Chinese toymaker Pop Mart recorded its first year-on-year decline in domestic online sales since 2024 in May, raising fresh questions about the sustainability of demand for its intellectual property (IP) portfolio, including its blockbuster Labubu character.

Domestic online sales fell 5 per cent from a year earlier and 14 per cent from April, according to Moojing e-commerce data tracking transactions across Tmall, Taobao and Douyin. Sales were also 25 per cent below the average monthly level recorded in the second half of last year.

“This confirms our earlier prediction of mounting sales pressure in Pop Mart’s domestic market from the second quarter of 2026 onwards,” said Deutsche Bank analyst Sammi Xu. “We believe this pressure could intensify in the second half of the year, driven by a higher comparison base and waning IP popularity in China.”

Shares of the Hong Kong-listed company fell 2 per cent to close at HK$171.30 on Wednesday.

“We think the earlier frenzy surrounding Labubu has cooled, while intensifying competition is likely to weigh on revenue growth in 2026,” said Jeff Zhang, an analyst at Morningstar.

Since the beginning of the year, Pop Mart has accelerated the roll-out of new products, which Deutsche Bank said was the main driver of sales growth.

In the first quarter, revenue in mainland China surged between 100 and 105 per cent year on year, although overseas markets recorded a quarter-on-quarter decline. The company did not disclose quarterly revenue or profit figures.