JAPAN. Beauty powerhouse KOSÉ has outlined its travel retail priorities for 2026 after a challenging year for sales in the channel, as highlighted in the group’s FY2025 results.
Of travel retail, the company said it “will work to stabilise business in China, strengthen sales in Japan and develop new markets in Europe and North America”.
Asia travel retail sales (excluding the PURI brand) fell -19.2% year-on-year (see table below). Within this, China duty free represents a key market.
In its year-end results presentation, KOSÉ commented, “China travel retail experienced a decrease in sales. This was due to higher sales in the previous fiscal year’s Q2, when shipments were expanded, anticipating a V-shaped recovery in the Chinese market. Additionally, this year saw a deliberate reduction in shipments led by our company. However, Chinese travel retail and other sales exceeded the forecast, and sales were higher than planned.”
Overall, KOSÉ Holdings Corporation delivered +2.3% (+2.6% excluding foreign exchange) year-on-year net sales growth to ¥330.1 billion (US$2.13 billion).
Domestic Mainland China and wider Asia gains offset the decline alongside strong performances from the core KOSÉ, ALBION and KOSÉ Cosmeport businesses and the newly consolidated PURI Co.
Operating profit rose +6.3% to ¥18.4 billion (US$118.7 million), supported by improved profitability in the core KOSÉ business despite profit declines at Tarte and ALBION.
Profit attributable to owners of the parent more than doubled to ¥15.1 billion (US$97.4 million), up +101.2% from the previous year. This was driven by lower income taxes and the absence of China structural reform losses booked in 2024.
Regional performance
Japan remained the largest contributor, with sales rising +1.9% to ¥215.3 billion (US$1.4 billion). Growth was driven by record sales from DECORTÉ and KOSÉ Cosmeport, supported by strong performance from ALBION and ONE BY KOSÉ.
However, Japan sales were impacted by sluggish inbound demand linked to tensions in Japan-China relations and continued challenges in the makeup category.
KOSÉ Group President and CEO Kazutoshi Kobayashi commented: “In December, sales were slow as a restriction by China on foreign travel reduced the number of customers. We believe slow sales are only a temporary event caused by a decrease in the number of foreign tourists in Japan. In Mainland China, there are no serious negative effects on sales, such as a campaign to boycott Japanese products.
“In the travel retail category in Japan, performance remains stable as the decline in Chinese tourists has been offset by solid sales to Japanese travellers.”
Asia Pacific delivered the strongest regional growth, with net sales up +8.6% year-on-year to ¥44.1 billion (US$284.4 million).
While travel retail sales in China declined following shipment adjustments and a strong comparison base, Mainland China outperformed thanks to strong ecommerce events and an improved mix of high-end DECORTÉ products.
The addition of newly consolidated PURI also supported regional growth.
Kobayashi said: “PURI’s first-time consolidation was a major driver of sales growth in Asia in 2025. In 2026, we expect a recovery in Mainland China sales and we are planning on no change in travel retail sales based on a conservative stance due to the business climate. We are hoping for a further recovery in Mainland China sales.”
Commenting on KOSÉ Travel Retail’s performance in Hainan, he added: “On Hainan Island, the business climate is benefiting from China’s December 2025 designation of the island as a ‘special customs territory’ and from the reorganisation of duty-free store operators.
“However, we do not see any dramatic improvement in the decline in consumer spending in China.”
Sales in North America, Europe and other markets were broadly flat at ¥70.7 billion (US$455.9 million).
Tarte sales declined slightly due to currency effects but remained stable in local currency. Growth in SEKKISEI sales to a major North American retailer supported the wider ‘others’ category.
Performance by business segment
The Cosmetics segment delivered improved overall profitability of +2.7% to ¥262.3 billion (US$1.7 billion), supported by the return to profitability in Mainland China and cost reductions at KOSÉ. This offset profit declines at Tarte and ALBION.
Tarte’s profits fell due to aggressive marketing investments aimed at strengthening brand presence, while ALBION maintained a high single-digit operating margin despite lower inbound demand and increased marketing activity.
The Cosmetaries segment recorded -0.3% sales decline at ¥64.4 billion (US$415 million), while Others recorded ¥3.3 billion (US$21.2 million) in net sales, representing +26.3% growth.
In the Cosmetaries segment, KOSÉ Cosmeport remained flat. It maintained a double-digit operating margin by controlling selling expenses in response to the sharp rise in raw material prices. However, this was not enough to offset declining gross profit from lower sales of Visée and other makeup brands.
Outlook
For FY2026, KOSÉ forecasts net sales increase of +6% year-on-year to ¥350 billion (US$2.26 billion). It expects to generate a +8.3% year-on-year increase in operating profit to ¥20 billion (US$129 million), driven by growth across its core companies, Tarte and PURI.
The group predicts higher depreciation, personnel costs and administrative expenses to weigh on profits, but aims to offset these pressures through gross profit growth and profitability improvements across the business. ✈
