. However, the trend returned to positive growth in July and August.
Our private channels, such as blind box machines, showed positive growth trends in the first half of this year across all metrics, including visitor count, the proportion of new brand customers, the proportion of returning channel customers, average revenue per user (ARPU), and all conversion rates. Maintaining these trends in the second half will provide a solid foundation for future growth.
Briefly regarding e-commerce: while there were indeed challenges during major promotional events in the first half of this year, detailed operational metrics show strong performance. Across e-commerce platforms, whether looking at new customer acquisition or repurchase rates from first-party channels—taking Tmall and Douyin as examples—the number of repurchasing customers grew by a high double-digit percentage.
The increase in repurchases by existing customers was particularly significant. The number of repurchasing existing customers among Tmall members and Douyin members both showed a high double-digit year-over-year growth trend. Additionally, looking at our major platform e-commerce channels, using Tmall as an example, even after excluding the impact of hit products such as premium plush toys, daily sales on Tmall still showed a double-digit year-over-year growth trend in the first half of the year.
We do not rely on hit products but rather on consumer operations. Building on the operational foundation of daily sales in the second half of the year, we will continue to enhance operations across various aspects. Thank you.
Operator
Next, we invite the investor with the phone number ending in 7656 to ask a question. Please state your name and institution first. You may proceed.
Xu Hang
Thank you very much to the management team for accepting my question. I am Xu Hang from CITIC Securities. My first question relates to the strategic direction of adjustment and optimization for this year, which management has already discussed in detail. Focusing specifically on organizational structure, could management share with us the most significant changes observed following the restructuring? Additionally, have any issues emerged as a result, and what is the subsequent direction for further adjustments?
Secondly, regarding profitability, we noticed that gross margin in the first half was affected by certain factors. I would like to know what measures are being implemented to address gross margin going forward. Furthermore, considering personnel adjustments and the costs associated with new store openings, how do you project the net profit margin for overseas markets for the remainder of the year? Thank you.
Ning Wang
Overall, we have consistently regarded organizational issues as the most critical challenge in recent years, as we believe all operational success is built upon a healthy organization. Therefore, we have dedicated significant time and energy to optimizing our organizational management capabilities, attracting more top-tier talent, and developing better strategies to cope with various difficulties we may encounter.
Regarding the general direction: in previous years, such as the year before last, we divided operations into four major regions. Currently, these four regions are unified under the management of a central middle-office platform. The core rationale here is, first and foremost, to acknowledge the efforts of our colleagues in each region. They successfully navigated the 'zero-to-one' phase, which inherently involves uncertainty, difficulties, and challenges.
However, as the company and our brand evolve, we enter different stages. Moving forward, our focus shifts beyond just achieving 'zero-to-one' penetration; we aim to establish a cohesive, global brand experience. Previously, we were satisfied with mere market entry—whether through pop-up stores, counters, or distribution channels—as long as our products were sold in a region, which earned us much applause. However, our standards have now changed.
We now expect all stores to better reflect our brand identity, service systems, and operational details. This is a key focus for us moving forward. Since unifying the management structure, we have seen improvements in many areas. If you visit our stores in various global regions, you will notice that the consistency of our brand experience is continuously improving. Of course, every year brings different difficulties, challenges, and complexities as the company grows.
For instance, regarding the supply chain, our previous focus was on timely demand fulfillment. However, with the expansion of our global business and geopolitical uncertainties, logistics lead times in some regions have exceeded our expectations. How we respond to such uncertainties and optimize our proactive risk management capabilities is another key focus for our organizational and management strategy going forward.
Indeed, while our overseas performance showed a year-on-year decline in the first half of this year, it is important to consider the high base effect from last year, partly driven by the surge in popularity of Labubu. If we compare 2024 with 2023, I believe our overseas business continues to demonstrate healthy and stable growth.
Even with the relative year-on-year decline, our profit margins have not been significantly impacted. This indicates that our fundamental business strengths remain solid, thanks to our efforts over the years. Moving forward, our organizational and operational efforts will continue to focus on maintaining the health of the organization and the company, as well as strengthening our fundamental operational capabilities.
Sidi
To add a bit more context regarding our next steps: On one hand, the further strengthening of our middle-office capabilities has raised the bar for our headquarters team in China. There are now higher expectations for global perspective and cross-cultural competencies, including language proficiency. Consequently, we will continue to strengthen our headquarters team over an extended period.
