According to data from the National Bureau of Statistics, from January to September, the total retail sales of cosmetics were 306.9 billion yuan, down 1% year-on-year. Since June this year, the retail sales of cosmetics have fallen year-on-year for four consecutive months.

This downturn is also reflected in the performance of specific companies. Recently, a number of local beauty industries have disclosed their financial reports for the third quarter of this year, although there are still top students who have maintained a double increase in profits, but for most companies, the market in the third quarter of this year is not optimistic, and many companies have even suffered losses in a single quarter.

It is difficult to increase revenue, and it is even more difficult to increase profits

Judging from the listed beauty companies that have disclosed data so far, only Proya (603605. SH) and Marubeni Co., Ltd. (603983.SH). The former's operating income in the first three quarters was 6.966 billion yuan, a year-on-year increase of 32.72%; net profit was 999 million yuan, a year-on-year increase of 33.95%. Compared with Proya, Marubeni's current scale still has a certain gap, and it is below the waist of the industry. In the first three quarters of this year, Marubeni's revenue increased by 27.1% year-on-year to 1.952 billion yuan; net profit was 239 million yuan, a year-on-year increase of 37.4%.

In addition to the above two can still maintain growth, other beauty companies are hardly optimistic.

Shanghai Jahwa(600315. SH) achieved operating income of 4.477 billion yuan in the first three quarters, a year-on-year decrease of 12.07%, and net profit attributable to the parent company of 163 million yuan, a year-on-year decrease of 58.72%. Regarding the decline in performance in the first three quarters, Shanghai Jahwa said that the fair value changes and investment income of the funds and stocks invested by the company decreased year-on-year; The foreign business was affected by the low birth rate overseas, the intensification of competition in the infant and child categories, and the reduction of inventory by dealers, resulting in a decline in revenue, and in order to maintain market share, it continued to increase brand marketing investment, resulting in a year-on-year decrease in net profit; The investment income of the company's investment associates decreased year-on-year.

Bloomage Biotech (688363.SH) revenue in the first three quarters was 3.875 billion yuan, a year-on-year decrease of 8.21%; The net profit attributable to the parent company was 362 million yuan, a year-on-year decrease of 29.62%. Regarding the sharp decline in net profit, Bloomage Biotech said that it was mainly due to the year-on-year decrease in operating income and the year-on-year increase in management expenses and R&D expenses.

The reporter noticed that Bloomage Biotech has also experienced some internal shocks. On October 17, 2024 this year, Bloomage Biotech's WeChat official account released a "Letter to Everyone", saying: "At present, Bloomage Biotech is undergoing an unprecedented organizational and management change, which is crucial to supporting the company's long-term development and realizing modern management. ”

Bethany Group (300957. SZ) achieved operating income of 4.018 billion yuan from January to September this year, a year-on-year increase of 17.09%; Net profit fell 28.39% year-on-year to 415 million yuan. Specific to the third quarter, Bethany achieved operating income of 1.213 billion yuan, a year-on-year increase of 14.04%; The net profit attributable to shareholders of listed companies was -68.9993 million yuan, a year-on-year decrease of 153.41%. This is the company's first single-quarter loss since going public.

This may be closely related to its high sales expenses. According to the financial report, Bethany's sales expenses in the first three quarters were as high as 2.009 billion yuan, a year-on-year increase of 25.27%. Bethany said that in the third quarter, the company increased the promotion and drainage of the Douyin platform, and invested in advertising spending on brand endorsements and co-branded activities. These measures are mainly to enhance the brand image and pave the way for the upcoming promotional season such as Double 11 and Double 12.

In the capital market, Bethany also bid farewell to the "highlight moment", and its market value has fallen from more than 100 billion yuan at the peak to more than 20 billion yuan today. In October this year, the company's second largest shareholder, Tianjin Sequoia Juye Equity Investment Partnership (Limited Partnership), once again issued a shareholding reduction plan.

The industry as a whole is cold

Since the beginning of this year, the market of the entire industry has been relatively cold. In addition to the decline in the performance of listed companies, a number of cutting-edge beauty brands have "fallen" since the beginning of this year.

The reporter learned from a number of beauty brand traders that when the market was good in the early years, several large e-commerce platforms needed to promote new brands to attract traffic, which gave birth to a large number of cutting-edge makeup. Beauty used to be an "easy money" track. At that time, many entrepreneurs poured into the industry, looking for an OEM (foundry) factory, and they could do marketing to be able to raise money to buy traffic, and a makeup brand was "fast".

Traffic brings sales, but the most unstable and "money-burning" is also traffic. When capital no longer pays for these emerging brands, how to continue to survive new brands that once relied on a sense of niche and marketing circles has become a problem.

"Nowadays, the paid traffic of Xiaohongshu beauty is much higher than the organic traffic." The above-mentioned beauty brand operator told reporters that many emerging local cosmetics brands adopt OEM and ODM (OEM) business models, which leads to serious homogenization of products on the market and low consumer loyalty. When differentiated competitive advantages are diluted by too many players, traffic costs surge, and it is difficult for brands that cannot raise capital to survive.

The reporter noticed that some listed companies are also looking for new development directions, making some acquisitions and other industrial investments. After 2022, Bethany established an industrial investment fund, acquired beauty brands, and made a series of actions such as health food, but some of them failed halfway, and some of them have not yet shown their effectiveness.

Others are strengthening R&D and reserving patents. In August this year, the Shanghai R&D center was officially put into use. In response to investors' questions, the company said that in August this year, the company launched more than 10 new cosmetics products, and it is expected that in the future, it will be able to launch 5-10 new products every year.

Shanghai Jahwa applied for 108 new patents in the first three quarters, a year-on-year increase of 71%, and at the same time used "AI + digitalization" technology to establish a complete R&D and application methodology for plants with Chinese characteristics, and submitted the first new raw material for the record. "Growth is expected to resume across the board in the second quarter of next year." Lin Xiaohai, CEO and general manager of Shanghai Jahwa, recently said that in a series of organizational adjustments since June, Shanghai Jahwa has made the e-commerce channel grow by focusing on online, but it will take time for offline to grow again.

In the eyes of industry insiders, the beauty market at this stage is accelerating differentiation. In the future, some enterprises with product adjustments in place will usher in growth, while some enterprises that are not in place will be eliminated at an accelerated pace.