Today, Kose Group released its financial report for the first quarter of 2024.
According to the report, Kose achieved a net sales of 77.583 billion yen ($499.4 million) in the first quarter of 2024, representing a 9% year-on-year growth. Excluding the impact of foreign exchange, the net sales increased by 6.4% compared to the same period last year. The operating profit also showed a significant growth of 35.5%, reaching 7.902 billion yen ($50.9 million).
Regarding the performance growth, Kose attributed the increase in net sales primarily to the efforts in the Japanese market and the promotion of the cosmetics brand Tarte in the United States and Europe. The strong sales growth in Japan and Tarte’s performance, along with a decrease in the sales cost rate and SG&A expense rate, offset the negative impact of the decline in sales in the high-profit Chinese travel retail sector, resulting in overall profit growth.
Breaking down the performance by department, the sales of the cosmetics division reached 62.164 billion yen ($400.1 million) in the first three quarters of this year, showing an 11.2% year-on-year growth. The operating profit of the division increased by 5.5% to 6.816 billion yen ($43.9 million). The beauty division achieved sales of 14.808 billion yen ($95.3 million), marking a remarkable 25.9% year-on-year growth, while the operating profit surged by 385.8% to 2.306 billion yen ($14.8 million).
The financial report revealed that DECORTÉ products continued to demonstrate strong sales in Japan but experienced a decline in China. ALBION’s Elégance products witnessed a substantial increase in sales, while JILL STUART’s makeup products showed strong performance. Tarte, which primarily sells products in the United States and Europe, achieved sales growth driven by core concealer categories and new lipsticks, mascaras, and other products.
In terms of high-end products, sales of the flagship brand SEKKISEI experienced a significant increase, and sales of ONE BY KOSÉ and ESPRIQUE also saw substantial growth. KOSÉ Cosmeport’s Softymo, CLEAR TURN, and other brands reported increased sales. Additionally, the sales of Visée products and the MAKE KEEP series remained strong.
Looking at regional performance, the domestic market in Japan exhibited positive growth. Sales of high-end products in department stores and specialty cosmetics stores remained strong, indicating a healthy demand for luxury beauty products. This trend was particularly evident in the sales of the renowned brand SEKKISEI, where a newly launched beauty lotion achieved tremendous success. Furthermore, sales of other renowned brands and major cosmetics brands continued to grow, supported by the recovery in consumer demand. As a result, sales in Japan increased by 18.2% compared to the same period in 2023, reaching 488.34 billion yen ($3.14 billion).
However, the financial report also highlighted the challenges faced by Kose Group in the Asian market, especially in China. Despite the company’s efforts to adjust and improve operations, sales in the e-commerce sector and physical stores experienced a decline due to the persistently challenging market environment. Additionally, there was a significant decrease in sales in the travel retail sector, primarily attributed to high inventory levels and stricter shipment controls implemented by Kose Group. Consequently, sales in Asia decreased by 23.7% compared to the same period in 2023, amounting to 96.53 billion yen ($621.4 million).
On a positive note, Kose Group achieved substantial sales growth in North America and other regions. In North America, the Tarte brand maintained a strong position in the renowned makeup market, benefiting from robust sales of both established and new product lines. The sales growth in the region was further boosted by increased sales through social media platforms and the depreciation of the yen. As a result, sales in North America witnessed a remarkable increase of 30.5% compared to the same period in 2023, totaling 168.63 billion yen ($1.09 billion).
Furthermore, sales in the “other” regions, including Europe, experienced a significant surge of 76.8% to reach 22.32 billion yen, primarily driven by the strong sales performance of Tarte products.