Secondly, from a regional perspective, we have established relatively complete teams across our three overseas regions, which are currently performing well. However, there are still notable gaps in talent pipeline development and long-term succession planning. We recently completed a talent review and will focus on supporting our overseas teams in two key areas: first, enhancing their understanding of company operations, corporate culture, and collaboration with the middle office; and second, helping them build a robust talent pipeline for the future to support the company's long-term growth.
Yang Jinbin
The second question concerns gross margin. Overall, the gross margin in the first half of 2026 decreased by 0.6 percentage points year-over-year. This slight decline was driven by changes in revenue mix, as well as rising costs for raw materials and logistics.
To address gross margin, we are primarily optimizing our supply chain and global logistics to strengthen cost control. First, we are accelerating the development of our overseas supply chain, prioritizing shipments from overseas factories to overseas markets to mitigate the impact of procurement costs on gross margin. Second, we are integrating global logistics resources to enhance our bargaining power with suppliers. By coordinating sea, air, and rail transport, we aim to reduce inbound freight costs, which directly affect product costs.
Regarding overseas market profitability, we expect operating margins to decline in 2026. On one hand, the cooling popularity of Labubu overseas led to an 11% year-over-year decrease in overseas revenue, weakening economies of scale and reducing per-store efficiency. On the other hand, the overseas market is still in an expansion phase, with many new stores opening in the second half of 2026. Pre-opening expenses, such as rent and labor costs incurred during the preparation period, have also contributed to the decline in operating margins for the first half.
We are actively working to optimize overseas operational efficiency by strengthening localized and refined management in overseas markets. Through the establishment of standardized systems—including staffing reviews, inventory processes, and display protocols—we aim to continuously improve store operational efficiency and per-store operating margins. Additionally, we are accelerating local warehouse construction and streamlining warehousing operations. We are also consolidating our supplier base to improve warehousing and logistics efficiency while enhancing our bargaining power with suppliers. Thank you.
Operator
Next, we invite the investor with phone number ending in 5306 to ask their question. Please state your name and institution before proceeding. Thank you.
Si Man
Thank you, management, for the opportunity to ask questions. I am Si Man, an analyst at Bank of America Securities. I have two main questions. The first is more long-term in nature. Historically, the company has undergone adjustments in the domestic market, and from last year to this year, the global popularity of IPs has also fluctuated. From the current standpoint, what are management's primary thoughts and strategic priorities for the coming years, both in terms of IP development and brand building?
My second question concerns new business initiatives. Since the beginning of this year, we have observed positive developments in some of the Company's new ventures, including the dessert business, with the first domestic store opened in Aranya. Could management share any operational metrics for the dessert segment? Additionally, how do you view the synergy between the dessert business and our core operations, as well as its driving effect on the main business? These are my two main questions. Thank you to the management team.
Ning Wang
I have just discussed many aspects of long-term development and our strategic thinking. From an IP perspective, we believe that, leveraging our current operational capabilities, we aim to become a comprehensive IP platform. As everyone can see, although we produce a blockbuster IP every few years, our ability to continuously create and operate high-quality IPs is being steadily strengthened, reinforcing the platform's foundation.
Regarding overseas markets, Labubu may have a significant impact this year. However, domestically, due to our solid foundation and the rapid emergence of new IPs, we have quickly filled the gap left by any cooling in Labubu's popularity. Looking ahead, we remain highly confident in our pipeline of many other strong IPs.
Of course, I do not consider short-term fluctuations in Labubu's performance compared to last year as negative. We have experienced many such cycles. This is also related to our overall operational rhythm. Just as global IP companies align their IP releases with movie release cycles, we manage our IP rollout accordingly. Whether it involves operating top-tier IPs, incubating new ones, or continuously improving our existing platform, I believe our platform is becoming increasingly robust and healthy.
Therefore, we are growing more confident in our platform and our IP operations.
Sidi
Regarding Sweet Bean (Tianpin You): Sweet Bean originated from our initial exploration within the catering segment. We discovered that consumers not only enjoy our trendy toys but also appreciate dessert experiences associated with our IPs. Consequently, the Group established desserts as an independent business line. Currently, there are two main formats: standalone stores and themed pop-up stores. In June this year, we opened our first standalone dessert store in China at Aranya. By late July, during the summer holiday season, we opened a dessert store at Double Tree by Hilton in Singapore.
The performance of both stores exceeded our expectations. The Aranya store attracted over 60,000 visitors. The Singapore Double Tree store achieved an average transaction value exceeding SGD 50 (approximately RMB 250) within less than a month of opening. Regarding the second format, themed pop-up stores, we have cumulatively opened over 40 locations across more than 25 cities in China.
