According to the Chinese cosmetics firm, the Chinese beauty market experienced modest post-COVID recovery over the quarter.
Quoting the National Bureau of Statistics of China, beauty retail sales rose by 11.5% year on year and 0.8% quarter on quarter.
“The year-over-year growth was partially affected by the prior-year period, low base, while quarter-over-quarter growth indicated a mild recovery pattern during the quarter. Online beauty sales also rebounded and demonstrated by the beauty sales growth on Tmall and Douyin on both yearly and quarterly basis, mainly driven by promotion activities during the June 18 shopping festival,” explained Huang Jinfeng, founder, chairman and CEO of Yatsen Holdings.
Vice President and head of strategic investments and capital markets, Irene Lyu noted that the shopping habits of Chinese consumers has altered.
“Consumer behaviour has shifted a little bit from previous impulsive buying habits toward more rational behaviour, which also kind of demonstrates that very strong efficacy and functional value actually probably attract more consumer attention and buying.”
The company’s total net revenues for the second quarter of 2023 decreased by 9.8% to USD868.6m (USD118.4m).
“The decrease was primarily attributable to a 16.6% year-over-year decrease in net revenue from our colour cosmetics brands, which was partially offset by a 2.3% year-over-year increase in net revenues from skin care brands,” Yang Donghao, Director and CFO.
On the other hand, the skin care portfolio increased by 2.3% to RMB325.2m (USD44.8m). It’s skin care brands now account for 37.9% of total net revenues in the second quarter.
Yatsen R&D achievements
According to the firm, it currently accounts 3% of its total net revenues on R&D expenses reflecting its “continuous efforts in scientific advancement and product development”, said Huang.
On August 11, the company unveiled a new manufacturing facility in partnership with South Korean cosmetics manufacturer COSMAX.
“Powered by these developments and our enhanced capabilities, we are confident about the prospect to successfully explore and launch more hero products in the future,” said Huang.
Hero products such as Galénic’s N°1 vitamin C serum have been instrumental in driving growth for the company.
The launch of the new manufacturing facility followed the establishment of Yatsen Ruijin Medical skin care joint laboratory with the Shanghai Jiaotong University School of Medicine.
“We formed this alliance with Ruijin Hospital to jointly conduct research on skin disease, mechanisms, and develop efficient skin care products, leveraging Yatsen's deep experience and strong capabilities as well as Ruijin's remarkable achievements in resource integration across the beauty industry, educational and research institutions, and hospitals. We look forward to advancing the future of skin care together,” said Huang.
In July, the company exhibited at the 25th World Congress of Dermatology in Singapore, showcasing skin care brands Galénic and DR.WU.
This was to raise the brand profiles “among an internationally renowned group of clinicians, scientists, and industry professionals,” said Huang.