Perfect Diary’s parent company, Yatsen E-Commerce, reported its revenues of $924 million in 2021, up 11.6% year on year. It suffered a net loss of $245 million, compared to a net loss of $426 million in the same period a year earlier.
On the evening of March 10, Beijing time, Yatsen E-Commerce released its unaudited results for the fourth quarter and full year of 2021. According to the data, Yatsen E-Commerce’s revenue for 2021 reached $916 million, an increase of 11.6% year-over-year, with full-year gross margin increasing 2.5 percentage points year-over-year to 66.8% and net loss narrowing by 42.5% year on year.
In response to this performance, Huang Jinfeng, founder, chairman and CEO of Yatsen E-Commerce, said, “The industry is currently facing greater challenges. Consumer demand is weak and competition has become more intense. The industry’s average promotional discounts and marketing investment have climbed. Despite this, the company achieved growth in sales revenue and gross margin for the year. In the future, we will seize the opportunities of this wave of market adjustment based on our existing brand layout of three segments, while reducing unnecessary investment and improving refined management and operational efficiency to prepare for a long-term battle.”
The full-year 2021 revenue of $916 million for Yatsen E-Commerce did not reach the revenue of $949 million which was previously predicted by an agency, mainly due to the increase in the fourth quarter was less than expected.
In the fourth quarter of 2021, Yatsen’s total revenue fell 22.1% to $240 million from $310 million in the same period last year, according to the report. The decline in sales of cosmetics brands was the main reason for the drop in revenue in the fourth quarter of Yatsen E-commerce.
Despite weak performance in color cosmetics, the company’s gross margin for the year increased 2.5 percentage year on year to 66.8% and net loss narrowed 42.5% year on year to $255 million, with a non-GAAP operating loss of $165 million, benefiting from rapid growth in the skincare category and continued improvement in brand strength.
According to the data, during the period, skincare segment of Yatsen’s annual revenue increased 360% year-over-year and increased its share of the company’s total revenue from 4.0% to 21.3%.
The performance of the skincare sector is related to its recent strengthening in the category. 2021 saw the completion of the acquisition of two high-end skincare brands, France’s Galenic and EVE LOM. According to the company’s external release, during last year’s Double 11(Chinese Shopping Carnival), the sales of the skin care sector of Yatsen E-Commerce increased by over 400% year-on-year, and the total turnover of the relevant high-end skincare brands broke 100 million yuan (approximately $16 million) in the first year of participation in Double 11. Among them, France Galenic broke the Tmall International record, and EVE LOM surpass the total sales of Double 11 in 2020 within two hours.
In addition, with the trend of efficacy skincare, DR.WU, a brand of Yatsen E-Commerce that is positioned as a “physician’s specialty”, also performed well, with year-on-year sales increasing 6.7 times, and its iconic product, DR.WU Mandelik Daily Renewal Serum, was the No. 1 in the acid category in Tmall’s Double 11.
Yatsen E-Commerce’s annual report shows a more significant improvement in operational efficiency, with operating costs of $873 million in 2021, down 8.7% compared to $957 million in 2020. Also, sales and marketing expenses have increased, rising from $539 million in 2020 to $633 million in 2021.
According to the financial report, Yatsen E-Commerce’s full-year R&D investment for 2021 increased 113.5% year-over-year, totaling more than $22 million and accounting for 2.43% of total revenue, placing it at the head of the Chinese beauty group. Up to now, Yatsen E-commerce has 118 patents worldwide, a 71% year-on-year increase in the number of patents, including 39 invention patents (some of which are in the process of being transferred).
Huang Jinfeng has publicly stated, ” R&D empowers category innovation and category innovation promotes R&D breakthroughs. Only with superior product strength and more technological beauty achievements on the ground can we meet more consumers’ expectations for beauty.”
Yatsen Holding Limited is a leading player in China’s beauty market. Founded in 2016, the Company has launched and acquired multiple color cosmetics and skincare brands including Perfect Diary, Little Ondine, Abby’s Choice, Galénic, DR.WU (its mainland China business), Eve Lom and Pink Bear. The Company’s flagship brand, Perfect Diary, is one of the top color cosmetics brands in China in terms of online retail sales value. Leveraging its digitally native direct-to-customer business model, the Company has built core capabilities that enable it to launch and scale multiple brands quickly while offering a wide selection of products to a growing variety of customers.