Shiseido released its 2024 Q1 financial report, the Japanese beauty giant net sales in Q1 grew 3.9% to ¥249.5 billion based on reported figures. When adjusted for foreign exchange effects and business transfers, including the acquisition of Dr. Dennis Gross Skincare, the year-on-year increase was 3.2%, marking a slight decrease of 2.7% on an FX-neutral basis.
Although a year-on-year decrease of ¥1.2 billion in core operating profit, totaling ¥11.3 billion, it surpassed Shiseido’s quarterly target, marking a solid start to the year. Weak sales growth, primarily due to retailer inventory adjustments in the Travel Retail Business, and reduced intersegment sales to the Travel Retail and China Businesses in the Other segment, affected the profitability of Shiseido’s business. Shiseido grew in core operating profit across all other segments, including Japan, China, Asia Pacific, Americas, and EMEA Businesses.
Profit attributable to owners of the parent declined by ¥12.0 billion year-on-year, resulting in a loss of ¥3.3 billion. This was influenced by decreased core operating profit and the recognition of structural reform expenses associated with the Early Retirement Incentive Plan in the Japan Business under non-recurring items.
In the Japan Business, net sales amounted to ¥73.6 billion, indicating a significant 19.3% increase year-on-year on reported figures, or a 19.6% increase year-on-year on a like-for-like basis excluding the impacts of business transfers, accounting for 29.5% of Shiseido’s total net sales. Core operating profit reached ¥6.7 billion, reflecting a noteworthy improvement of ¥8.3 billion compared to the previous year. This improvement was primarily driven by higher gross profit resulting from sales growth, coupled with enhancements in cost efficiency.
In the China Business, net sales reached ¥55.5 billion in Q1, marking a 4.2% increase year-on-year on reported figures, accounting for 22.2% of Shiseido’s total net sales. When adjusted for foreign exchange effects and business transfers, there was a 3.2% decline on an FX-neutral basis or a 2.6% decrease year-on-year on a like-for-like basis excluding such impacts. Core operating profit amounted to ¥0.1 billion, reflecting a significant improvement of ¥2.3 billion compared to the previous year, attributed to effective cost management strategies.
Shiseido stated that the company has announced a strategic shift in its China Business, moving away from relying heavily on large-scale promotions for growth and towards a more sustainable model centered on value-based brand communication tailored to consumer preferences. During the quarter, while Clé de Peau Beauté and NARS experienced consistent growth, SHISEIDO faced another period of negative growth due to the ongoing impact of reduced consumer spending on Japanese products following concerns about treated water.
In the Americas Business, net sales reached ¥31.8 billion, showing a significant 22.4% increase year-on-year on reported figures. Adjusting for foreign exchange effects and business transfers, there was an 8.9% rise on an FX-neutral basis, or a 9.4% increase year-on-year on a like-for-like basis, excluding the impacts of foreign exchange, business transfers, and the mentioned acquisition. Core operating profit experienced a notable increase of ¥2.1 billion compared to the previous year, reaching ¥3.6 billion. This growth was primarily attributed to higher gross profit resulting from increased sales.
In the Travel Retail Business, net sales amounted to ¥29.8 billion, indicating a significant 22.7% decrease year-on-year on reported figures. Adjusting for foreign exchange effects and business transfers, there was a steeper decline of 30.4% on a FX-neutral basis, or a 30.5% decrease year-on-year on a like-for-like basis, excluding the impacts of foreign exchange and business transfers. Core operating profit experienced a substantial decrease of ¥4.5 billion compared to the previous year, reaching ¥3.0 billion. This decline was primarily attributed to a lower gross profit resulting from decreased sales.
