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Omar
on Aug 21, 2025
Europe
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According to Exhibit 1, the total revenue of 2022 looks higher than total revenue of 2012 ? the revenue decrease could not be considered as profit decline driver

BeautyCo Revenue in 2012

 

  • In Perfumeries: The channel was worth €1,900M. BeautyCo's share was about 48% (from the ~52% mark to 100%).
    • 0.48 * 1,900M = €912M
  • In Online: The channel was worth €150M. BeautyCo's share was dominant at about 65%.
    • 0.65 * 150M = €97.5M
  • Total 2012 Revenue: ~€1,010M

 

BeautyCo Revenue in 2022

 

  • In Perfumeries: The channel shrank to €1,700M. BeautyCo's share increased to about 52%.
    • 0.52 * 1,700M = €884M
  • In Online: The channel exploded to €650M. BeautyCo's share dropped to about 27% (from the ~55% mark to ~82%).
    • 0.27 * 650M = €175.5M
  • Total 2022 Revenue: ~€1,060M

 

Conclusion

 

BeautyCo's revenue went from ~€1,010 million in 2012 to ~€1,060 million in 2022.  it has increased.

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Alessa
Coach
on Aug 21, 2025
10% discount in August |xMcKinsey & Company | xBCG | xRB | >400 coachings | feel free to schedule an intro call for free

Hey there :)

Your math seems right to me: BeautyCo’s revenue actually increased from ~€1,010M in 2012 to ~€1,060M in 2022. So a revenue decline is not the main driver of the profit drop. Instead, the issue must be margin-related: for example higher costs, lower pricing power, or weaker profitability in the online channel (even though it grew, margins there are often thinner than perfumeries).

So when building the case, the insight is: revenue grew slightly, but profit fell → we need to focus on cost structure or channel profitability, not topline.

best, Alessa :)

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Cristian
Coach
on Aug 21, 2025
#1 Rated & Awarded McKinsey Coach | Top MBB Coach | Verifiable success rates
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Pallav
Coach
22 hrs ago
Non-target expert | Ex-BCG | >200 cases

Exactly — your calculations show that total revenue actually increased from ~€1,010M in 2012 to ~€1,060M in 2022. So a simple revenue decline cannot be cited as the driver for a profit drop.

However, as you hinted, the composition of revenue matters:

  1. Channel mix:
    • Perfumeries (traditional retail) shrank slightly, though BeautyCo’s share grew.
    • Online exploded, but BeautyCo’s share dropped significantly.
    • Different channels often have different cost structures, marketing spend, and margins. Online may have lower margins or require higher promotional spend.
  2. Product mix:
    • Changes in product assortment or pricing across channels can impact profitability.
    • Even if revenue rises, selling more low-margin products or discounting heavily in online could reduce overall profit.
  3. Other cost drivers:
     
    • Rebates, promotions, competitive pressures, supply chain costs, or advertising spend could all contribute to a profit decline despite revenue growth.


Key insight: Always separate total revenue from profit drivers — revenue growth does not automatically translate to profit growth, especially when the channel/product mix and cost structure change.

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