We do not view the dessert business merely as a food and beverage operation. While trendy toys provide visual, tactile, collectible, and emotional value, desserts add gustatory, olfactory, and social dimensions. This helps us reach new consumers, extend customer dwell time, and, more importantly, allows consumers to experience our IPs in a different way.
We hope that when customers visit, they gain not just a dessert, but a beautiful experience and memories connected to our IPs. At this stage, we are maintaining a disciplined approach to the dessert business. We are not pursuing aggressive store expansion; instead, our focus is on refining fundamental capabilities such as product operations, training, and supply chain management. Once the business model is fully validated, we will proceed with steady expansion into suitable markets.
In fact, the dessert business is a concrete example of our exploration into conglomerate-style expansion. For Pop Mart, globalization and group diversification are two core strategic directions. Globalization, which is widely understood, involves exporting our IP products and capabilities to more markets. Regarding group diversification, we have been continuously exploring ways to identify additional long-term growth opportunities based on our existing core businesses. Some opportunities involve extending our current capabilities and operations further into domestic and overseas markets, while others involve discovering new directions with long-term potential.
Once we identify these opportunities, we can incubate them internally, collaborate externally, or participate through internal investments. Through various methods, we aim to gradually build Pop Mart's future business portfolio. Therefore, for us, the most important factor is not the scale or speed of execution, but rather accurately identifying initiatives that truly fit Pop Mart and can create long-term value, executing each one well. Thank you.
Ning Wang
To add some context on the overall performance, I am quite satisfied with our new businesses. As you may have seen, our dessert segment, following its launch from the theme park and the opening of the first store in Anaya, will continue to roll out offline services at our own pace. Overall, its performance has actually exceeded our internal expectations.
Naturally, we also pay close attention to its operations and product quality. It is evident that consumers really like the products we have launched. This includes new ventures such as the theme park, which, as mentioned earlier, are performing better than expected. In this regard, we remain very confident about the future development of our new businesses.
Operator
Next, we invite the investor with the phone number ending in 0903 to ask a question. Please provide your name and institution first before speaking. Thank you.
Samuel Wang
Thank you to the management team for the opportunity to ask questions. I am Samuel Wang from UBS Group. My first question concerns our business philosophy. I have observed that our stores now carry practical items, such as cups with USB ports. I recall that Mr. Wang mentioned in the early stages of the startup that the focus was on creating 'useless' items. Additionally, we have evolved from creating IPs without backstories to producing films. I would like to ask if our original entrepreneurial philosophies are changing due to factors such as scale expansion, and if there are other shifts in strategy you could share.
My second question relates to products associated with Labubu. In the first half of the year, we launched collaborations with Sanrio and a retro barbershop theme. Online reviews have been quite polarized. How does management view this phenomenon? Is this an inevitable stage following the surge in popularity of an IP? Based on past consumer insights, how does management plan the future direction for Labubu, and how do you assess subsequent product design and innovation capabilities to continue attracting new users? These are my two questions. Thank you, management.
Ning Wang
I will answer first. We proposed the concept of 'the usefulness of uselessness' quite some time ago. I believe people should not fixate on whether our products are practically useful. We believe that everything we create has its own significance and value. Of course, in terms of form, as the company develops, we will naturally experiment with various formats. However, the essential logic behind proposing 'the usefulness of uselessness' was our desire to emphasize that our core focus and the essence of our enterprise lie in intrinsic value.
Regarding design, art, and emotional appeal, we consider these aspects more worthy of attention and of greater value. We do not intend to launch derivative merchandise with no design elements, nor do we aim to produce peripherals that merely satisfy basic functional needs. That approach does not align with our overall philosophy.
Certainly. I believe that as our IP portfolio enriches and our artist resources continue to expand, our overall design capabilities are becoming increasingly robust. Naturally, we also possess significant excess design capacity. We intend to leverage this by applying our high-quality designs to products we deem promising.
As previously mentioned regarding productivity, means of production, and production relations, we view our existing design resources and IPs as a new form of means of production that can be replicated across multiple categories. For some categories, we utilize licensing models; for others where we believe we have the capability, we will undertake in-house development. I consider this to be a major future trend.
Sidi
Let me address Labubu. Regarding the perceived polarization or questions about popularity, I believe that if we avoid comparing current generations with the previous blockbuster hit, every product generation continues to deliver strong sales figures. Furthermore, we are committed to continuous innovation. Initiatives like the 'Barbershop' series, which allow users to participate in the design process, represent valuable experiments.
Looking ahead, we will continue to introduce various product forms to create diverse offerings that resonate with consumers.
