Kose Net Sales Reaches 144.2Bn yen in H1 with China Travel Retail share Down 5%
- Chaileedo Press
- Aug 9, 2023
- 3 min read
The China regional business performed poorly in the Kose travel-retail channel, with the ratio of consolidated sales declining from 17% last year to 12% this year.
The Kose Group has reported strong financial results for the first half of 2023, reflecting its continued growth and solid performance in the cosmetics industry. During this period, the company achieved a notable increase in net sales, driven by double-digit growth in its key markets, particularly Japan and Tarte. Despite facing challenges in South Korea with lower sales, Kose managed to offset the impact through its robust performance in other regions.
In H1 2023, Kose recorded net sales of ¥144.2 billion ($1 billion), representing a significant year-on-year increase of ¥13.6 billion ($94.9 million) or 10.5%. This impressive growth can be attributed to the exceptional performance of its Cosmetics segment, which accounted for 81.1% of the total net sales. The segment witnessed a substantial YoY increase of 10.8%, reaching ¥117.0 billion ($816.4 million). Tarte emerged as the leading contributor to the sales growth in the cosmetics segment, supported by strong performances from DECORTÉ, SEKKISEI, and ONE BY KOSÉ. These brands experienced robust sales and contributed to the segment's higher profitability, which was further enhanced by lower cost of sales and increased overall sales.
In addition to the Cosmetics segment, the Cosmetaries segment also demonstrated positive growth, with net sales amounting to ¥26.2 billion ($182.8 million), representing an 8.6% YoY increase. Within this segment, Kose's brands, such as Visée and CLEAR TURN of KOSÉ Cosmeport, performed well, particularly in the Japanese market. The segment's profitability improved due to higher sales and effective cost management.
Kose's major group companies, including ALBION, Kose Cosmeport, and Tarte, Inc., played a significant role in driving the company's overall sales growth. ALBION achieved sales of ¥25 billion ($174.4 million), with ¥22.1 billion ($154.2 million) in Japan and ¥2.8 billion ($19.5 million) in Asia/Others. Kose Cosmeport reported net sales of ¥16.3 billion ($113.7 million), with ¥16 billion ($111.6 million) in Japan and ¥0.3 billion ($2.1 million) in Asia/Others. Tarte, Inc. recorded sales of ¥25.6 billion ($178.6 million), with ¥20.8 billion ($145.1 million) in North America and ¥4.7 billion ($32.8 million) in Europe/Others. Major brands like DECORTÉ and SEKKISEI also contributed strongly to the company's overall sales, with DECORTÉ achieving sales of ¥43.7 billion ($304.9 million) and SEKKISEI recording sales of ¥6.7 billion ($46.7 million).
Regionally, Kose experienced significant sales growth in its domestic market, Japan, with net sales amounting to ¥87.5 billion ($610.5 million), representing a remarkable YoY increase of 15.5%. Sales of high-end brand products in prestigious department stores and specialty cosmetics stores remained strong, while major prestige skincare brands witnessed a recovery in sales in drug stores and other mass retail channels. Demand for makeup brands also surged, contributing to the overall sales growth in Japan.
In China, sales were impacted by the delayed recovery in demand in early 2023. However, sales rebounded in offline channels, particularly department stores. While e-commerce sales during the 618 shopping festival were higher than the previous year, cumulative sales were sluggish. In addition, the China regional business performed poorly in the Kose travel-retail channel, with the ratio of consolidated sales declining from 17% last year to 12% this year, and the travel-retail business in Korea also trending down. Overall sales in Asia declined 11.5% to 31.9 billion yen ($222.6 million).
On the other hand, Kose witnessed remarkable sales growth in North America, primarily driven by Tarte's success. The launch of new products backed by successful promotions on social media platforms, coupled with the increasing availability of Tarte products in stores and the impact of the yen's depreciation, contributed to a significant YoY sales increase of 31.2% in North America, reaching ¥21.6 billion ($150.7 million). The "others" region, including Europe, also experienced strong sales growth of 41.1% to ¥3.1 billion ($21.6 million), largely driven by the success of Tarte products.
Looking ahead to the second half of 2023, Kose expects a 10% increase in sales in China (excluding travel retail). However, the company anticipates a slower economic recovery than initially expected. To address intensifying competition, Kose plans to strengthen its e-commerce channels by adding a new platform. The company also aims to conduct promotional activities with a focus on its new AQ line. In department stores, Kose plans to open new stores and reinforce flagship stores to raise awareness of DECORTÉ high-end products.
With its strong performance in H1 2023 and positive outlook for the second half of the year, Kose aims to achieve a total net sales target of ¥305 billion ($2.13 billion) for 2023, representing a significant YoY increase of 15.8%. The company's commitment to innovation, brand strength, and strategic expansion positions it well for continued success in the competitive cosmetics market.
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