Caixin
Mar 04, 2021 08:57 PM
BUSINESS & TECH

Owner of Budget Makeup Brand Perfect Diary to Pretty Up Portfolio With Premium U.K. Skincare Line

Customers try out cosmetics at a Perfect Diary store in Shanghai on April 15. Photo: VCG
Customers try out cosmetics at a Perfect Diary store in Shanghai on April 15. Photo: VCG

The owner of Chinese budget makeup brand Perfect Diary will spruce up its portfolio by acquiring 35-year-old British skincare line Eve Lom.

Guangzhou-based Yatsen Holding Ltd. committed to buying the high-end cosmetics company from its current owner Manzanita Capital Ltd. for an undisclosed sum, the firms said in a joint statement Tuesday. They said they will finalize the deal in the coming weeks.

Manzanita Capital, a London-based investment company focused on premium cosmetics, will continue to hold a minority stake in Eve Lom as a “strategic partner,” Yatsen said, without elaborating on the nature of the partnership.

The deal will see Eve Lom join the four other makeup brands under the company — Perfect Diary, skincare brands Abby’s Choice and Galenic, as well as nail polish brand Little Ondine — and help Yatsen tap into higher-end beauty markets, the statement said. Yatsen developed Perfect Diary and Abby’s Choice in-house, and purchased Little Ondine in 2019.

Last October, Yatsen acquired skincare brand Galenic from French pharmaceutical and dermo-cosmetic group Pierre Fabre in an attempt to strengthen its research and development capabilities and bolster innovation.

Eve Lom has earned a “loyal following driven by its hero products,” Yatsen CEO Jinfeng Huang said in the statement, adding that the brand has had “resilient sales and profitability” during the pandemic.

Perfect Diary, which courts younger consumers with cut-price cosmetics marketed by social media stars, rapidly expanded since its 2017 founding to become China’s second most popular cosmetics-maker with a 2.7% market share by September 2019.

The 25-year-old Eve Lom has mostly aimed at the North American, European and Asian markets, with its premium skincare line led by its signature facial cleanser. A 200 milliliter (6.7 fluid ounces) tub of cleanser costs around $120.

Eve Lom’s product lineup will continue to be managed by its current development team, Yatsen told Caixin. Yatsen will supply it with resources to boost its marketing, portfolio development, client services and supply chains.

Manzanita Managing Partner Andras Szirtes said in the statement that Yatsen’s roots in Asia and e-commerce capabilities will help accelerate Eve Lom’s business growth.

Yatsen has concentrated on social media marketing for Perfect Diary, especially utilizing the Alibaba-backed lifestyle-focused social media platform Xiaohongshu. It has splurged on signing influential users, known as “key opinion leaders,” to endorse its products.

Perfect Diary has also increasingly built up its offline presence, establishing some 200 physical stores across 90 cities as of September, according to its prospectus.

Yatsen swung to a net loss of 1.2 billion yuan ($185 million) in the first nine months of 2020, from a net profit of 29.1 million yuan a year earlier, despite its revenues jumping 73% to 3.27 billion yuan over the same period, as the pandemic-induced lockdown measures forced store closures and hamstrung online sales growth.

Perfect Diary contributed 99.2% of Yatsen’s revenue in 2018 and 97.7% in 2019, according to its prospectus. But as Yatsen has added more brands to its lineup, Perfect Diary contributed less than 80% in the first nine months last year.

Yatsen was the first Chinese cosmetic corporation to list in the U.S. after a $617 million initial public offering in November in New York.

Contact reporter Anniek Bao (yunxinbao@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)

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