Sephora is having hard time in China
Sephora, the LVMH-owned beauty retailer, is facing mounting challenges in the Chinese market — a country widely recognized as one of the world’s largest consumers of skincare and cosmetics, and traditionally a stronghold for premium beauty brands.
In 2024, Sephora China reported a 19% year-over-year revenue drop, falling to 7.14 billion RMB (approximately $986 million), with net losses of 646 million RMB ($89.1 million). While, the financial losses continue since the year of 2022.
So what are the main factors have contributed to Sephora’s declining performance in China?
1. Intensified Local Competition
Chinese domestic beauty brands have surged in popularity, claiming over 50% market share in 2023—surpassing international brands for the first time. These local players offer more affordable pricing, product designs tailored to Chinese consumers, and agile marketing strategies, positioning themselves as stronger contenders in the evolving market.
2. The E-Commerce Dominance
The Chinese beauty retail landscape has become increasingly digital-first. Platforms like Taobao, Tmall, and Xiaohongshu (RED) dominate consumer shopping behavior by offering convenience, diversity, and personalized recommendations. In contrast, Sephora’s traditional brick-and-mortar model and relatively slow digital transformation have made it difficult to keep pace with rapidly changing consumer habits.
3. Rise of New Retail Players
Since 2020, a wave of new beauty concept stores and specialty retailers—such as Harmay (话梅), The Colorist (调色师) —they have disrupted the market. These emerging players prioritize experiential retail, offering:
Smaller product formats for trial and convenience
Trendy and immersive in-store environments
Creative promotional activities
4. Evolving Consumer Preferences Post-COVID
In the post-pandemic era, Chinese consumers have become more value-conscious and ingredient-focused, moving away from brand obsession and towards functionality, quality, and transparency. Trust in clinical efficacy, clean beauty, and cost-performance ratio now outweighs the appeal of big international names. Sephora’s premium, brand-driven model no longer aligns as well with these evolving expectations.
Overall, Sephora's challenges in China reflect a broader shift in the market: from global prestige to local relevance, and from physical presence to digital and experiential agility. To regain momentum, Sephora may need to reconsider its channel strategy, brand curation, and localized innovation to better align with China’s fast-evolving beauty ecosystem.
Sources:
Sephora cuts jobs in China in further sign of softness in cosmetics market (Financial Times)
LVMH’s Sephora China posts third year of losses (Jing Daily)
LVMH’s Sephora Cuts Around 10% of Staff in China as Woes Deepen (The Business of Fashion)
LVMH’s Sephora cuts hundreds of staff in China as woes deepen (The Straits Times)
To Reach €20 Billion in Sales, Sephora Weighs China Overhaul (The Business of Fashion)
Sephora cuts jobs in China, reflects beauty's wider struggles (Cosmetics Business)
Beauty retailer Sephora cuts China jobs as market slumps (Reuters)
LVMH Group's Sephora China plans to cut about 10% of its employees to turn around losses (Futunn)
Sephora cuts jobs in China in further sign of softness in beauty sector (CNA Luxury)
