Pola Orbis FY19 sales growth hindered by decline of flagship brand POLA
Pola Orbis Holdings attributed its dip net sales to the decline of domestic inbound demand for its flagship brand POLA.
The Japanese cosmetics firm saw net sales decrease 11.5% YoY to ¥219,920 million and operating income declined 21.2% YoY to ¥31,137 million.
The firm’s beauty care division, which consists of brand such as POLA, OBRIS and THREE, saw net sales dip by 7.1% while operating income fell 21.2%. POLA itself saw net sales decrease by 9.8% and operating income fall 21.6%.
According to the firm, POLA’s decline was mainly due to the decrease in demand for beauty health foods.
It said the brand was unable to recover from the decline with new cosmetic launches in 2019.
In May 2019, the brand relaunched White Shot LX and White Shot MX with a new whitening active ingredient.
In July, it refreshed its APEX personalised skin care series and also launched B.A GRANDLUXE III, POLA’s premium facial serum in November.
Overseas, POLA saw strong growth in China and Korea, but this was unable to cover the loss from its home market.
The firm said the brand struggled domestically to “capture new demand and create repeat customers” and also observed a decrease in inbound customers.
Strengthening the brand
Moving forward, the company said it would strive to improve the brand value of POLA and strengthen the business by launching highly functional products in the anti-ageing and skin-whitening segments.
To capitalise on current overseas demand, the company said it would place more emphasis on its overseas expansion to reach foreign consumers and accelerate brand recognition in the Asian market.
It recently pushed POLA’s Wrinkle Shot Serum into duty-free stores and e-commerce platforms both in Japan and overseas.
The firm highlighted the urgency of rebuilding POLA’s domestic business but also noted the importance of the brand’s overseas expansion.
“POLA will continue this sequential expansion overseas and accelerate growth in overseas operations,” said the company.
In particular, the company stressed the importance of expansion in the Chinese market.
The company said it planned to launch new retail touchpoints at a pace of 30 outlets a year.
By the end of 2022, it hopes to have 45 counters in department stores, 35 stand-alone stores and 30 touchpoints in duty-free stores overseas.
With this, the company hopes to achieve net sales CAGR of 20% from 2020 to 2022.
ACRO, THREE, DECENCIA records double-digit growth
The ORBIS brand remained flat compared to the previous year despite the success of ORBIS Defencera, an oral skin care product certified by the Japanese health authorities.
Defencera contributed JYP29bn ($264m) in sales in its first year, but its success was not enough to drive growth, which remained flat compared to the previous year.
The company attributed this to a decrease in existing customers as a result of strategically narrowing down its consumer target.
Overseas, the company saw success with the brands of its ‘under development’ portfolio.
The portfolio, which consists of THREE, ACRO, DECENCIA, Amplitude and ITRIM saw net sales increase by 10.7%. However, operating income fell due to various investments.
The growth was credited to the strong performance of the brands overseas.
THREE, which marked its 10th anniversary last year, saw 25% growth, driven mostly by overseas sales which consisted of 28% of total sales.
Pola Orbis said it would capitalise on the popularity of THREE by accelerating its expansion into China through cross-border e-commerce as well as duty-free channels.