Shiseido Co. Ltd. revised its consolidated financial result forecast for the year ending Dec. 31, 2017, reporting that both net sales and operating income are expected to exceed previous forecasts and reach record highs.
The Company expects to post an extraordinary income of 36 billion yen as a result of profit from its sale of Zotos International Inc. to Henkel for $485 million, announced late last week. Shiseido also said it would post a loss of 65.5 billion yen as an impairment charge on intangible assets and other assets associated with Bare Escentuals. In line with this, net income attributable to shareholders is forecast at 10 billion yen, 22.5 billion yen down from the previous forecast.
As part of the announcement, Shiseido said it would close approximately 100 BareMinerals company-owned stores in the U.S. Currently there are 209 such doors. Shiseido said the brand had sales of $50 billion yen annually.
Bare Escentuals has struggled since Shiseido acquired it in 2010 for $1.7 billion. At the time, it was a powerhouse seller on QVC, driven by its charismatic chief executive officer Leslie Blodgett, who pioneered the concept of social selling. More recently, it has faltered, amid increased competition from digital-to-consumer brands and an ever more fragmented color cosmetics market.
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Company executives expect that to change under recently named president Susan L. Jurevics. Jurevics joined Shiseido from J.K. Rowling’s Pottermore and Sony Corp., where she had extensive digital experience.
Going forward, Shiseido reaffirmed its commitment to BareMinerals, noting in a release that it is the “only brand within the Shiseido Group that is competitive in the growing natural cosmetics market.”
Earlier this year, the brand got a boost when Shiseido launched its foundation matching technology acquired from MatchCo, with BareMinerals Fresh Faced Made-2-Fit foundation.
“It’s the right fit for BareMinerals for a number of reasons, and it was the obvious brand for us to start with,” stated Marc Rey, president and chief executive officer of Shiseido Americas, at the time. “A full 30 percent of American women use the brand. As the leader in complexion and foundation, it was logical that we put the technology on BareMinerals. Additionally, BareMinerals has always been a conversation brand, a brand that wants to have a lot of intimacy with its consumer and there is nothing more intimate than personalizing a product for one person.”