Yatsen Holding Ltd. (NYSE: YSG) reported second-quarter revenue of RMB1.14 billion, a 5.1% increase from a year earlier, as strong growth in its skincare portfolio offset a sharp decline in color cosmetics.
Skincare net revenues rose 40.4% to RMB816.1 million, accounting for 71.5% of total revenue compared with 53.5% a year ago. Combined sales of the brand's skincare labels—including Galénic, DR.WU, and Eve Lom—grew 41.6%. In contrast, color cosmetics revenue, which includes Perfect Diary, Little Ondine, and Pink Bear, fell 35.8%.
Gross margin contracted 4.4 percentage points to 73.9%. Operating expenses rose to 85.4% of revenue, driven by a increase in selling and marketing spend to 70.7% from 66.5%. General and administrative costs remained steady at 3.3% of revenue. The company maintained research and development investment at 3.3% of total net revenues.
Yatsen posted a GAAP net loss of RMB90.8 million, wider than a RMB19.5 million loss a year earlier, yielding a net loss margin of 8.0%. The non-GAAP net loss was RMB99.4 million, compared with a non-GAAP net income of RMB11.5 million (1.1% margin) in the prior-year period.
Net cash used in operating activities improved to RMB78.0 million from RMB90.0 million in the first quarter. Cash, restricted cash, and short-term investments totaled RMB1.06 billion as of June 30. Net inventories stood at RMB554.6 million, with inventory turnover days declining slightly to 201 from 205.
For the third quarter, the company guided revenue between RMB898.6 million and RMB998.4 million, implying flat to down 10% growth at the midpoint against a year-ago figure. Shares rose 4.14% to around $2.77 in premarket trading on September 2, following the results release.
The broader market context showed China's beauty products retail sales growing 6.6% year-over-year in the second quarter, while overall consumer goods retail sales rose just 0.2%.
