In an attempt to crack the world's second-largest beauty market, Sephora entered China in 2005, expanding to 350 stores in more than 100 cities and selling online. The retailer has roughly 4,000 employees in the country.
A company spokesperson said the cuts would impact less than 3% of the workforce, which is equivalent to fewer than 120 jobs. Bloomberg reported earlier that around 10% of its China staff in offices and stores are being affected.
"In response to the challenging market environment and to ensure our future growth in China, Sephora China is currently streamlining our organizational structure in our head office to ensure we have the right capabilities for long-term sustainable growth," the company said in a statement.
The restructuring comes as the newly appointed former Nike Inc. Asia e-commerce chief Ding Zia was appointed as Sephora's new Greater China head, who is attempting to turn the loss-making operation around. The retailer incurred roughly 330 million yuan ($60.4 million) in combined losses in 2022 and 2023, according to annual reports from skincare manufacturer Shanghai Jahwa United, which holds a 19% stake in the mainland business.
The retailer has remained committed to the Chinese business while scaling back its regional footprint, closing its Taiwan and South Korea operations in the past year.
In 2023, the Chinese beauty market registered 5.1% growth, reaching $58 billion, according to data from the National Bureau of Statistics of China. A shift has happened in a market where international brands dominate, and the players have changed. Local brands have reached a watershed moment, leveling the playing field.
Charles Denton, Chairman of Erno Laszlo spoke to foreign brands' challenges and advantages when confronted with homegrown talent at the BeautyMatter FUTURE50 Summit. “The advantage of Chinese brands is that they take data very seriously, and their speed/ability to jump on a trend and act is remarkable. The disadvantage is they struggle to take a risk and see into the future, but they have an understanding of the consumer, and with their high degrees of efficacy and claims, they are winning the scientific argument.”
