Investing.com -- Beauty brands experienced what analysts from Bernstein termed "a catastrophically weak September" in China, signaling a dramatic downturn in the country’s online beauty market.
Data from Bernstein showed a staggering 46% drop in sales for tracked beauty companies, marking a sharp reversal from the previous month’s 22% growth.
The broader e-commerce beauty market in China mirrored this bleak performance, with a 40% decline in September sales, following modest growth in August.
This drop was particularly unexpected given China’s growing reputation as a key market for global beauty brands.
The numbers flagged by Bernstein raise concerns about the volatility in consumer demand in China’s beauty sector, which has long been reliant on large online shopping festivals to drive sales.
September, typically a slow month contributing only 3% to annual sales, saw an unprecedented dip in growth, adding to the industry's challenges.
Brands like Estée Lauder managed to weather the storm better than most, with a sales decline of "only" 34%, which, in relative terms, resulted in a substantial 174 basis points market share gain.
Similarly, L’Oréal and other top performers such as Hermès and L'Occitane managed to gain market share despite seeing their overall sales shrink.
In contrast, some brands like Unilever (LON:ULVR) and Bloomage struggled, losing market share amid the broader downturn.
Analysts at Bernstein emphasized that the September data, while stark, should be viewed in context. Much of China’s online beauty sales are concentrated around key shopping events like the June 18 and November 11 festivals.
With August becoming increasingly important due to the rise of Douyin’s 8.18 shopping festival, September’s weaker performance might be less significant in the larger annual picture.
“Nevertheless, sales growth for our tracked companies over the past three months remains miserable, at -7.9%,” the analysts said.
The volatility in China’s beauty sector is likely to keep investors and brands on edge, as the market adjusts to shifting consumer behavior, economic headwinds, and increased competition.