Us cosmetics company Estee Lauder Group announced its financial results for fiscal year 2020, which ended June 30, according to 21st Century Business News on August 20. For the full fiscal year 2020, the group reported net sales of $14.29bn, down 4 per cent from $14.86bn a year earlier.

Net sales for the fiscal fourth quarter were $2.43 billion, down 32% from a year earlier due to the COVID-19 outbreak, and a loss of $459 million, compared with a net profit of $158 million a year earlier, the report said.

At one point, Estee Lauder's shares fell nearly 7 percent after the results, wiping about $5.2 billion off the company's market value.

The results came as Estee Lauder group unveiled a two-year restructuring plan to respond to dramatic changes in distribution patterns and consumer behaviour following the COVID-19 outbreak.

The restructuring plan includes restructuring the company's distribution network; Closure of some independent stores and closure of some department store counters; Strengthen digital investment and actively shift to online sales. The program will begin in the first quarter of fiscal 2021 and be completed by the end of fiscal 2023. This will eventually lead to the closure of up to 15 per cent of individual stores and the loss of jobs for around 1500-2000 point of sale staff and associated support staff.

It lost $3.1 billion in a single quarter

Estee Lauder reported a net loss of $459 million for the quarter, compared with a net profit of $158 million a year earlier. The diluted loss was $1.28 per share, compared with a year-ago profit of 43 cents per share. Net sales were $2.43 billion, down 32% from a year earlier; Gross profit was us $1.663 billion, down 40% from the same period last year; Operating expenses were $2,206 million, down 13% from a year earlier.

In addition, net cash flow from operating activities in fiscal 2020 was $2.28 billion, down 9.5% from the same period last year, primarily due to a decline in net sales. Full-year capital expenditure was $623m, down 16 per cent year on year. The company continues to invest in e-commerce, supply-chain improvements and information technology, while reducing spending on retail and office space upgrades to respond to health incidents.

L 'Oreal has also been hit hard by the epidemic

L 'Oreal, another cosmetics brand, has also been hit by the epidemic, according to CCTV Finance.

On July 30, L 'Oreal group announced its financial results for the first half of 2020, showing the first decline in the group's semi-annual sales performance in nearly five years. L 'Oreal's sales in the first half of this year totaled 13.07 billion euros, down 11.7 percent from a year earlier. Net profit was 1.82 billion euros (15.1 billion yuan), down 21.8 percent year on year.

Cosmetics brands in Asia - Pacific region, China market performance

Both Estee Lauder and L 'Oreal are doing well in the Asia-Pacific region, particularly in China.

For Estee Lauder, asia-pacific sales rose 15 per cent to $4.2bn, outperforming the americas, the company's core business region. Sales in the Americas fell 20% to $3.8 billion.

L 'Oreal's sales in China have been the key to stopping its losses. L 'Oreal reported a 30 percent increase in sales in China in the second quarter. Its premium cosmetics divisions, such as Keryan, Lancome and Helena, have continued to gain market share in China.

Shiseido reported that its sales in China had returned to growth since the second quarter, up 9 per cent from the same period last year, with premium cosmetics online channel sales up more than 150 per cent. Shiseido expects sales in China to grow by more than 10 per cent for the full year.

Kao closed a number of temporary cosmetics stores in the Americas and Europe during the outbreak. However, in The Asian market, especially in China, Kao Group has strengthened the sales through e-commerce channels, and the sales volume of its brands Korun and Fuli Fang are relatively stable.

International brands are generally optimistic about China's cosmetics market. Wang Qinglin, an analyst with IMEDIA, told China Business News: "Although Chinese demand for cosmetics has weakened during the epidemic, in the long run, the development of China's cosmetics industry will continue to grow. It is expected to return to normal growth in 2021 and the market size will exceed 450 billion yuan."

It is worth noting that e-commerce has become an important sales channel for most enterprises. Unilever's e-commerce results in China grew 59% in the second quarter; Shiseido achieved more than 150% growth in the sales of high-end cosmetics through e-commerce channels in the Chinese market; Kao, on the other hand, has strengthened its sales through e-commerce channels in China, and the sales volume of its brands Korun and Fuli Fang are relatively stable. Some Japanese media said that the development dividend of The Chinese market has brought good prospects to Japanese cosmetics companies, among which the e-commerce channel should be the top priority.

Daily Business News comprehensive 21st Century Business Report, CCTV Finance, China Business Daily