Operator
We now invite the investor with phone number ending in 7592 to ask their question. Please state your name and institution first.
Meng Ni
Good evening, management. I am Meng Ni, an analyst at Shiwang Hongyuan. I would like to ask about the theme parks. Following the expansion of the park map, the amenities, performances, and IP interactive experiences have become more enriched. Could management share specific feedback on foot traffic and user sentiment since the opening? Additionally, are there any plans for park expansions or new park developments in the pipeline?
Another question concerns inventory. We observed that mid-period inventory increased by approximately RMB 600-700 million compared to the end of last year. Could management comment on inventory health, specifically regarding aging and category composition? Also, based on current inventory levels and supply chain conditions, are there plans to adjust production schedules or increase promotional efforts? Thank you.
Sidi
Regarding the theme park, let me first share some specific data. Since the opening of Phase II and our new areas, foot traffic has increased by nearly double on a month-over-month basis, and by approximately 40% year-over-year. From the perspective of browser-based games, over 25% of traffic originates from this channel. The overall data performance has been very strong. In terms of user experience, I believe that anyone who has visited recently—whether our colleagues, friends, or based on current feedback—has largely had a positive experience.
I personally have visited multiple times over the past two weeks. Whether during the day or at night, one can fully immerse in the park's atmosphere and sense the joy of all visitors. The general mood and engagement levels are quite good. Beyond the positive aspects, the nighttime experience, in particular, aligns closely with our initial vision, and in some areas, it has even exceeded our early expectations.
However, we are also identifying areas for further optimization. Due to the current high popularity and large crowds, wait times for certain attractions can be lengthy. We are exploring ways to better distribute visitor flow, shorten queue times, and enhance the overall experience. Looking further ahead, we are considering operational strategies to address Beijing's seasonal variations, managing operations effectively during the hot summers we are currently experiencing and the colder winters.
From a longer-term perspective, we aim to sustain operations that encourage repeat visits. Beyond specific operational metrics, the theme park brings significant long-term value to the company’s brand and IP portfolio. We believe that every visitor to Pop Mart’s theme park gains a deeper understanding of our brand. Their perception of individual IPs may also change after experiencing live performances, which represents a substantial benefit to the company as a whole.
Simultaneously, we are planning further renovations for existing areas of the theme park. We will initiate the renovation of Bubble Street next year. Additionally, conceptual design for Phase II of the park has already begun. We plan to introduce new IPs into these new Phase II developments, and we hope everyone looks forward to these enhancements.
Yang Jinbin
Let me discuss our inventory situation. Overall, the current status and optimization direction of the group's inventory focus on several key points. First, we noted a slight increase in the proportion of inventory aged over two years in Q1 2025 compared to previous periods. However, broadly speaking, total inventory volume began to turn the corner in July of this year, showing a gradual downward trend. It is worth noting that inventory aged under one year—including new products and unreleased items aged 3-6 months and 6-12 months—falls largely into the 'new product' category. The value of this inventory rose significantly from Q1 2015 to the end of 2015, driven by explosive growth in global business which necessitated higher stock levels. By Q1 of this year, this figure had declined by double digits. The overall trend is stabilizing with a slight decrease, as we balance the need for sufficient new product availability across various regions, including overseas markets, to support future performance while managing inventory levels.
Currently, we are optimizing operations through global cross-regional transfers. For instance, if certain products still have strong consumer demand in Greater China, we execute appropriate transfers to meet local demand quickly while reducing overall global inventory levels. Conversely, if similar differentiated trends emerge in other regions in the future, we will work closely with the merchandise team to execute precise and timely transfers.
Additionally, we are exercising control from the ordering side. As management has stated, we will not chase short-term performance targets at the expense of inventory health. Therefore, to maintain reasonable inventory levels, we are managing orders to prevent an overall upward trend in inventory. Consequently, total inventory is declining slowly, having turned downward since July this year, with the structure undergoing gradual optimization.
Furthermore, whether for brand protection or to ensure the best experience for our existing consumers, we will not engage in large-scale promotional activities. Thank you.
Operator
Due to time constraints, we will take one final question. We now invite the investor with the phone number ending in 7826 to ask their question. Please state your name and affiliation first. You may proceed. Thank you.
Pei Jinzhe
Thank you for the opportunity to ask a question. I am Pei Jinzhe from Jefferies. I have two questions. The first concerns our IP portfolio. Could you share your current view on the balance of our existing IP mix? Beyond Labubu and School Panda, which were just mentioned, have there been any significant trend shifts in the popularity or share of our other IPs overseas? Which IPs are currently showing new potential?
