Kose Asia Declines 23.2% to 40.813Bn Yen in the First 9 Months due to the Impact of Treated Water

Today (November 13), Kose Corporation released its financial report of the first nine months. In the first nine months of 2023, sales experienced a significant 9.0% increase compared to the same period in 2022, reaching an impressive 218.961 billion yen ($1.44 billion) (6.4% growth after excluding the effects of foreign exchange rate changes). Kose Corporation faced headwinds in sales across South Korea and China. Despite this, the company witnessed notable success in Japan and with Tarte, a brand renowned for its presence in the United States and Europe.  Overseas sales accounted for a substantial 37.0% of the company’s total sales.

Kose Corporation’s operational efficiency was evident through a remarkable 28.4% increase in operating profit, outpacing the growth in cost of sales and SG&A expenses from the same period in 2022, reaching 16.029 billion yen ($105.6 million).

Within the cosmetics business segment, DECORTÉ, the flagship brand in the high prestige category, continued to witness sales growth in Japan. However, DECORTÉ faced sluggish sales in duty-free stores in South Korea and China. Additionally, the release of treated wastewater from the Fukushima nuclear power plant into the ocean in August had a significant adverse impact on sales. Nonetheless, other major brands such as ALBION, JILL STUART, and ADDICTION experienced higher sales. Tarte, in particular, enjoyed strong sales of its prominent products.

In the prestige category, SEKKISEI and ONE BY KOSÉ displayed a remarkable recovery in sales, contributing to an overall 8.5% increase in the cosmetics business segment’s sales compared to the same period in 2022, amounting to 174,468 million yen. Furthermore, operating profit in this segment rose by 2.2% to 15.794 billion yen ($104 million).

In terms of geography, sales in Japan remained robust for high prestige category products at specialty cosmetics stores and department stores. Major skincare and makeup brands also experienced strong sales at drug stores and other mass retail channels. Consequently, sales in Japan increased by 17.8% compared to the same period in 2022, reaching 137.87 billion yen ($908.1 million).

Sales in Asia faced challenges, with a decrease in the e-commerce sector in China. However, sales in offline channels, primarily department stores, showcased signs of recovery from the downturn caused by the COVID-19 pandemic. In the travel retail sector, sales were impacted negatively due to restrictions on bulk purchases by resellers and the release of treated wastewater from the Fukushima nuclear power plant into the ocean in August. South Korea experienced a significant decline in sales, particularly in the travel retail sector, as distributors limited their merchandise purchases. Consequently, sales in Asia decreased by 23.2% compared to the same period in 2022, amounting to 40.813 billion yen ($268.8 million).

In North America, Tarte’s concealer and other major product categories experienced strong sales. Additionally, the increase in the number of stores selling Tarte products and the impact of the yen’s depreciation contributed to sales growth. As a result, sales in North America witnessed an impressive 30.2% increase compared to the same period in 2022, reaching 35.28 billion yen ($232.4 million).

Sales in the “others” regions, including Europe, experienced a remarkable surge of 37.9% to 4.997 billion yen ($32.9 million), primarily driven by the outstanding performance of Tarte products.

In addition to this, KOSE also announced the revenue of major companies and major brands within the group for the first nine months, with ALBION, a major group company, posting sales of 38.9 billion yen ($256.2 million), up 4.3% year-on-year, KOSE Cosmeport posting sales of 26.1 billion yen ($171.9 million), up 8.8% year-on-year, and Tarte Inc. posting sales of 40.8 billion yen ($268.7 million), up 30.4% year-on-year. DECORTE, the group’s main brand, posted sales of 58.4 billion yen ($384.7 million), down 7.4% year-on-year, while SEKKISEI posted sales of 10.6 billion yen ($69.8 million), up 27.7%.



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