Yesterday, Shiseido released its financial data for the first quarter of fiscal year 2025, ending March 31.
During the reporting period, Shiseido Group recorded net sales of ¥228.2 billion ($1.54 billion), a year-on-year decrease of 8.5%; operating profit was ¥7.202 billion ($48.7 million), compared with a loss of ¥8.7 billion ($58.8 million) in the same period last year; net profit attributable to owners of the parent was ¥3.686 billion ($24.9 million), whereas the full-year loss in 2024 was ¥10.8 billion ($73 million)—successfully turning a profit this quarter. Core operating profit was ¥8.251 billion ($55.8 million), a year-on-year decrease of ¥3.1 billion ($21 million).
Shiseido pointed out that the decline in net sales was mainly due to the worsening economic environment, which led to weakened consumer demand, including sluggish sales in China’s travel retail business and the Drunk Elephant brand in the Americas. At the same time, the effects of structural reforms in Europe, the Americas, China, and Japan, along with company-wide cost management, partially offset the profit decline in the travel retail business.
The financial report specifically noted that, starting from the first quarter of the consolidated accounting period, due to changes in organizational and management structures, the reporting segments “China Business” and “Travel Retail Business” were merged into “China & Travel Retail Business.” According to the report, revenue from the China & Travel Retail Business declined by 12.1% year-on-year to ¥74.96 billion ($506.8 million) in Q1 2025, and core operating profit decreased by 16.1% year-on-year to ¥13.31 billion ($90 million).
Specifically, weak domestic consumption in China and a sluggish Hainan duty-free market were the main reasons, with demand for high-end skincare products significantly shrinking. Focusing on brand performance, a sharp drop in department store foot traffic led to a decline in offline sales, compounded by weakened demand for high-end products, resulting in declining sales for Shiseido and the ANESSA suncare brand.
Meanwhile, online channels in the Chinese market performed strongly. During the Women’s Day promotion period, e-commerce sales of brands like CPB and NARS recorded double-digit growth. Shiseido stated that the recovery of high-end brands still depends on the rebound of consumer confidence in China. Going forward, Shiseido will aim to sustain profits through reductions in fixed costs, more efficient marketing investments, and focusing on high-conversion products.
In travel retail, the Asian tourism market declined significantly, especially as Chinese consumers’ overseas spending stagnated. Airport duty-free store operations shrank. Shiseido will shift to adapt to changing consumption patterns among Asian tourists, such as moving toward emerging Southeast Asian markets.
Looking at the performance by region, revenue in Japan was ¥74.19 billion ($501.6 million), a year-on-year decrease of 2.4%; net sales in the Americas were ¥27.2 billion ($183.9 million), down 14.5% year-on-year. Net sales in the Asia-Pacific region were ¥17.07 billion ($115.4 million), a year-on-year decrease of 0.3%. In the EMEA region, sales reached ¥31.6 billion ($213.6 million), representing a year-on-year decline of 8.7%.
According to the financial report, although the Asia-Pacific market slightly contracted, its market share expanded against the trend, with revenue contribution increasing from 6.9% to 7.5%. Stable growth was achieved in key markets such as Thailand and South Korea, with increased revenue from the Shiseido, CPB, and NARS brands.
However, focusing on brand performance in the Americas, Drunk Elephant experienced a steep decline of over 60%, dragging down overall performance. Shiseido plans to revamp the Drunk Elephant product line to revive the market, restructure the Americas team, close underperforming retail stores, and optimize the supply chain, with the goal of returning to profitability by 2026.
In the EMEA region, the CPB brand grew by more than 40%, and new products from the fragrance brand “Zadig & Voltaire” performed well. However, the weak performance of Drunk Elephant offset the high growth effect from early shipments last year, leading to an overall revenue decline.
Shiseido stated that it has launched a multi-faceted contingency plan in response to the issue of cosmetics tariffs. On one hand, it is adjusting the supply chain by increasing procurement from regions such as Mexico and Canada and shifting some production lines; on the other hand, it is implementing pricing strategies, including raising wholesale prices for imported goods and leveraging preferential tariff measures.
Shiseido has defined 2025–2026 as a critical period for its “Action Plan.” In the future, it will continue to strengthen brand power, concentrate resources on its three core brands (Shiseido, CPB, NARS), and eliminate unprofitable SKUs. Additionally, to cope with geopolitical conflicts, it will accelerate local production and further advance cost management as planned. The goal for 2025 is to cut total expenses by ¥7 billion ($47.3 million).
Shiseido forecasts net sales of ¥995 billion ($6.72 billion) for fiscal year 2025, a slight year-on-year increase of 0.4%; core operating profit is expected to remain flat at ¥36.5 billion ($246.8 million). Given the current growth momentum of core brands in Japan and ongoing structural reforms, Shiseido is building resilience to economic cycles, aiming to achieve a 7% core operating profit margin in 2026.
