Yatsen Holding Ltd reported a 5.1% year-over-year increase in total net revenue for Q2 2026, reaching RMB 1.14 billion, as its skincare portfolio expanded sharply despite a steep decline in color cosmetics. The company’s shares rose 4.14% in premarket trading to $2.77 following the results.
Skincare brands generated RMB 816.1 million in revenue, up 40.4% from the prior-year period, while combined net revenue for Galénic, DR.WU and Eve Lom increased 41.6% year-over-year. The shift in revenue mix accelerated, with skincare accounting for 71.5% of total net revenue compared with 53.5% a year earlier. Color cosmetics revenue, by contrast, fell 35.8% year-over-year.
Gross margin declined to 73.9% from 78.3% in Q2 2025, a drop of 4.4 percentage points, as the company increased inventory provisions in its color cosmetics business amid brand portfolio optimization and SKU rationalization. Operating expenses rose to 85.4% of net revenue from 83.4% a year prior, driven by a 70.7% increase in selling and marketing expenses, which climbed to 70.7% of revenue from 66.5%.
Non-GAAP net loss widened to RMB 99.4 million, or an 8.7% margin, compared with a non-GAAP net income of RMB 11.5 million in the prior-year period. Share-based compensation and amortization of intangible assets totaled RMB 19.8 million, while a revaluation of investments added a further negative RMB 35.6 million to adjustments.
Cash, restricted cash and short-term investments stood at RMB 1.06 billion as of June 30, 2026, with net cash used in operating activities improving to RMB 78.0 million from RMB 90.0 million in the prior quarter. Inventory turnover days increased to 201 days, while net inventories totaled RMB 554.6 million.
For Q3 2026, Yatsen guided revenue between RMB 898.6 million and RMB 998.4 million, implying a flat to 10% year-over-year decline, with the midpoint indicating an approximate 5% drop. China’s consumer goods retail sales grew 0.2% year-over-year in Q2, while beauty product sales expanded 6.6% over the same period.
Management highlighted continued progress in its strategic shift toward skincare. Chief Executive Jinfeng Huang noted the company delivered "continued strategic progress" and that skincare now represents over 70% of total revenues, reinforcing a transformation toward higher-quality, more sustainable growth.
