Retail in Asia

In Sectors

Cosmetics giant Shiseido blames yen for lower profit outlook

Shiseido - Retail in Asia

Japanese cosmetics giant Shiseido, which also owns the Bareminerals and Nars brands, has cut its profit outlook as a result of the stronger yen.

It now expects full-year profits of 30bn yen ($296m; £227m), compared with a previous forecast of 34.5bn yen. Shiseido said earnings would be hit by the recent strength of Japan’s currency and the cost of recent acquisitions.

The 140-year-old firm is buying make-up brand Laura Mercier and skincare line ReVive to try to lift sales. Shiseido shares fell 7.5% in reaction to the lower forecast.

“There is a growing sense of uncertainty regarding the future,” Shiseido said in a statement. “This largely reflects further appreciation of the yen and a drop in stock prices, mounting anxiety toward overseas economies, and signs that corporate-sector earnings and consumer spending have stalled.”

Andrew Hall, retail consultant at Verdict Retail said: “If you remove currency fluctuations from the picture you see that sales are flagging in international markets such as the U.S.

“Recent acquisitions will also be taking its toll on profit as Shiseido must invest in restructuring these acquisitions to align with the rest of the business, these costs have come sooner in the year than many analysts expected.

“However the brand still has a number of strengths including licence agreements with coveted brands such as Dolce & Gabbana.”

(Source: BBC)