Yatsen Group FY24: Gross Margin Over 75%, Skincare Sees Continued Growth

Yatsen Group, which is undergoing a significant transformation in recent years, reported strong results for FY2024. Although the group saw a slight 0.6% decrease in total sales for the year, it achieved a solid 7.1% growth in Q4, driven by its cosmetics business. With ongoing efforts, the company is getting closer to returning to a positive growth trajectory.

This strong performance has reassured investors, with Yatsen Group’s stock price rising by 5.07% to $4.35 per share in pre-market trading.

In Q4 2024, Yatsen Group's sales increased by 7.1% year-on-year to reach 1.15 billion RMB, primarily driven by the growth of its cosmetics brands. The gross margin rose to 77.8%, compared to 73.7% the previous year, with high-margin product sales continuing to grow during the period. Marketing expenses fell from 717.4 million RMB to 690.6 million RMB, reducing the sales ratio from 66.9% to 60.1%. This highlights the company's strong cost control while also reflecting the growing influence of its brands. Net loss decreased by 23.4% year-on-year, from a loss of 494.5 million RMB to 378.8 million RMB.

For the 2024 fiscal year, the group's sales saw a slight decline of 0.6%, totaling 3.39 billion RMB. The gross margin rose to 77.1%, up from 73.6% the previous year. Net loss narrowed by 5.3%, down to 710.2 million RMB, while the non-GAAP net loss dropped significantly by 56.7%, reaching 128.2 million RMB. This indicates a notable improvement in financial efficiency.

Despite the challenges posed by goodwill impairment from brand acquisitions, the pressure on the company is expected to lessen as its transformation continues to progress.

Yatsen Group’s founder and CEO, Huang Jinfeng, commented, "Despite the challenges faced by the cosmetics industry, we’ve managed to achieve steady growth. This proves that our strategies in product development, brand building, and cost optimization are yielding positive results. Skincare will be a key driver of stable growth for us, and we are confident that, moving forward, we will deepen our transformation strategy and focus on sustainable growth."

In terms of product categories, for the 2024 fiscal year, the cosmetics category saw a modest decline of 0.3% in net revenue, mainly due to shifting consumer preferences and intense market competition. However, in the fourth quarter, sales rose by 16.4% year-on-year, largely driven by the introduction of Perfect Diary’s innovative “Makeup and Skincare Integration” concept, as well as new product launches.

For the skincare category in the 2024 fiscal year, net revenue grew by 0.7%, reaching 1.39 billion RMB. Notably, skincare now accounts for 41.1% of the group’s total sales, marking an all-time high. In the fourth quarter, net revenue remained stable at 555 million RMB compared to the previous year, with strong performances from the Galenic and Dr. Wu brands in the domestic market.

In the last year, Yatsen Group has significantly increased its investment in R&D, spending 109 million RMB in FY2024, which represents 3.2% of total revenue—higher than the industry average of 2-3%.

In terms of sales channels, Yatsen Group has established a robust and flexible sales network, leveraging platforms such as Tmall, JD.com, Douyin, and Pinduoduo to support the strong sales of its key products. The e-commerce channel showed continued strong growth in Q4, with EVE LOM achieving steady sales, even surpassing 100 million RMB during “Double 11”.

The company also revealed that it expects total revenue for Q1 2025 to be between 789 million RMB and 866 million RMB, representing a growth of 2% to 12% compared to the previous year, signaling a stable growth outlook.