Today, KOSÉ Group reported its financial report in first nine months of 2024. In the first nine months of 2024, KOSÉ reported a 9.0% year-over-year increase in sales, reaching 238,725 million yen ($1.56 billion), with a growth rate of 6.0% after excluding foreign exchange effects. This growth was driven primarily by strong performance in Japan and the Tarte brand, despite a decline in Chinese sales.
KOSÉ’s operating profit also rose by 17.4% to 18,815 million yen ($122 million), benefiting from increased domestic sales and cost controls in China. However, growth in operating profit slowed in the third quarter, largely due to the diminished impact of post-pandemic recovery in Japan and weaker sales in Greater China. Structural reforms in China aimed at improving long-term profitability resulted in a 3,953 million yen ($25.8 million) loss, mainly due to a 3,512 million yen ($22.9 million) write-off of inventory.
In the cosmetics business segment, sales rose 7.4% to 187,447 million yen ($1.22 billion). DECORTÉ, a high-prestige brand, faced reduced demand in mainland China and the travel retail sector, though it performed well in Japan. Double-digit sales growth from ALBION and Tarte offset these challenges, contributing to higher high-prestige sales overall. SEKKISEI and ONE BY KOSÉ led growth in the prestige category. The segment’s cost of sales ratio increased due to shifts in the sales mix, resulting in a 1.8% drop in operating profit to 15,505 million yen ($101 million).
The cosmetaries segment recorded robust growth, with sales up 15.3% to 49,440 million yen ($322 million) and operating profit surging 73.0% to 6,790 million yen ($44.26 million). Key drivers included popular brands like CLEAR TURN and MAKE KEEP, along with successful autumn and winter product launches. Meanwhile, in the “others” business segment, OEM product orders boosted sales by 14.0% to 1,837 million yen ($11.97 million), and operating profit grew by 45.1% to 940 million yen ($6.13 million).
Regionally, Japan experienced a 12.8% sales increase to 155,483 million yen ($1 billion), supported by strong performance across department stores, specialty stores, and mass retail channels. Despite this, third-quarter growth moderated as post-pandemic recovery effects faded.
In China, inventories at distributors and stores are still stagnated due to weak consumer spending caused by the uncertain economic outlook and to increasing competition from Chinese companies. KOSÉ is reexamining sales methods based on the characteristics of each distribution channel while placing priority on avoiding excessive competition in order to maintain the value of its brands. As a result, sales in Asia decreased 26.5% from the same period of 2023 to 30,015 million yen ($195 million).
Efforts to adapt sales methods to each distribution channel aimed to preserve brand value. North America saw a 32.4% sales rise to 46,711 million yen ($304 million), driven by Tarte’s success and favorable currency effects, while Europe and other regions reported a 30.4% sales increase to 6,514 million yen($42.45 million), mainly from Tarte’s strong European performance.
Reflecting these mixed results, KOSÉ raised its 2024 sales forecast by 8,000 million yen ($52.14 million) to 320,000 million yen ($2 billion), while lowering the operating profit forecast by 2,000 million yen ($13 million) due to weaker than expected recovery in China’s travel retail sector.
