Japanese cosmetics giant Shiseido revealed a 0.2 percent sales in uptick for the first half 2023 to JPY 494.2 billion (USD 3.45 billion), on the back of double-digit increases in China and Japan.
In Shiseido’s Japan business, net sales totalled JPY 125.2 billion, up 8.2 percent year-on-year, or up 8.6 percent on a like-for-like basis excluding business transfer impacts. Core operating loss was JPY 3.4 billion, an improvement of JPY 4 billion, thanks to higher gross profits following an increase in sales and cost management efforts.
During the six months, the Tokyo-based company launched new products across its portfolio of brands, following a recovery in demand due to the relaxation of mask use, as well as increased opportunities to go outside as Covid measures released. Locally, the company noted strong sales growth of its Clé de Peau Beauté and Shiseido brands, in addition to its Elixir products, which continued to perform strongly, alongside Maquillage, signalling the demand recovery for makeup domestically.
In its China business, Shiseido clocked net sales of JPY 130.6 billion, up 12.8 percent on a reported basis, or up 9.9 percent on a like-for-like basis excluding foreign exchange and business transfer impacts. Core operating profit was JPY 5.5 billion, an improvement of JPY 7.5 billion year on year, primarily due to higher gross profits associated with an increase in sales, and returned to profitability.
In China, the company said it is shifting to a more sustainable growth model, which focuses on value-based brand and product communication tailored to consumer needs. Shiseido brand growth was driven by offline channels through enhancing initiatives unique to brick-and-mortar store, while Clé de Peau Beauté growth was driven by its e-commerce channel, with brands demonstrated “outstanding growth” in the region.
In the ‘618’ e-commerce promotion, the company said it strengthened the diversification of platforms and expanded its focus on high functionality products and appeal for products’ efficacy, and “outperformed the market growth” as a result.
In Asia Pacific, Taiwan turned to growth in the second quarter, and strong growth continued in South Korea and Southeast Asia. The Nars brand maintained its “robust performance” from last year, driving overall growth in the region.
However, net sales in APAC fell to JPY 30.7 billion, down 2.2 percent for the six months, but were up 13.9 percent on a like-for-like basis. Core operating profit decreased by JPY 2.2 billion to JPY 0.2 billion, primarily due to higher marketing investment.
Finally, in the company’s travel retail business, the company saw a “vigorous recovery” in Japan, thanks to an increase in tourist traffic with the impact of Covid-19 being mitigated.
Meanwhile, in South Korea and Hainan Island in China, sales were lower than last year, due to the impact of retailer inventory adjustments and market normalisation and a refocusing on tourists.
As a result, net sales were JPY 77.5 billion, down 0.5 percent, or down 3.9 percent on a like-for-like basis. Core operating profit decreased by JPY 1.5 billion to JPY 15.4 billion, primarily due to lower gross profits from a decline in sales.