TOKYO — Shiseido said extraordinary gains from the sale of the Decléor and Carita brands to L’Oréal SA boosted its bottom line for the first nine months of the year as its operating profit took a tumble on higher costs.
The company’s net profit for the three quarters ended Dec. 31 jumped 66.1 percent to 27.82 billion yen, or $261.26 million at average exchange rates for the period.
Operating income for the nine months fell 43.6 percent to 18.81 billion yen, or $176.62 million. Shiseido said factors included “an increase in personnel expenses stemming from higher bonus payments in Japan, as well as stepped-up marketing investments overseas and higher costs stemming from problems at our U.S. distribution center.”
RELATED CONTENT: WWD Earnings Tracker >>
Nine-month sales at Japan’s largest cosmetics manufacturer increased by 3.8 percent to 555.77 billion yen, or $5.22 billion.
Since appointing Masahiko Uotani as president and chief executive officer in April, Shiseido has been preparing to make drastic reforms to its operations and marketing strategy. In December, Uotani detailed some of these reforms in a new medium-term business plan set to start in the coming fiscal year.
In the nine months under review, Shiseido’s domestic sales in Japan fell 2.4 percent to 265 billion yen, or $2.49 billion, which accounted for 47.7 percent of the company’s total sales. The company said sales suffered on an increase in the country’s consumption tax, which went into effect in April. But the firm said its Elixir and Maquillage brands, both of which have been recently revamped, posted increases.
A weak yen boosted international sales 10.2 percent to 290.77 billion yen, or $2.73 billion. In local currency terms, the percent increase in this figure was only 2.8 percent. Overseas, sales in Europe were down due to the sale of the Decléor and Carita brands, but global brand Shiseido and Bare Minerals performed well in the Americas, Shiseido said.
Shiseido left unchanged its profit guidance for the fiscal year ending March 31, but increased its sales forecast. The company is expecting net income to grow 14.7 percent year-over-year to 30 billion yen, or $254.4 million at current exchange rates.
The company is predicting operating income will fall 49.6 percent on the year to 25 billion yen, or $212 million.
Shiseido is forecasting yearly net sales growth of 1.7 percent to 775 billion yen, or $6.57 billion. This is up from a previous forecast of 770 billion yen, or $6.53 billion.