Ruoyuchen buys Erno Laszlo, betting on turnaround of struggling brand

2026.04.14 by ZHU Yongling Ruoyuchen (RYC), a Chinese e-commerce services provider expanding into brand ownership, is acquiring heritage skincare brand Erno Laszlo for 299 million yuan (about US$44 million), betting it can revive a once-prestigious label now facing declining sales and widening losses. The appeal lies in brand equity rather than current fundamentals. Founded in 1927 by Hungarian dermatologist Dr. Erno Laszlo, the brand built an early reputation in premium skincare. RYC said its century-long history and medical positioning make it a rare asset in the high-end segment. RYC is also counting on the brand's existing foothold in China, where it already has established retail channels and consumer recognition. Erno Laszlo operates 19 counters in high-end malls in cities including Beijing and Shanghai, and sells through retailers such as Sephora, alongside flagship stores on major e-commerce and social platforms. Yet the financial picture is weak. According to RYC's filing, the target company had net assets of just $1.53 million as of end-2025. Global revenue totaled $59.96 million last year, with mainland China contributing roughly $54 million, highlighting its limited scale and reliance on a single market. Performance has also deteriorated. Revenue in mainland China fell 28.7% year on year in 2025, while losses widened from 60.65 million yuan to 76.62 million yuan. Overseas markets also saw declines. RYC described the downturn as a "short-term fluctuation," arguing that the brand's core assets and long-term value remain intact. Industry observers are more cautious. CHEN Jingjing, from a brand consultancy, told Jiemian News the asset reflects a common pattern: "a strong brand but weak operations." While the label carries high gross-margin potential, repeated private equity ownership has failed to deliver a turnaround. From a valuation perspective, she said the deal appears expensive relative to current earnings and asset quality and effectively represents a bet on rebuilding the brand. If profitability can be restored to 60–80 million yuan, the implied price-to-earnings ratio would fall to 4–6 times, making the acquisition more attractive. In other words, the deal hinges on execution. RYC's ability to reposition and scale the brand will determine whether the purchase proves worthwhile. Previous attempts to revitalize Erno Laszlo have had limited success. The brand entered mainland China in 2014 and expanded into e-commerce, later shifting to a direct-operated model while targeting 1.5 billion yuan in retail sales within five years — a goal that appears unmet. Its offline footprint has also contracted. Stores opened in cities including Shenzhen, Xiamen and Xi'an since 2019 have largely closed. The brand has struggled to sustain momentum, despite several hero products such as its whitening mask and overnight gel. However, it has failed to translate these into broader category leadership, partly due to inconsistent marketing and limited high-profile marketing campaigns in recent years. For RYC, the challenge is structural. While the company has experience in e-commerce operations and brand management, much of its past business has been in servicing third-party brands. Premium skincare requires longer-term brand building and consumer trust, rather than reliance on short-term "hero product" cycles. The company appears to be taking a cautious approach. It said it will retain Erno Laszlo's existing global management, R&D and design teams, aiming for a stable transition while providing operational support in China. Ultimately, the success of the deal will hinge on whether RYC can rebuild the brand — a challenge that previous owners have failed to achieve.