Interface journalist | Zhou Fangying

Interface News Editor | Lou Qinqin

On the occasion of the handover in late spring and early summer, the local beauty listed companies that have spent the cold winter have handed over their transcripts in the first quarter of 2022 and 2023.

As can be seen from the 2022 annual report, two domestic beauty companies, Proya and Betani, which are characterized by effective skin care, are still growing against the trend. In 2022, Polaiya’s revenue increased by 37.8% year-on-year to 6.39 billion yuan, and the net profit returned to the mother increased by 41.9% to 817 million yuan; Betaine’s revenue increased by 24.7% year-on-year to 5.01 billion yuan, and the net profit returned to the mother increased by 21.8% to 1.05 billion yuan.

These two local beauty groups are rising stars who broke the 5 billion yuan mark for the first time after shanghai jahwa, an "old-timer", and both of them take a single main brand as the main force of performance.

Polaiya brand accounted for more than 82% of the group’s total revenue for two consecutive years. Winona brand is the only main brand since Betani was founded, which has created a subdivision of sensitive muscle repair.

However, it is worth mentioning that although Betani still maintained a double increase in net profit of revenue under the situation of repeated epidemics in 2022, the growth rate slowed down significantly. In addition to the epidemic raid in 2020, Betani’s revenue and net profit have increased by more than 30% in the past five years.

In 2022, the epidemic situation repeatedly brought more obvious impact on local listed beauty companies such as shanghai jahwa, Marubi, Shuiyang and Shangmei, with their revenue declining by 3% to 26%, while the net profit returned to their mothers decreased by about 20% to 60%.

Marubi Co., Ltd. pointed out in the financial report that the transformation of online channels and the expansion of online self-operated business have led to the increase of various expenses and have an impact on net profit. During the period, Marubi’s revenue decreased by 3.1% year-on-year, net profit returned to the mother decreased by 29.7% to 170 million yuan, while sales expenses increased by over 100 million yuan. Among them, the main brand Marumi’s revenue decreased by 12.3% year-on-year, which obviously caused a big drag on the company’s performance.

Except for Marubi, the common problems of the above-mentioned companies are that the head effect of the main brands is not obvious, and the development volume of new brands is broken.

Taking Shangmei as an example, three brands, Kanshu, Yiye and Red Elephant, accounted for over 90% of the group’s performance, but all three brands experienced a revenue decline of 20% to 30%. Among them, Kans and Yiye are undergoing upgrading and transformation. For example, Yiye is now positioned as a pure beauty brand. The new brands developed by Shangmei in recent years, such as high muscle energy, extreme square and one page, are still in the market cultivation stage, and their coverage spans from mass to high-end, from personal care to maternal and child care, but the revenue benefit is not yet obvious.

Shuiyang Co., Ltd. said in the recent investor relations activities that a brand matrix of "2+2+n" has been formed at present. The newly acquired French high-end skin care brand EDB and the original main brand Yu Nifang are the first 2, the big water drops and the small confusion are the second 2, and N is some new brands. In the first quarter, except EDB and Royal Nifang, other brands still suffered some losses.

The opportunity to expand the segmentation field with new brands has become the consensus of beauty group. The aforementioned Polaiya and Betani, who are more resilient in the epidemic, are also trying to establish a second growth point.

In 2022, the single-brand revenue of Caitang, a cosmetics brand owned by Polaiya, exceeded 500 million yuan, which has doubled for two consecutive years, but there is still a big gap with the main brand of Polaiya, which is 5.2 billion yuan. Betaine launched a high-end anti-aging brand in 2022, trying to fill the gap in the high-end field for the group beyond Winona at the mass price.

From the financial reports and external information of local beauty groups, we can also find that the strategy of "big single product" and the development potential of online e-commerce in Tik Tok and Aauto Quicker are frequently mentioned.

During the period, Marumi shares combed the product structure and streamlined more than 200 SKUs. The company intends to promote the strategy of dividing canals and products. For example, online, the eye cream of star single product is the core, supplemented by the newly launched "big single product" such as anti-aging essence, while offline, the gift box set is the most important to enhance the in-store experience.

Shanghai jahwa, who has always focused on offline channels, said in the 2022 financial report that the company’s e-commerce channels continued to promote multi-platform layout, and gradually digested the past dependence on a single style of play, such as eliminating the impact of Tmall’s over-the-top loss, and achieved an overall growth of about 4%. Among them, the growth rate of interested e-commerce (Tik Tok, Aauto Quicker, etc.) exceeded 200%.

Together with the 2022 financial report, there are also good news that major local beauty groups have returned to growth in the first quarter and achieved recovery. The overall market data can also reflect the signal that the beauty industry is recovering.

According to the data of the National Bureau of Statistics, the total retail sales of cosmetics in the first quarter was 104.3 billion yuan, a year-on-year increase of 5.9%. In comparison, in March this year, the total retail sales of cosmetics reached the highest value in the past five years, with an increase of nearly 10%.

However, judging from the generally dull feedback of e-commerce promotion on Women’s Day on March 8th this year, it will take some time for the beauty industry to fully recover, and local cosmetics companies still need to be cautiously optimistic.