TOKYO — Shiseido Co.’s full-year profits slid as it booked costs related to the acquisition of Bare Escentuals and losses on investments and last month’s earthquake in Japan.
The Japanese beauty giant said net profit for the year ending March 31 shed 62 percent to 12.79 billion yen, or $149.64 million at average exchange rates for the period. Sales rose 4.1 percent to 670.70 billion yen, or $7.85 billion.
Those numbers are more or less in line with the figures Shiseido gave last week when it issued a profit warning.
Once again, Shiseido’s international division outperformed that of the Japanese market, which has been suffering for years as consumers rein in their spending.
Global sales surged 20.9 percent to 302.63 billion yen, or $3.54 billion, boosted by the Bare Escentuals acquisition. Japanese cosmetics sales slid 6.6 percent to 358.41 billion yen, or $4.19 billion.
“Overseas sales increased significantly thanks to recovery of growth in European and North American markets and ongoing high growth in China and elsewhere in Asia, as well as the addition of Bare Escentuals, Inc… By contrast, there was a year-on-year decline in domestic sales. Factors included lackluster recovery in consumer sentiment and our failure to respond to changes in the market structure, which is characterized by polarization toward high-priced and low-priced products,” the company said.
The company also issued forecasts for the fiscal year it just started. Net profit for the year ending March 31, 2012 is expected to gain 64.2 percent to 21 billion yen, or $256.95 million, while sales are seen rising 1.4 percent to 680 billion yen, or $8.32 billion.
“Business conditions surrounding the Shiseido Group remain very challenging due to various factors. These include damage to stores caused by [the earthquake and tsunami] and the subsequent issue of radiation fallout from nuclear power plants, as well as the impact of such events on the supply chain and languishing consumer sentiment,” the company said.
Earlier this month, Shiseido said it is embarking on a new three-year strategic plan with the aim of becoming more of a global beauty player.
Highlights of the plan include:
-Launching e-commerce consecutively in the United States and China. The time of this move has not been determined but newly-tapped Shiseido president and chief executive Hisayuki Suekawa said it could happen as early as this year. Shiseido already has an e-commerce presence in Japan with some of its brands including Ayura, Ipsa and Sokamocka.
-Cultivating the Shiseido brand to become more of a global contender in the beauty world.
-Targeting the “ultra-affluent” segment of Asia and North America with the Clé de Peau Beauté range, which has actress Amanda Seyfried as its spokeswoman.
-Expanding Bare Escentuals’ presence in the United States as well as in Europe and Asia.
-Tapping into the masstige market to target “middle-income” consumers in Asia. Shiseido said it will invest “proactively” in skincare and makeup brand Za and skincare brand Senka.
-Reducing its vast product portfolio in Japan to the best-performing brands and items to be more focused. Also for the Japanese market, the company will launch next year a new website featuring a virtual shopping mall, online beauty counseling and various other paid and free content.