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Shiseido Lowers Full-Year Profit Forecast

Shiseido's costs related to the acquisition of Bare Escentuals weigh on first-half earnings.

TOKYO — Shiseido Co. Ltd. said Thursday that its first-half net profit plummeted 58 percent as costs related to the acquisition of Bare Escentuals bit into its performance.

This story first appeared in the October 29, 2010 issue of WWD.  Subscribe Today.

The company also slashed its full-year profit forecasts but lifted its full-year sales target, citing growing demand in emerging markets, such as China, and the benefits it will derive from Bare Escentuals’ revenue. But overall, it was cautious in its outlook.

Meanwhile, the firm has added some celebrity shine to its holdings, saying Thursday it had signed actress Amanda Seyfried as the global spokeswoman and face of its luxury cosmetics brand, Clé de Peau Beauté.

Seyfried, who started her career in modeling at the age of 11, has starred in the films “Letters to Juliet,” “Dear John” and “Mamma Mia!” On the small screen, she’s known as Sarah Henrickson in HBO’s “Big Love.” She will first appear in the brand’s advertising campaign for spring, which was lensed by David Sims. Makeup artist Lucia Pieroni, who is Clé de Peau Beauté’s color creator, created the beauty look for the shoot.

Turning back to the numbers, Shiseido stated: “Economic recovery and a turnaround in consumer sentiment in Japan will take some more time. Accordingly, market conditions surrounding the company, both in Japan and overseas, will remain unpredictable even in the second half of the current fiscal year.”

For the six months ended Sept. 30, Shiseido’s net profit fell 57.6 percent to 7.54 billion yen, or $84.9 million at average exchange. The company said it reported extraordinary losses, including a loss on the valuation of securities investments.

Operating income fell 3.9 percent to 21.85 billion yen, or $246.03 million, but the company said operating income would have risen 11.7 percent if the effects of the Bare Escentuals acquisition were excluded from the equation.

Sales for the period rose 5.2 percent to 333.63 billion yen, or $3.76 billion.

Sales in Japan fell 4.3 percent to 198.9 billion yen, or $2.24 billion, as economic conditions in the country’s home market continued to stagnate.

Sales outside of Japan fared much better, growing 23 percent to 134.7 billion yen, or $1.52 billion.

“Cosmetics markets in Europe and North America continued a recovery that began in the fourth quarter of the previous fiscal year. Cosmetics markets in China and emerging nations also continued to expand. In addition, Bare Escentuals, Inc.…made a contribution to overseas sales for just over four months of the period under review,” the company said.

Shiseido revised its guidance for the full year ending March 31. Net profit is now expected to come in at 25 billion yen, or $305.94 million at current exchange. This represents a drop of 25.8 percent from last year, and is down from a previous forecast of 31 billion yen, or $379.37 million.

The company upped its sales forecast from 660 billion yen, or $8.08 billion, to 688 billion yen, or $8.42 billion, representing an increase of 6.8 percent on 2009 sales.

The naming of Seyfried as the face of Clé de Peau Beauté looks to help with the line’s revamp (Shiseido said it has a reformulated 21-product lineup with a new ingredient derived from natural silk and pearl) and planned international growth, particularly in Asia, the U.S. and Canada. Seyfried will attend a launch event in Tokyo on Nov. 5.

Yoshiaki Okabe, general manager of the Clé de Peau Beauté division, said of Seyfried, “Amanda’s radiance and sophisticated style are the perfect embodiment of Clé de Peau Beauté. The spring campaign will bring a vibrant and fresh allure to Clé de Peau Beauté.”