International beauty group is divided, organizational efficiency is "king"

①China's overall performance is poor, with only L'Oreal's positive growth, behind the reflection of organizational efficiency and brand matrix perfection differences.

②Effective skincare continues to overgrow, perfume demand explodes, and wash care upgrade is ready to take off.

International beauty groups released their financial results, L'Oreal's performance is bright, Shiseido's profitability is improving, and Estee Lauder is under pressure.

Benefiting from multi-brand and multi-region strategy, 2022 L'Oreal revenue and net profit +19% and 24% year-on-year, slightly lower gross margin year-on-year due to inflation but further profitability improvement driven by expense ratio optimization.

22H2 Estee Lauder revenue and net profit -14% and -50% year-on-year, mainly due to poor retail performance in duty-free channels and the China market, U.S. retailer de-stocking, expense contraction but due to revenue decline Shiseido's revenue recovered +5.7% YoY in 2022, but income in Japan and China, the two core markets, were lower than the previous guidance; core operating profit was +21% YoY under strengthened cost control.

The performance of overseas beauty groups in China is divergent, reflecting the difference in organizational efficiency and brand matrix perfection.

Regarding overseas group 22 full-year and 22Q4 China revenue performance, only L'Oreal Group China revenue achieved positive growth for the year, while Estee Lauder, Shiseido, and Amore Pacific all declined. Among them, Estee Lauder's income during the double 11 +10% year-on-year, Shiseido's Q4 online retail decline year-on-year, verifying that the poor performance of overseas groups is not simply a problem of channel structure, the essence of the response to the slow local response to the lack of new growth momentum in the product side. While the L'Oreal Group is in the mass, high-end, high-luxury price band comprehensive layout and better channel control, the resilience is more pronounced.

In 2022, the global efficacious skincare market continued to lead by +9% year-on-year, and the three major groups are strengthening their layout through acquisitions. At the same time, in 2022, perfume continues to grow. The Chinese market in the young group, driven by perfume penetration, increased significantly. Upgrade trend from the face to hair, high-end wash care performance, L'Oreal Group Professional Hair Care Division in 2022 China revenue +32% year-on-year, Estee Lauder introduced Aveda to strengthen the layout.

2022 overseas beauty group China underperformed in response to the faster-changing Chinese market, organizational efficiency as the core competitive factor, based on the faster market response speed of local brands and the opening of the branding process, continues to be optimistic about the share of the top national products to improve.

beauty consumption recovery is different than expected; new products, and channel expansion are not as expected, and intensified market competition.