Proya's Revenue Keeps Climbing. Its Profit Keeps Shrinking.

Proya Cosmetics grew third-quarter revenue 29.8 percent while net profit fell by double digits, the company reported, and it named promotional spending tied to overseas expansion as the cause, according to The Business of Fashion.

The gap between top-line growth and profit decline isn't new for Proya. In the first half of 2026, reported net profit jumped 46 percent to roughly RMB 1.17 billion, but that figure rested almost entirely on a one-off RMB 445 million fair-value gain from taking control of makeup brand Flower Knows. Strip out that gain and core profit fell 13.8 percent year over year, with the second quarter alone down 17.5 percent. Flagship Proya-brand revenue dropped 7.2 percent in the same period, and makeup line Timage fell about 22 percent.

Marketing spend explains much of the squeeze. Proya's sales and marketing expense ratio has run near 50 percent of brand revenue for several quarters, while research and development spending has stayed under 2 percent of revenue for years. Rival Marubi has pointed to the same cause for its own margin pressure: rising customer-acquisition costs on Douyin and Tmall. The pattern suggests an industry-wide cost problem on Chinese beauty platforms, not a single company's misstep.

Domestic competition is widening the gap. Mao Geping Cosmetics posted 26 percent revenue growth in the first half of 2026, far outpacing Proya. Caixin reported on August 28 that L'Oreal, Estee Lauder and LVMH beauty units are regaining ground in China, and it named Proya specifically as a domestic brand losing momentum as flagship products and marketing formulas lose traction.

That pressure helps explain the timing of Proya's push abroad. On August 19, Proya announced it will launch its Advanced Firming and Original Repair skincare lines in roughly 400 Ulta Beauty stores and on Ulta.com starting in November 2026, its first formal US retail distribution after years of relying on cross-border e-commerce. Chairman Hou Juncheng has said the company is scouting acquisitions in Europe, in baby care, perfume and men's skincare, aiming for a spot among the top ten global beauty companies, a tier that would require annual revenue near RMB 50 billion against a current run rate closer to RMB 10 billion.