(Yicai Global) July 18 -- Many Chinese cosmetic retailers are seeing their first-half profits eroded by the recent resurgence of Covid-19 which affected deliveries of their goods in many areas of the country. However, sales should pick up in the second half although some uncertainties remain, executives at a number of cosmetics firms told Yicai Global.

China’s overall retail sales of cosmetics sank 2.5 percent in the six months ended June 30 from the same period last year to CNY190.5 billion (USD28.2 billion), according to the latest data.

The drop in sales was predictable, market insiders told Yicai Global. But business will pick in the second half as logistics recover. However, expectations should be managed as “many uncertainties still exist,” they said.

Lily & Beauty, an online Chinese agent for over 60 overseas brands including French skincare brand Avène and Germany-based Schwarzkopf, is expecting first-half net profit to plunge 97 percent from the same period last year, while competitor Guangzhou Ruoyuchen Technology is bracing for an 80 percent drop.

The Covid-19 flare-ups prevented the firm’s warehouses in Shanghai and the surrounding area from delivering goods, but the company’s fixed expenses such as staff wages and warehouse rents remained the same, Shanghai-based Lily & Beauty said.

Delivering orders made online became difficult as the Covid-19 outbreaks hindered logistics, thus affecting the company’s performance, Ruoyuchen said.

Sales of makeup and skincare products on the “big three” e-commerce platforms of Alibaba Group Holding’s Tmall, JD.Com and Pinduoduo sank 18.9 percent during the 618 online shopping carnival held last month from the year before to CNY30.7 billion (USD4.6 billion).

Cosmetics are still regarded as a promising sector, said Shenwan Hongyuan Securities. The short-term impact of the Covid-19 outbreaks will not change this industry’s long-term upward trajectory.

Editors: Shi Yi, Kim Taylor