Yatsen halts acquisitions as skincare dominates sales
Yatsen Group Pivots Strategy, Focusing on Skincare Dominance Over Acquisitions
In a significant strategic maneuver, Yatsen Group is pausing its pursuit of further brand acquisitions, choosing instead to concentrate its substantial investment on its existing skincare portfolio. This move reflects a fundamental shift in strategy, centering the company’s focus on the segment that now forms the backbone of the group’s financial success.
The success of the skincare division has been undeniable. Quarterly sales for skincare reached RMB 816 million (equivalent to US$122 million). This performance highlights the sector’s rapid ascent within the broader cosmetics landscape. This growth has dramatically redefined the group’s revenue structure; skincare now accounts for more than 70 percent of the entire Chinese cosmetics group’s revenue, a stark contrast to its position when Yatsen was listed in 2020, when skincare represented only 12 percent of group revenue.
To build this powerhouse, Yatsen has already made considerable moves. The company has expanded its portfolio through strategic acquisitions, including brands like Galénic and Eve Lom, alongside securing mainland China rights for Dr Wu. Furthermore, the commitment to innovation is evident in the heavy investment poured into research and development, with the group allocating more than RMB 700 million to R&D since 2020.
However, the focus is now pivoting. Rather than pursuing further expansion through acquisitions, Yatsen is directing its capital toward organic growth, deep product formulation, and the cultivation of its organic brand presence. This strategic pivot aims to deepen the connection between the group’s skincare and colour cosmetics businesses.
The future vision involves greater integration. Yatsen plans to bring cutting-edge skincare ingredients and advanced technologies directly into its make-up offerings, bridging the gap between treatment and beauty. This integration is key to capitalizing on the synergistic relationship between the two product lines.
Despite this ambitious strategic shift, the company faces ongoing financial pressures. Second-quarter net losses widened to RMB 90.8 million. This pressure stems from increased operational costs, as sales and marketing expenditures climbed by 11.8 percent to RMB 807.6 million. Compounding this challenge, the colour cosmetics segment experienced a significant downturn, with revenue declining by more than 35 percent.
The decision to pause acquisitions signals a maturing strategy: prioritizing internal innovation and organic market dominance over external expansion. Yatsen is betting that sustained success lies not in acquiring new brands, but in maximizing the potential of its existing, high-performing skincare foundation while weaving together its product lines into a cohesive, technologically advanced ecosystem.
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