Core Viewpoint - Ulta Beauty's stock rose by 13.6% following the announcement of better-than-expected third-quarter results and an upward revision of annual net sales and earnings per share forecasts [1] Financial Performance - The company raised its full-year net sales estimate to approximately $12.3 billion [1] - Earnings per share (EPS) forecast was adjusted to a range of $25.20 to $25.50 [1] Market Drivers - Strong demand for fragrances and skincare products contributed to the positive performance [1] - Continued momentum in K-beauty (Korean beauty) trends also played a significant role [1]

Core Insights - The South Korean beauty industry is refocusing on China as a key strategic market for its "second growth curve" amid improving South Korea-China relations [1] - Many South Korean companies are struggling in the Chinese market due to rapid technological changes and increasing competition, with a strong emphasis on "complete localization" to succeed [1][3] - The decline in South Korean cosmetic exports to China is notable, with projections indicating that by mid-2025, the export share will fall below 20% for the first time [2] Group 1: Market Dynamics - The number of new South Korean brands entering Tmall International has seen significant growth, with a 110% increase in the second quarter of this year compared to the previous year [2] - The South Korean cosmetics market in China has experienced a downturn since 2021, with exports dropping from over 50% to a projected decline below 20% by 2025 [2][3] - The rapid product development cycle in China, termed "Chinese speed," allows local brands to quickly adapt and innovate, posing a challenge to South Korean brands [4] Group 2: Strategic Adjustments - Major South Korean beauty companies are restructuring and investing heavily to regain market share in China, with Amorepacific reporting a 23% year-on-year sales increase in the Greater China region [7] - Companies like Amorepacific are enhancing local production capabilities to better align with market demands and consumer preferences [7][8] - The emphasis on localization is critical, with companies needing to adapt their supply chains and product offerings to meet the unique tastes of Chinese consumers [8] Group 3: Future Outlook - The collaboration between South Korean and Chinese brands is seen as mutually beneficial, with both markets influencing each other's trends and consumer preferences [11] - South Korean brands are expected to continue focusing on skincare and makeup products for the Chinese market, leveraging the vast potential of this consumer base [11] - The goal is to elevate "C-Beauty" to global recognition, with significant production capabilities established in China, accounting for 50% of total output for some companies [11]