HONG KONG–Japan’s largest cosmetics company, Shiseido Group, posted a nearly 30 percent drop in annual profit dragged down by the impairment of its Bare Escentuals business, although sales in Asia and its home market grew by double digits as it invests more into the prestige segment and travel retail.
Net income for the year ended Dec. 31 was 22.7 billion yen–or $207.9 million at current exchange–a drop of 29.1 percent year on year. Sales increased 16 percent over the year before on a local currency basis. When converted into yen, net sales reached 1,005.1 billion–or $9.22 billion–an increase of 18.2 percent year on year due to a weakened Japanese currency.
The firm incurred a 55.2 billion yen loss in relation to Bare Escentuals, which has struggled since it acquired it back in 2010, over voluntary product recall expenses and the recognition of an impairment of assets related to the line. “Sales of the bareMinerals brand, which we are working to restructure, declined compared to last fiscal year due to the impact of department store closures and to increased competition in specialty stores,” the firm said.
In the Americas, it recorded a 6.6 percent drop year on year on a local currency basis, or a 10.1 percent drop year on year to 140.4 billion when converted into yen.
In its home market, the company observed some signs of a turnaround in consumer spending based on stronger employment and sales demand from overseas tourists to Japan. Japan sales grew by 13.1 percent year over year to 431 billion yen.
In China, the group’s prestige brands including Clé de Peau Beauté, and IPSA leveraged its “made in Japan” appeal to record 20.1 percent year on year sales growth on a local basis to 144.3 billion yen–an increase of 22.2 percent year on year, after conversion into yen.
Sales for the rest of Asia Pacific grew 11.2 percent or 18.8 percent year on year to 54.2 billion when converted into yen.
Shiseido is set to announce its new three-year strategy to 2020 on Mar. 5.