‘No negative view’: Pola Orbis will proceed with POLA China expansion despite strict COVID-19 policies
Pola Orbis is the company behind POLA, ORBIS, Jurlique and THREE. According to the company’s latest third quarter (Q3) financial report, it continued to be negatively impacted by the volatile market environment.
It attributed its dampened results to the disruptions in Japan and China, as well as rising raw material prices and a weakened yen.
POLA’s overseas sales dipped 4% to JPY4.4bn (USD30m). In China, sales declined by 5%. While the impact of lockdowns in China continues, the company said the situation has stabilised compared to the first half of the fiscal year.
Pola Orbis has been pushing the expansion of its ‘super prestige’ beauty brand POLA in China in recent years. In 2021, POLA was responsible for driving up the firm’s Q3 profits thanks to its growing popularity in China.
Despite the troubles, the company reaffirmed its commitment to expanding POLA’s business in China.
For instance, it said it would not change its plans to open new storefronts. “There is no need to review the business model, and store openings are continuing.”
It noted that unveiling stores in malls, especially those that offer aesthetic treatment service, were crucial from a branding perspective.
In addition, the POLA launched on the social entertainment platform Douyin in July after lockdown-related delays, adding to the number of contact points and expanding to new customer segments.
Moving forward, the firm believes POLA has yet to fully tap into the potential among young Chinese consumers, as well as consumers from second- and third-tier cities.
“In the future, the company expects to see the trend of customer segments expanding in the Chinese market from first-tier cities to second-and third-tier cities, so we do not have a negative view of the market environment. We still have the potential to expand customer contacts with new customers and younger generations.”
The situation in China would also have a ripple effect on other markets, including its home market of Japan, which has struggled with the fall of inbound tourists.
“Although the number of visitors to Japan is increasing, the situation will not change significantly unless the number of Chinese tourists increases. We recognise that the future depends on the trend in China’s zero-COVID policy.”
In addition to POLA, ORBIS was also impacted by China’s lockdown, resulting in a 3.9% and 30% decline in net sales and operating income respectively.
On the other hand, Jurlique managed to grow 10.6% in China, thanks to e-commerce. This helped to buoy net sales slightly by 4.1%.
In the nine months ending September, its beauty business reported that net sales decreased by 9.1% to JPY116.2bn (USD792.6m) while operating income fell by 32.2% to JPY8.31bn (USD56.6m).
Its consolidated net sales decreased by 8.8% to JPY119.6bn (USD815.6m) while operating income declined by 37.4% to JPY7.66bn (USD52.2m).