In the three months ending June 2019, Kosé’s sales were higher in almost every Asian country and region where it enjoys a presence. This, it added, was in spite of the economic slowdown in the region.
The strength in Asia reinforced Kosé’s performance, net sales grew 1.6% to ¥81.7bn ($752.5). Its operating profit fell by 24.2%.
However, the company claimed that expenses for aggressive marketing activities caused its earnings to decrease.
Japan falters in strong Asian market
The Japanese cosmetics company said it had been focusing on reinforcing existing sales channels throughout Asia while expanding into new sales channels such as duty-free stores and e-commerce platforms.
The group’s objective was to establish a global and borderless customer base. This included leveraging the demand from foreign tourists.
This was further bolstered by the demand for its ‘high-prestige’ brands such as Decorté and Albion, which were a major source of the company’s growth throughout Asia.
However, sales in its home market of Japan fell by 5.3% to JPY56.6bn ($520.9m).
The company reported that sales dipped in its major sales channels such as the department store channels, which mainly carried its prestige brands. According to the group, the channel experienced weak skin care sales and low tourist transactions.
In the drug store and general merchandise store channels, sales of the ESPRIQUE makeup brand increased. However, skin care brands including SEKKISEI and ONE BY KOSÉ dropped.
The firm’s cosmetaries portfolio, which includes brands such as Suncut, Clear Turn and Visée also a drop in sales.
The company’s performance in North America also declined, with net sales dropping 4.1%.
It claimed that sales were affected by rapid changes taking place in the competitive landscape of the colour cosmetics market.
However, sales at Tarte remained unchanged from a year earlier amid intense competition in the US.
The rest of the markets grew by 67.6%. The company said sales were higher in this category mostly because of measures to enter new markets, primarily the expansion of Tarte Cosmetics in Europe.
Sales of the cosmetics business increased by 3.9% while operating profit decreased by 8.5%.
Its prestige category grew thanks to measures put in place to strengthen the brands. This included activities such as the launch of new products for ESPRIQUE and ONE BY KOSÉ, as well as an increase in promotions for SEKKISEI.
The group noted that its earnings declined mainly because of an increase in the cost of sales ratio and higher selling, as well as general and administrative expenses caused by expenses for aggressive marketing activities.
To boost its cosmetaries business, the company developed new, targeted products and carried out advertising and promotional activities.
However, sales declined by 8.1%. This was attributed to the strong sales in the previous year due to the launch of new products.
Moving forward, Kosé announced a range of products it plans to launch by the end of this year.
It added that it will be unveiling a new concept store in Tokyo’s Ginza District, Maison Kosé, which will include digital innovations.
This is in line with the company’s mission to increase the global presence of Kosé and help the company reach its 2026 target of ¥ 500bn ($4.6bn)