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Forget the lipstick effect. The trade withstanding the most promising recession this year doesn’t include beauty purchases that drive away the blues, but it’s a gorgeous toy with rabbit ears and a mischievous smirk.
Meet Lovebu. The pint-sized creature, created by Beijing-based toymer Pop Mart, has garnered a frenzy among Z and millennial shoppers of generations in Asia, the US and Europe. Fans line up for hours for a new release. Rihanna, Dua Lipa and Lisa of K-Pop Group BlackPink have been discovered with Labubu keychains hanging from designer bags.
Pop Mart enjoys the growth of meteors. Sales more than doubled last year to $1.8 billion, but profits more than tripled. Hong Kong-listed stocks have skyrocketed more than 500% over the past 12 months despite global economic uncertainty and concerns about the trade war. The market rating is $38 billion, and Pop Mart is worth more than twice as much as the US toy giants Mattel and Hasbro.
Labubu Dolls is sold in a variety of sizes, colors and themes through the Pop Mart website, a global network of 530 stores, and 2,472 “Roboshops” (vending machines). Part of their appeal is that many are sold in “blind boxes.” Buyers don’t know what to do until the box opens. This format encourages repeat purchases, especially from those who chase the complete collection.
With 33x advance revenue, Pop Mart may seem expensive. It trades at more than twice the multiples of Mattel and Hasbro. But while the collectible toy trends come and go, Pop Mart may be able to guide Hello Kitty’s lasting power, rather than going down the baby beanie path.
Toy companies are a bit like media companies. Their sales are driven by ultimately acquiring intellectual property or character brands. Labubu was last year’s breakout star, with sales growing by more than 700% to $422 million, and other Pop Mart character lines, including Molly, Skullpanda and Crybaby, also report booming sales.
Also, Pop Mart has plenty of room for growing overseas. Approximately 39% of the company’s sales come from outside mainland China at this time. North America, Europe and Australia each make up small slivers.
Cash-bound consumers scattered in small luxury during difficult times have long been known. The fact that a doll grinning in a sealed box can fit the bill is probably a sign of what a grumpy thing will look like outside.
pan.yuk@ft.com