The second question is about store expansion. What is the progress of our store upgrades and renovations in China, and how much room for growth remains? Globally, has there been any change in our expectations for the number of flagship stores? Have there been further changes or adjustments to our store opening plans in different overseas regions? Thank you.
Sidi
Let me start with IPs. As mentioned earlier, SKULLPANDA and Hirono perform very well not only in China and Asia but also in Western markets, where they are basically ranked second or third. In some locations, they may even briefly reach the top spot. This indicates that in Western markets, consumers tend to favor designs that are not purely cute but incorporate more emotional depth or thought-provoking elements. Moving forward, we will focus on this direction and select suitable IPs accordingly. For instance, Nyota, which we have already launched, has shown strong performance data in both Asian and Western markets.
We recently held a designer signing event for Nyota in Germany, which attracted a queue far larger than I had anticipated. Additionally, IPs like Dimoo continue to perform quite well in Western markets. Beyond product development and upcoming standout designs for Dimoo, we are also preparing engaging online interactive content. We hope these efforts will help consumers better understand Dimoo's worldview and develop a stronger affinity for the IP character.
Regarding Zsiga (Gorilla Man), its growth rate in China and Asia has been extremely rapid over the past few months. However, we have observed that its current popularity in the West still lags behind that in Asia. Therefore, we plan to enhance Zsiga's performance in Western markets through various measures, including marketing, product offerings, and display design.
For CRYBABY, we will have more initiatives coming up. For Molly, we expect to launch some breakthrough design products by the end of this year or in the first half of next year. We hope these offerings will present completely different and eye-catching product forms beyond Molly's traditional product line. By leveraging diverse product portfolios across different global regions, we aim to achieve better growth. That covers my main points.
Wen Deyi
Regarding our stores, let me first outline the situation in China. We are continuously advancing our store upgrade and renewal initiatives. In the first half of 2026, we relocated and renovated over twenty stores. These locations demonstrated a significant year-over-year sales growth rate, markedly outperforming the average trend across our national store network. Both sales per square meter and overall store efficiency achieved double-digit growth. We will continue this effort in the second half of the year, with dozens more stores undergoing relocation and renovation. We are meticulously refining and implementing details for each location to deliver an enhanced consumer experience through a refreshed brand image.
As for the store upgrades and renewals planned for the second half of the year, these dozens of locations are distributed not only in Tier-1 and New Tier-1 cities but also across Tier-2 and Tier-3 cities, as well as in Hong Kong, Macau, and Taiwan. This represents a broad-based renovation strategy. We estimate that the average sales efficiency will remain consistent with the levels seen in the first half of the year, although the number of stores undergoing upgrades may be higher.
Additionally, beyond our regular store refreshes, we have opened several flagship stores this year. Those who have visited them likely had a positive impression. We will continue to open flagship stores in the second half of the year. Reviewing the data from the first half, it is worth noting that we do not limit flagship openings to Tier-1 cities; we have also launched flagships in various Tier-2 and Tier-3 cities. For example, among stores that have been open for thirty days, some have generated over RMB 10 million in sales. Notably, the foot traffic at one or two of these locations during their first thirty days has even surpassed that of our well-known Shanghai Shimao flagship store.
Therefore, in the second half of the year, we will continue to expand our flagship store network to enhance both store image and customer experience. Thank you.
Sidi
For our overseas operations, our core focus is on quality over quantity. This represents a shift from our earlier strategy. During the early stages of our international expansion, securing and opening stores was challenging across various dimensions. Consequently, we aimed to accelerate store openings to establish a substantial business footprint and build a stronger team.
Having largely completed that initial phase, our next stage involves two key actions: adjusting underperforming stores opened in the early period, and exercising greater caution in evaluating new store opportunities. We will rigorously assess factors such as location, size, and commercial terms. If a potential site does not meet our standards, we prefer to wait rather than compromise, ensuring we secure high-quality locations.
In summary, while our store opening pace will not slow significantly, we will enforce stricter criteria across all aspects. Additionally, as mentioned earlier, we will begin allocating resources in the Asia-Pacific region to renovate and relocate existing older stores.
Li Hongxuan
Thank you everyone for your active questions, and thank you to the management team for their detailed answers. This concludes Pop Mart International Group Ltd.'s 2026 Interim Results Presentation. We appreciate your participation and your continued attention and support for the company. Should you have any further questions, please feel free to contact our Investor Relations team at any time. Thank you again, and we look forward to seeing you next time. Thank you.
Ning Wang
Alright, thank you all.
More details:POP MART IR
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