Today (November 10), Shiseido, a renowned cosmetics company, has released its financial report for the first nine months, showcasing a 5.3% year-on-year decrease in net sales, amounting to 722.4 billion yen ($4.77 billion) compared to 762.7 billion yen ($5 billion) in the previous year. The operating profit for the period stood at 25.8 billion yen ($170.4 million), reflecting a 27.6% year-on-year decrease. Shiseido addressed the global uncertainties prevailing during this time, such as the prolonged conflict in Ukraine and rising inflation.
The domestic cosmetics market in Japan demonstrated growth as the country’s economy progressed towards recovery from the pandemic. Additionally, the recovery of inbound tourism contributed to the market’s expansion. However, consumers remained cautious due to the rising cost of living.
In the Japan business, Shiseido launched innovative products and experienced sales growth due to the relaxation of mask guidelines and increased opportunities for outdoor activities. Brands like Clé de Peau Beauté and SHISEIDO saw steady growth and gained loyal users. ELIXIR and ANESSA also showcased strong growth, benefiting from the gradual recovery of inbound tourism consumption. The Japan business reported net sales of 191.6 billion yen ($1.27 billion), indicating a 7.3% year-on-year increase.
In the overseas cosmetics market, the trends and pace of recovery varied across regions. For the China business, Shiseido shifted its growth model to focus on value-based brand and product communication tailored to consumer needs. Although SHISEIDO and Clé de Peau Beauté showed robust growth in the first half of the year, the overall positive performance was somewhat counteracted by the negative effects of the weakening sentiment towards China’s economy. Additionally, consumers scaled back their purchases of Japanese products following concerns related to the release of treated water in Japan. Consequently, this led to a decline in net sales during the third quarter. The impact of these developments was particularly noticeable in the e-commerce sector, which experienced significant repercussions. Net sales for the China business amounted to 178.1 billion yen ($1.18 billion), representing a 3.6% year-on-year increase.
The Travel Retail business, which primarily operates through duty-free stores in airports and downtown areas, witnessed a recovery in Japan due to increased tourist traffic. However, sales declined in South Korea and Hainan Island in China due to retailer inventory adjustments and the shift towards a business model focused on tourists. Net sales for the Travel Retail business were 108.5 billion yen ($716.8 million), reflecting a decline of 9.7% year on year.
In this environment, Shiseido lowered its FY2023 estimates, saying that it forecasts net sales for FY2023 to record 980 billion yen ($6.47 billion), down 8.2% year-on-year.