Retail in Asia


Japan’s weak demand weighs on Shiseido’s earnings

Shiseido‘s sales and profit declined in the first half of the year due to weak domestic demand. The company, whose brands include Nars, Drunk Elephant, and its namesake Shiseido, reported a 0.4 percent decline in net sales in the first six months of its fiscal year ended June 30. Meanwhile, core operating profit dropped 23.9 percent to 132.1 million USD, or 17.5 billion YEN.

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Despite strong growth in its travel retail business, the Americas, EMEA, and Asia Pacific, and a stellar performance from brands Clé de Peau Beauté and Nars, weak demand in China and COVID-19 lockdowns weighed on the company’s overall results.

“In Japan’s domestic cosmetics market, although a gradual recovery was seen thanks to the relaxation of activity restrictions, the market environment remained challenging due to delays in the recovery of consumer appetite for cosmetics consumption and increased frugality influenced by the extensive price hikes,” the company reported.

Source: Shiseido

“In terms of overseas cosmetics market, in China, the market environment was sluggish due to the restrictions in retail operations and supply chain disruptions caused by lockdowns primarily in Shanghai,” it added. “Meanwhile, in Europe and the United States, consumption continued to recover steadily as economic activities resumed, and the cosmetics market also showed strong growth across all categories.”

Therefore, Shiseido revised its forecasts for net sales for the full year to 1.07 trillion, down 5 billion YEN from its previous forecast, and core operating profit to 40 billion YEN.

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As part of its first investment, Shiseido Beauty Innovations Fund has introduced a recombinant collagen maker. With Shiseido as its lead investor, the fund is investing close to 100 million renminbi, or 14.5 million USD, in Jiangsu Trautec Medical Technology, which produces materials primarily for medical and cosmetic use.