‘A bullish plan’: Kosé China targets 10% sales increase on the back of ‘revenge consumption’

With China on its reopening path this year, the company believes it can capitalise on the recovery to grow its sales in China.

“In China, we have a bullish plan for a 10% YoY increase in sales in anticipation of revenge consumption in 2Q and beyond due to the lifting of the zero-COVID policy​,” CFO Shinichi Mochizuki

In the 2022 fiscal year, Kosé Corporation saw sales in Asia by 5%. Mochizuki attributed the slight increase to “struggling sales”​ in China as well as travel retail in South Korea.

With intense e-commerce competition, temporary store closures and reduced stores hours, China’s sales and profits failed to meet its revised forecast, which was announced on November 2022.

Despite the rollback of China’s strict zero-COVID measures, offline sales remained sluggish as the number of infections spiked.

On the other hand, Kosé observed a recovery in its travel retail and e-commerce channels.

Kose is the maker of cosmetic brands such as Decorté, Sekkisei, Albion, and Tarte.

In FY2022, Kosé recorded sales growth of 7.5% to JPY289.1bn (USD2.16bn) and operating profit increased 41.1% to JPY22.1bn (USD165m).

Increased investments

Kosé will continue to enhance its global presence in 2023, said Kazutoshi Kobayashi, president and CEO.

“We view 2023 as a year for laying the groundwork for making investments in brands that we can make stronger. We believe this will result in higher sales and profits from 2024.”​

According to the firm, it held back its marketing expenses in China and Japan in 2022.

For instance, the firm incurred lower advertising and logistics expenses for the Singles’ Day shopping festival in November 2022.

However, moving forward, the company said it plans to “allocate considerable expenses for activities in Japan and China”.​

The company will be increasing marketing expenses by about JPY10bn (USD74.5m)

Decorté, Albion, Tarte would receive 60%, 20% and 10% of these funds respectively while the remainder will be left for the prestige brands, primarily Sekkisei.

According to the firm, a majority of expenses for Albion and Tarte would be allocated to China and Japan.

However, the firm will focus marketing initiatives for Decorté in Europe and North America, as the company said it had a “conservative outlook”​ for the brand in China.