The share price of SET-listed Beauty Community Plc (BEAUTY), a retail distributor of cosmetics and skincare products, plummeted 15.2% yesterday as disappointing earnings in 2018 sparked a sell-off.
BEAUTY shares closed yesterday at 6.95 baht, down 1.25 baht, in trade worth 4.2 billion baht, considered the most active trade on the Stock Exchange of Thailand.
The company's fourth-quarter net profit was 123.84 million baht, down 69.7% year-on-year and 62.4% quarter-to-quarter. Full-year net profit was 991.59 million baht, down 19.3% year-on-year.
Total revenue for last year's final quarter was 657.12 million baht, down 40% year-on-year and 39.3% quarter-to-quarter. Total revenue for the whole of 2018 was 3.5 billion baht, down 6.3% year-on-year.
The decline in revenue came mainly from the impact of a crackdown on illegal cosmetics by the Food and Drug Administration (FDA), prompting customers to be more cautious in their cosmetics purchases, said Suwin Kraibhubes, Beauty Community's chief executive and largest shareholder.
The FDA crackdown also affected the export of cosmetics to China because of more stringent inspections, while lower Chinese tourist arrivals in Thailand also hurt cosmetics sales, Mr Suwin said.
Beauty Community's revenue is mostly generated from retail cosmetics shops such as Beauty Buffet (54.3%), followed by overseas branches (20.2%), consumer product channels (13.7%), Beauty Cottage shops (8.4%), Beauty Market shops (1.5%), e-commerce (0.3%) and other channels (1.5%).
An analyst at Finansia Syrus Securities, speaking on condition of anonymity, said BEAUTY's net profit was lower than expected by a huge margin, while a dividend payment of 0.135 baht per share is not interesting enough for investors to continue holding BEAUTY shares.
The analyst said the company's revenue outlook in 2019 is expected to continue declining because of stiff competition, reflected by the ongoing slide in BEAUTY's net profit margin.
BEAUTY's domestic retail stores have limited expansion capacity, while the company is poised to close overseas branches to offset losses, the analyst said.
As of last year's final quarter, the company operated 265 Beauty Buffet retail shops, 76 Beauty Cottage shops and seven Beauty Market shops.
There were 17 overseas retail stores as of last year's third quarter.
Surapon Phetklueng, the chief financial officer, said the company aims for 20% growth this year and will maintain an after-tax net profit margin of more than 25%.
Key drivers for this year's business include foreign business expansion via cross-border platforms and enhancing both online and offline channels in China, leveraging sales efficiency in existing channels, and restructuring and reorganising the e-commerce platform, Mr Surapon said.
