Trendy toy brand Bubble Mart (09992. HK) announced its latest business performance for the first quarter of 2024, mainly revenue growth figures, so what is the inspiration for its performance?
On the whole, Pop Mart's revenue in the first quarter of 2024 increased by 40%-45% year-on-year, of which mainland revenue increased by 20%-25% year-on-year, while revenue from Hong Kong, Macao, Taiwan and overseas increased by 245%-250% year-on-year.
Pop Mart has disclosed the operating data of Hong Kong, Macao, Taiwan and overseas markets since its 2022 annual report. Judging from the growth of the number of stores opened and the scale of revenue, the growth rate of this market is far faster than that of domestic business.
As shown in the chart below, the mainland business is still the main source of revenue for Pop Mart, but the proportion of Hong Kong, Macao, Taiwan and overseas business is increasing, from 4.09% of total revenue in 2021 to 16.92% in 2023.
In 2023, the revenue growth of the Hong Kong, Macao, Taiwan and overseas business segment will reach 134.86%, and according to Pop Mart's business guidance for the first quarter of 2024, the revenue growth rate of Hong Kong, Macao, Taiwan and overseas during the period will be as high as 245%-250%, far exceeding the growth rate of the whole year of 2023, showing that Pop Mart has made great efforts in overseas markets, and it is foreseeable that the proportion of revenue from overseas markets will further rise.
From the perspective of the subdivided channels of Hong Kong, Macao, Taiwan and overseas business, the growth of offline channels is the most significant, as shown in the figure below.
Finet noted that the gross profit margin of the company's Hong Kong, Macau, Taiwan and overseas branches in both offline and online channels was higher than that of the corresponding channels in the mainland, or related to its higher pricing. Taking the results of 2023 as an example, the gross profit margin of offline channels and online channels of Hong Kong, Macao, Taiwan and overseas segments was 74.4% and 73.5% respectively, much higher than the 63.0% and 60.5% of offline channels and online channels in the mainland, and therefore, with the strong growth of offline channels and online channels of overseas business (the growth rate was higher than that of wholesale and other channels with lower gross profit margins), the overall gross profit margin of this market also increased significantly, increasing by 10.4 percentage points year-on-year to 64.9% in 2023.
It is foreseeable that the continued strong growth of Hong Kong, Macau, Taiwan and overseas divisions is expected to further improve the overall profit margin performance of Pop Mart.
Pop Mart did not provide segmented channel operating data for the first quarter of 2024, but provided growth data for each channel of its domestic business.
Compared with the operating data of the first quarter of 2023, the growth of Pop Mart in the first quarter of 2024 has improved in all domestic channels, of which the growth rate of retail stores is 20%-25%, higher than the 5%-10% growth rate in the first quarter of 2023, and the year-on-year growth rate of robot stores remains at the level of 15%-20%.
However, the online platform has changed: the Pop Mart box drawer increased by 0%-5% year-on-year, while the year-on-year decline was 40%-45% year-on-year, or mainly due to the low base, so the growth rate improved.
E-commerce and other online platforms grew by 20%-25% year-on-year in the first quarter of 2024, compared to a year-on-year decrease of 5%-10% in the same period last year. It is worth noting that the Douyin platform has sprung up and become the main growth driver of Pop Mart.
Finet noted that before the 2023 annual report, the main mainland online channels reported by Pop Mart included Tmall flagship store and JD.com flagship store, but from 2023 onwards, JD.com's flagship store has been grouped into other online channels, and Douyin is listed separately, and the sales of Douyin platform in 2023 increased by 431.24% year-on-year to RMB283 million, accounting for 16.56% of its mainland online channels from 2.91% in 2022 , which is close to the contribution of the Tmall flagship store of 322 million yuan.
In the first quarter of 2024, Pop Mart's Douyin flagship store will grow by 95%-100% year-on-year, far exceeding the 0%-5% growth of Tmall's flagship store.
summary
No matter how many people criticize the "blind box" economy, there is no strong development of Bubble Mart.
Judging from its development in 2023, its retail store expansion in the mainland will shift from first-tier cities to second-tier and other cities, while cultivating single-store operations in first-tier cities, and achieving offline revenue growth in the mainland by increasing single-store revenue in first-tier cities and expanding in lower-tier markets. In terms of online marketing, Pop Mart is also very keen to track new marketing methods, and the Douyin platform has quickly risen to the top, replacing JD.com and Tmall, which are growing at a flat rate, as the main growth driver of Pop Mart.
Since 2022, the growth of overseas markets has been very rapid, among which the expansion of offline channels is the mainstay, and the expansion of offline channels has increased exponentially, while online channels are mainly promoted through foreign trade platforms such as Shopee, Shopify and its official website. In view of the high gross profit margin of overseas online channels, it is foreseeable that the overall gross profit margin of Pop Mart is expected to further improve with the increase in the contribution of Hong Kong, Macao, Taiwan and overseas business.
Author: Mao Ting