Pop Mart International Group Ltd. has signaled it will likely fall short of its previously stated 20% annual sales-growth objective, citing a tougher-than-anticipated first half and mounting pressures in international markets.

“We will most likely fail to hit the 20% growth target,” Chief Executive Officer Wang Ning said at a briefing Thursday, following the release of weaker-than-expected earnings for the six months ended June. “Overseas performance saw a year-on-year decline in the first half of this year,” he added.

Chief Operating Officer Si De noted that the company has experienced a substantial inventory buildup over the past six months or more, attributing the issue to deviations in sales forecasts that followed last year’s rapid expansion. This has compounded challenges as sales of its blockbuster Labubu toys begin to normalize after an explosive surge in the prior year.

Despite the deceleration, Pop Mart has reaffirmed its commitment to launching new Labubu products to sustain its flagship franchise. Additionally, the company unveiled a share buyback plan ranging from 2 billion yuan to 5 billion yuan (approximately $297 million to $744 million) over the next six months, underscoring confidence in its long-term prospects even as near-term growth faces headwinds.

These remarks come on the heels of first-half results showing revenue climbed 24% to 17.2 billion yuan, significantly missing expectations and marking a sharp slowdown from the over 200% growth recorded a year earlier. Net income also fell short of forecasts, reaching 5.04 billion yuan.

The performance underscores Pop Mart’s struggle to diversify beyond a single hit product and establish a sustainable entertainment franchise.

In a statement released earlier Thursday, the group said it will “proactively explore diversified content expressions and commercialization paths for its IPs.” It added, “We will also steadily advance the development of new businesses, including POP LAND and POP BAKERY, continuously explore synergies among different business formats.”