Orient Securities Company Limited has released a research report indicating that July beauty and cosmetics retail sales significantly outpaced the broader consumer market, with domestic leading brands and international premium labels resonating across online channels, while divergence on the Douyin platform is intensifying. The current fund holdings ratio in the beauty and personal care sector sits at historic lows, prompting the firm to recommend focusing on three key directions: 1) brands with validated GMV in H1 2026 and improving expense efficiency; 2) beneficiaries of structural trends such as premiumization and functional skincare; and 3) companies with strong multi-platform operational capabilities that are unlocking new growth through overseas expansion.

July beauty retail sales continued to significantly outperform the overall consumer market. In July 2026, total retail sales of consumer goods rose 0.6% year-on-year, while retail sales of consumer goods above designated size declined 3.4%. During the same period, cosmetics retail sales above designated size increased 6.8% year-on-year, approximately 6 percentage points higher than the broader market. Cumulative cosmetics sales for January-July grew 6.3% year-on-year, notably faster than the 1.2% cumulative growth in total retail sales. Despite the natural deceleration following the high base from June's promotional campaigns, July beauty sales still maintained mid-single-digit or higher growth, demonstrating sustained demand resilience and continued relative prosperity.

Online beauty sales shifted from promotional peak volumes to normal operations in July, with domestic leading brands and international premium labels jointly dominating the top rankings. According to Qingyan Intelligence, in July, the top 20 skincare brands recorded monthly transaction values ranging from approximately RMB 100 million to RMB 400 million per brand, while the top 20 color cosmetics and fragrance brands ranged from approximately RMB 70 million to just over RMB 200 million. Domestic brands including HANU, PROYA, Graine, CHANDO, MAOGEPING, and CARSLAN continued to lead the pack, while international labels such as Lancôme, L'Oréal, Estée Lauder, LA MER, Dior, and YSL maintained strong positions. The head landscape reflects a dual dynamic of improving domestic brand efficiency and enduring international premium resilience.

On the Douyin platform, according to Chanmama data, PROYA's flagship brand and PST both saw declines, while OR recorded double-digit positive growth. At SHEME, the flagship brand saw slight declines, but YEAH and Amean both achieved high growth. At MARUBI, the flagship brand experienced double-digit declines, while Lianhuo grew at a high double-digit rate. At Shanghai Jahwa, both Dr.Yu and Herborist posted high growth. At Giant Biogene, Comfeel saw slight declines while Collgene achieved robust growth. MAOGEPING's flagship brand grew over 50%.

Disclosed H1 2026 and Q2 financial reports from overseas beauty leaders reveal that industry demand remains resilient, though regional and category divergence continues. L'Oréal: H1 2026 sales grew 6% year-on-year, with adjusted like-for-like growth of 6.5%. The China premium cosmetics business achieved double-digit growth, while dermatological beauty and professional hair care both grew at roughly mid-double-digit rates. Unilever: H1 2026 beauty and wellness underlying sales grew approximately 6%, accelerating to high single digits in Q2, with Dove, Sunsilk, and Vaseline all achieving double-digit growth. Personal care grew at mid-single digits. China posted mid-single-digit growth, with beauty and wellness as the primary driver. Beiersdorf: H1 2026 consumer business organic revenue declined approximately 4%, mainly dragged by mid-to-high single-digit declines in NIVEA. The Derma business grew at high single digits and achieved notably strong growth in China during Q2. Shiseido: H1 2026 reported revenue grew approximately 6%, but was roughly flat after excluding currency and other impacts. China and travel retail businesses remain in a weak recovery phase. Kao: H1 2026 cosmetics business grew approximately 7% on a like-for-like basis, with marked improvement in operating profit, and Asia leading growth. Amorepacific: Q2 2026 sales grew approximately 15% with operating profit up over 50%, though Greater China revenue still declined, primarily due to channel optimization. Procter & Gamble: The company's FY2026 beauty revenue grew at high single digits, with 4-6 month organic growth around 4%. Hair care and personal care outperformed skincare, and SK-II's product mix improved, though Greater China volumes remained under pressure. Essity: Q2 personal care reported revenue grew at double digits with mid-single-digit organic growth, with female care categories showing particular strength. LVMH: H1 2026 perfumes and cosmetics organic revenue was broadly flat, with a slight decline in Q2. Dior fragrances and makeup, along with Guerlain fragrances, performed well. The company also divested its DFS Greater China operations, continuing to optimize its travel retail footprint.

Risk warnings: continued weakening of end-consumer demand, new product launches falling short of expectations, and intensifying industry competition.