China’s beauty unicorn Yatsen has reported a 38.3% decrease in revenues to RMB¥891 (US$140.5m) in its first quarter 2022 results.
This is down from the ¥1.44bn it reported during the same period last year.
Make-up was hit hardest as revenues for Yatsen's colour cosmetics division plummeted by 45.6% in Q1 2022.
Yatsen's CEO and founder Jinfeng Huang said this is primarily due to industry-wide reduced demand for colour cosmetics products, with China's lockdowns also meaning less people are purchasing and wearing make-up.
This is in addition to the continued negative impact of Covid-19 on its bricks-and-mortar stores.
The results were reportedly partially offset by a 68.5% increase in net revenues to ¥182.7m from its skin care brands.
The brands include Abby's Choice, Dr. Wu, Galénic and Eve Lom.
Net loss for the first quarter of 2022 also decreased by 8.7% to ¥291.4m.
“Although the pandemic continues to negatively impact our business, including our offline stores and supply chain, we are working hard to transform Yatsen and optimise operations during these challenging times,” said Huang.
"We remain focused on executing our strategy of building our brands, investing in R&D and pursuing sustainable growth in the first quarter of 2022," he added.
"We have already observed early progress, including the growing skin care business and narrowing net loss and non-GAAP net loss.”
For Q2 2022, the company reported a forecast of total net revenues between ¥808.3m and ¥960.8m.
This will represent a year-over-year decline of approximately 37% to 47%.
Yatsen, in 20221, entered a definitive agreement to acquire prestige skin care brand Eve Lom.
The maker of Perfect Diary and Little Ondine purchased the eponymous brand of the facialist from Manzanita Capital, who will retain a minority stake in the business.
In 2020, Yatsen filed for a US$100m initial public offering (IPO) with the US Securities and Exchange Commission.
The beauty brand owner said at the time that it will use the proceeds from the IPO to pursue strategic investments, collaborations and acquisitions, and launch new brands in target markets.