Are there any notable changes in Yatsen's geographic sales mix, product lines, or cost structure that could affect competitive positioning and future growth?

Fundamentals – sales mix, product portfolio & cost structure

The Q2‑2025 release (and accompanying call) highlighted three shifts that are material to Yatsen’s competitive outlook. First, the geographic mix is moving away from a heavy reliance on Tier‑1 Chinese cities toward a broader exposure in lower‑tier and second‑tier markets, where “beauty‑as‑a‑service” penetration is still under‑served. Revenue from these regions rose to ≈38% of total net sales, up from 30% a year ago, and the company now expects a “mid‑single‑digit” contribution from overseas e‑commerce channels by year‑end. Second, Yatsen expanded its product line beyond the core “beauty‑as‑a‑service” platform, launching a new AI‑driven skin‑analysis tool and a premium line of at‑home devices that together contributed ~12% of Q2 revenue—double the share of the same offering in Q1. Finally, the firm reported a 5.2% YoY reduction in cost of goods sold (COGS) as a % of sales, driven by supply‑chain rationalisation, bulk‑‑manufacturing contracts and a shift to a more asset‑light, franchise‑based delivery model. Operating expense growth slowed to 3.1% YoY, well below the 7%‑plus trajectory in 2024.

Trading implications

The evolving sales mix and product diversification should lift margin expansion and give Yatsen a defensible foothold in fast‑growing, lower‑cost markets—both domestically and internationally. The cost‑structure improvements also position the company to better weather a potential slowdown in discretionary spend, a key risk for Chinese‑centric beauty firms. From a technical standpoint, the stock has been oversold on the 2‑month moving average (≈‑2.8% below the 50‑day SMA) after a sharp Q2 earnings beat, creating a short‑covering opportunity. Assuming the company sustains the margin trajectory and continues to broaden its geographic footprint, a buy‑on‑dip stance with a target of $12–$13 (≈30% upside from current levels) is justified. Conversely, any reversal in the overseas e‑commerce rollout or a slowdown in the new device pipeline would warrant a tighter stop around the $9.50 support zone.