Luxe.CO has noted an important detail disclosed by LVMH during its FY2026 first-quarter earnings call: its premium beauty retail chain Sephora recorded flat year-on-year performance in the Chinese market, ending its previous streak of declines.
This indicates that Sephora China, after three years of losses and four consecutive years of shrinking revenue, has reached a critical stabilisation point at the beginning of 2026.
According to previously released FY2025 financial data from Sephora China’s strategic partner — Shanghai Jahwa (FY2026 Q1 data has not yet been disclosed), Sephora China (including its Beijing and Shanghai entities) recorded revenue of RMB 6.536 billion (approximately USD 0.91 billion), down 8.5% year-on-year. However, net losses narrowed from RMB 646 million to RMB 499 million (approximately USD 0.07 billion), a reduction of RMB 147 million, already showing some positive trends.
Sephora China’s performance trajectory over the past five years also reflects, to some extent, the fluctuations of China’s premium beauty retail market. Luxe.CO extracted relevant data from the financial reports of Shanghai Jahwa, Sephora’s long-term partner in China, to visually illustrate this trajectory:
Data source: Shanghai Jahwa annual reports
The year 2021 marked a historic peak for Sephora China. At that time, revenue exceeded RMB 10 billion for the first time, reaching RMB 10.876 billion (approximately USD 1.51 billion), with net profit of RMB 431 million (approximately USD 0.06 billion), setting a record high.
However, a combination of internal and multiple external factors — including recurring pandemic disruptions, weakened consumer sentiment, and the rise of domestic brands — led to a sharp 21.4% decline in revenue in 2022 to RMB 8.548 billion (approximately USD 1.19 billion), along with its first net loss of RMB 191 million (approximately USD 0.03 billion). After a slight rebound in 2023, 2024 saw a further deep adjustment phase, with revenue declining another 18.5% to RMB 7.14 billion (approximately USD 0.99 billion) and net losses widening to RMB 646 million (approximately USD 0.09 billion), more than tripling from 2023 (RMB 141 million).
A substantive change emerged in 2025. Although full-year revenue still declined, the rate of decline narrowed from 18.5% to 8.5%, while the scale of losses also decreased significantly.
In its FY2025 report, Shanghai Jahwa explained that the narrowing net loss of Sephora (Shanghai) was driven by two main factors: strengthened expense control, which positively impacted net profit after deducting operating expenses, and a year-on-year reduction in impairment losses on long-term assets.
This indicates that Sephora China has shifted its strategic focus toward improving store-level operational efficiency and profitability. A series of cost control and asset optimisation measures have begun to yield tangible results.
Note: In 2005, Sephora and Shanghai Jahwa established a joint venture to jointly develop the Chinese market. Currently, Shanghai Jahwa holds 19% stakes in Sephora (Shanghai) Cosmetics Sales Co., Ltd. and Sephora (Beijing) Cosmetics Sales Co., Ltd. Shanghai Jahwa stated in its financial report that although its shareholding ratio is below 20%, it exercises significant influence through board representation and therefore accounts for these entities as associates.
Sephora Shanghai Xiangyang flagship store
During the FY2026 first-quarter earnings call, LVMH’s Chief Financial Officer Cécile Cabanis stated that Sephora delivered solid performance across global markets. By region, it continued store expansion in North America, accelerated development in emerging markets such as the UK, and demonstrated resilience amid a volatile environment in the Middle East.
“Notably, Sephora achieved flat performance in Asia this quarter, particularly in the Chinese market. China has been one of the key regions under recovery focus, and the current stabilisation signal is encouraging.“
She added that Sephora’s future growth will focus on several key directions: a unique brand portfolio and incubation capabilities, sustained same-store growth momentum, and further geographic expansion potential.
Sephora China’s shift from deep adjustment to early signs of stabilisation is not only the result of internal operational optimisation and strategic realignment, but also reflects, to a considerable extent, the recovery process underway in China’s premium beauty retail market.
Data from the National Bureau of Statistics of China shows that total retail sales of cosmetics reached RMB 465.3 billion (approximately USD 64.6 billion) in 2025, up 5.1% year-on-year, a clear rebound compared to the 1.1% decline in 2024. The recovery trend continued into 2026, with March cosmetics retail sales reaching RMB 46.3 billion (approximately USD 6.4 billion), up 8.3% year-on-year.
In fact, recent disclosures from multiple international beauty groups further confirm this recovery trend in the Chinese market from different perspectives:
The Estée Lauder Companies reported that in the second quarter of FY2025/26 (ending December 31, 2025), revenue in the Chinese Mainland increased by 13% year-on-year to USD 928 million, marking the second consecutive quarter of double-digit growth, and achieving market share gains across four major categories for four consecutive quarters.
L’Oréal Group reported in its FY2025 results that growth in the Chinese Mainland improved from 1% in the first half to 5% in the second half, with premium cosmetics as a key driver.
Unilever stated in its FY2025 results that although underlying sales growth in China remained flat year-on-year, it returned to growth in the second half, with the fourth quarter being the strongest of the year.
Shiseido Company also reported that both the fourth quarter and full-year performance in the Chinese Mainland achieved year-on-year growth, with structural reforms and reduced fixed costs contributing positively to overall results.
丨Image Credit: Luxeplace, Sephora official press release
丨Editor: Luxeplace
