Yatsen Holding Limited Q2 2026 Earnings Recap

Shares dropped 11.2% after Yatsen’s results revealed margin pressure from inventory provisions in color cosmetics and deceleration in overall revenue growth, disappointing investors who likely expected steadier profitability and clearer improvement in the struggling segment.

Key Takeaways

• Total net revenue grew a modest 5.1% year over year, falling short of prior expectations amid industry headwinds.
• Skincare revenue remained a bright spot with a strong 40.4% increase, now accounting for 71.5% of total sales and driving the company’s strategic shift.
• Gross margin was negatively impacted by higher inventory provisions related to proactive SKU rationalization and portfolio optimization in the color cosmetics segment.
• Selling and marketing expenses increased as a percentage of revenue, driven by investments in high-growth channels such as Douyin.
• Management highlighted ongoing challenges in color cosmetics due to fast-changing trends and intense promotional activity, with efforts underway to streamline the portfolio and improve profitability.