Shiseido's office in Tokyo.

TOKYO — Shiseido said Thursday that in the first nine months of its fiscal year, the company recorded a net loss of nearly 17 billion yen, due mainly to a 70.7 billion yen impairment loss on intangible and other assets related to Bare Escentuals. Despite the net loss, both operating income and net sales for the group grew by double digits.

For the nine months ended Sep. 30, Japan’s largest cosmetics company posted a 16.96 billion yen ($149.09 million) net loss. Operating income for the period jumped 82.4 percent to 70.65 billion yen.

Shiseido’s nine-month net sales grew 17.4 percent to 731.2 billion yen.

“The company positions fiscal 2017 as the final year for rebuilding the business foundation under its current three-year plan,” Shiseido said in a release. “In specific terms, Shiseido is looking to accelerate sales growth, further reinforce investments in areas where substantial results can be expected and has also launched initiatives to address brand and other category issues where concerns remain regarding growth potential and profitability amid the steady improvement in earning power in existing businesses. The company has also begun to push forward a variety of initiatives with the aim of improving profitability, including strictly managing profits by business and brand, dramatically reorganizing mainstay businesses and the brand portfolio, and cutting products that contribute little to sales and income.”

Shiseido has worked to strengthen strategic investments in the prestige category, where it is achieving strong results. The Clé de Peau Beauté, Shiseido and Ipsa brands sustained high growth in China, while Clé de Peau Beauté and Nars posted strong growth in the Asia-Pacific region.

Net sales grew in each of Shiseido’s areas of business, with the biggest increase coming from the travel-retail activity, in which sales were up 84.5 percent to 15.5 billion yen. The company said the jump was the result of increased marketing activities, including advertising and promotion at airports.

The EMEA business, which comprises Europe, the Middle East and Africa, posted net sales growth of 34.8 percent to 22.5 billion yen. Sales were boosted by the Narciso Rodriguez fragrance brand, as well as Dolce & Gabbana beauty, which Shiseido licensed last year.

In the Americas, Shiseido is working to rebuild its suffering Bare Minerals brand and announced recently that it will close some 100 doors. However, Laura Mercier, which the company acquired last year, helped to push its sales in the region up 9.5 percent to 8.5 billion yen.

In the company’s home market of Japan, mid- and high-priced brands are performing well, while the Elixir Superieur Enriched Wrinkle Cream S has become a hit product. Shiseido’s overall sales in Japan grew 11.8 percent to 33.83 billion yen.

Shiseido also revised its guidance for its current fiscal year, ending Dec. 31. Just over a week ago it increased its net sales and operating profit forecasts, while drastically cutting its net income projection. On Thursday, it reduced the latter figure even further.

The company now expects net income to total 5 billion yen, down from its previous forecasts of 10 billion yen and 32.5 billion yen. It said that the impairment loss on goodwill associated with Bare Escentuals, which was announced on Nov. 1, had been miscalculated. Previously announced as a 65.5 billion yen impairment loss on intangible assets, it has now been recalculated to 70.7 billion yen.

The operating profit forecast remains unchanged from the Nov. 1 figure of 65 billion yen, which is up from a previous forecast of 56 billion yen. This change was made due to an expected extraordinary income of 36 billion yen as a result of profit from the sale of shares of Zotos International and assets associated with the Zotos business.

Shiseido still expects its yearly net sales to total 985 billion yen. If the actual figures match the forecasted levels, both operating income and net sales will reach record highs.

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