Yatsen returns to growth: Skin care brands leads recovery but makeup declines

Total net revenues for the fourth quarter of 2023 increased by 6.7% to RMB1.07bn (USD151.1m) from RMB1.01bn (USD140.6m) for the prior year period.

“We made solid progress this quarter amid a still soft retail environment, returning to a growth trajectory as we executed our strategy transformation plan,”​ said Huang Jinfeng, founder, chairman, and chief executive of Yatsen.

The firm’s gross profit for the quarter increased by 10.6% to RMB790.1m (USD111.3m) from RMB714.6m (USD99.5m) for the prior-year period.

“The increase was primarily attributable to a 17.6% year-over-year increase in net revenues from skin care brands, partially offset by a 1.8% year-over-year decrease in net revenues from colour cosmetics brands,”​ said the firm’s chief financial officer, Yang Donghao.

The company owns skin care brands Galénic, DR.WU, and Eve Lom. Revenues from these brands increased by 17.6% year over year for the fourth quarter.

“For our skin care brands, we maintained our focus on brand building and introduced efficient products to foster deeper connections with each brand's audience,”​ said Huang.

According to the company, skin care sales accounted for 51.7% of total net revenue, up from 46.9% the previous year.

Over the quarter, Galénic managed to record strong sales during Singles’ Day, ranking as the number one bring in the premium brightening serum category in terms of retail sales value on both Tmall and Douyin.

Additionally, Eve Lom unveiled its first brick-and-mortar store in Guangzhou to strengthen its position in Southern China.

From an R&D perspective, DR.WU announced its first batch of research projects at the 2023 National Congress of Cosmetics Dermatology in Shanghai.

Huang said the firm remained “committed to R&D investments to drive innovation and growth”​ moving forward.

For the full year of 2023, total net revenue increased by 11.4% to RMB1.38bn (USD194.9m) from RMB1.24bn (USD172.6m).

This accounts for 40.5% of total net revenues, an increase from 33.5% the previous year.

Wins and losses

On the other hand, its colour cosmetics division, comprising of flagship brand Perfect Diary, Little Ondine, and Pink Bear, dipped by 1.8% over the quarter.

However, Huang highlighted some positivity in the portfolio, including the launch of Perfect Diary’s Biolip Essence Lipstick.

The product launch has resonated with target consumers and helped the brand’s repositioning, said Huang

“Biolip Essence Lipstick, the new hero product we launched in September 2023, has been gaining market share in the lipstick category on both Tmall and Douyin.”​

The product’s success is driving the company to expand its line-up with more products.

“Given this product line's potential, we expanded the series to include Biolip Essence Lip Stain in 2023 and the Biolip Essence Matte Lipstick in February 2024, enriching offerings for customers to experience its advanced formulation,” ​said Huang.

The firm also highlighted that Little Ondine and Pink Bear had new products launches that  won industry awards over the quarter.

Moving forward, Huang expressed the firm’s commitment to R&D to ensure the continuous development of successful products in both skin care and makeup.

“The R&D team has developed iconic products, including Perfect Diary's Biolip Essence Lipstick and Galenic's Vivifiant Invigorating Micro Mask. We also strengthened our R&D infrastructure by setting up our Shanghai R&D centre.​

“Going forward, we remain committed to R&D investments to drive innovation and growth.”​