WWD.com/beauty-industry-news/financial/shiseido-9-month-net-profit-slumps-21-6679860/
government-trade
government-trade

Shiseido 9-Month Net Profit Slumps 21%

The beauty company spent more on advertising and promotion and saw weak sales in Japan and China.

Shiseido Bio-Performance Advanced Super Revitalizing Cream

TOKYO — Shiseido’s nine-month net profit dropped at a double-digit pace, as the company slashed its full-year forecasts.

 

The company said Thursday that net profit for the nine months ended Dec. 31 dropped 21 percent to 4.56 billion yen, or $57.06 million at average exchange rates for the period.

 

The cosmetics company saw its business in its home market of Japan continue to soften. It also cited weak demand in China amidst ongoing political tensions between the two countries, a factor that dragged down Shiseido’s international sales.

 

RELATED CONTENT: Click Here for More Earnings Coverage >>

Shiseido said that operating income plummeted 65.8 percent to 9.15 billion yen, or $114.48 million. The company said its margins suffered on lower domestic sales and higher promotional spending.

 

 Net sales for the period slipped 1.2 percent to total 484.79 billion yen, or $6.06 billion.

 

In Japan, sales in Shiseido’s domestic cosmetics business fell 3.2 percent to 252.05 billion yen, or $3.15 billion.

 

“In the first two quarters, sales [of cosmetics in Japan] fell below the previous corresponding period, when shipments reach a high level in the aftermath of the [March 11, 2011] earthquake,” Shiseido said.

 

Cosmetics sales in its global business inched up 0.8 percent to 225.62 billion yen, or $2.82 billion.

 

“Despite solid performances [overseas] by the global brand Shiseido and the Nars makeup artist brand, as well as the fragrance business in Europe, sales were affected by weak demand in China, due to restrained purchasing attitudes toward Japanese products,” the company said, referencing consumer reactions to an ongoing territorial dispute between Japan and China.

 

Shiseido said it is continuing to see weak international sales in the fourth quarter, so it cut its forecasts for the full year ending March 31.

 

Shiseido also warned that it plans to book an extraordinary loss of around 6 billion yen, or $65.90 million at current exchange rates, in its fourth quarter. This extraordinary loss is linked to a reorganization of the company’s production and R&D bases, the company said.

 

Shiseido now expects full-year net income to fall 27.7 percent to 10.5 billion yen, or $115.33 million. This is less than half of the company’s previous forecast of 22 billion yen, or $241.64 million.

 

It is predicting operating income will fall 37.4 percent year-on-year to 24.5 billion yen, or $269.10 million, down from a previous forecast of 40 billion yen, or $439.35 million.

 

The company said it now sees full-year sales dropping 0.3 percent to 680 billion yen, or $7.47 billion. This has been revised down from a previous estimate of 700 billion yen, or $7.69 billion.