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Perfect Diary owner files for US IPO to expand in world’s fastest-growing beauty market

Written by Song Jingli Published on 

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Yatsen has witnessed its sales increase 363.7% year-on-year or roughly 30 times the growth rate of the broader China beauty industry.

Yatsen Holding, which owns cosmetics brand Perfect Diary, has filed for an initial public offering in the US on Friday to back its fast growth in China, the world’s largest beauty market.

The company has not disclosed details of the IPO, such as timing and pricing of the new shares, saying that it plans to use the fresh funds for potential investments, data analytics development, product R&D, and offline store network expansion.

Founded in 2016 in Guangzhou, Yatsen sells color cosmetics products for eyes, face, lips, nails, and skincare products under Perfect Diary, the company’s first and flagship brand launched in 2017, as well as Little Ondine, which it acquired in 2019, and Abby’s Choice.

The firm has witnessed a sales increase from RMB 757.7 million in 2018 to RMB 3.5 billion in 2019, representing growth of 363.7% or roughly 30 times the increase of the broader China beauty industry in terms of retail sales value over the same timeframe, the company said in the filing, citing market research firm China Insights Consultancy (CIC).

Yatsen has attributed its success to a digitally native direct-to-consumers business model at a time when e-commerce platforms have become default shopping destinations. Under this model, the company sells most of its products via Tmall, as well as social and content platforms such as WeChat, Douyin, Kuaishou, Bilibili, and RED.

Perfect Diary was the only color cosmetics brand to achieve over RMB 100 million (USD 14.9 million) in gross merchandise volume on Tmall in every month of 2019 and the nine months ended September 30, 2020, according to the CIC Report.

Despite its huge success online, the firm has built over 200 experience stores across over 90 cities in China by the end of September to diversify its distribution channels. It spent RMB 52.9 million (USD 7.8 million) in 2019 to open 40 stores in China and RMB 196.4 million (USD 28.9 million) in the first nine months of this year to open 163 stores.

The company generated net income of RMB 75.4 million (USD 11.1 million) in 2019 but generated net loss of RMB 1.15 billion (USD 170.4 million) in the first nine months of 2020.

Yatsen’s IPO plan comes at a time when China’s beauty market is the fastest expanding worldwide. The country saw USD 38.8 billion in retail sales in 2019 and is expected to grow by USD 29.9 billion between 2019 and 2025, accounting for nearly 60% of the total growth of the global beauty market during the same period, according to CIC.

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