Shiseido

TOKYO Shiseido reported growth in its first-half net profit and sales, while its operating profit contracted due to increased investments.

For the six months ended June 30, net profit gained 10 percent year-over-year, totaling 52.45 billion yen, or $494.4 million.

Operating profit for the same period declined by 3 percent, coming in at 68.98 billion yen. Japan’s largest cosmetics company said Thursday that this reflected “increased investments in marketing, research and development, and people, which offset an increase in gross profit accompanying the increase in net sales.” It concentrated its marketing investments in digital mediums, which led to an improvement in its marketing return on investment.

Shiseido posted net sales of 564.65 billion yen in the first half, representing growth of 6 percent over the same period last year. It conducted cross-border marketing initiatives targeting Chinese consumers across Asia, which helped boost sales.

In nearly all of its business segments, Shiseido’s sales grew in the first half. The biggest gains came from the travel-retail business, where sales were up by 17.2 percent to 53.06 billion yen, and the China market, where sales grew by 15.9 percent to 107.68 billion yen.

“In the China business, the strong performance of prestige brands such as Shiseido, Clé de Peau Beauté, Ipsa and Nars continued, and sell-out of prestige brands soared in mainland China, exceeding 40 percent growth,” the company said in a statement. “Among cosmetics, strong growth also continued for the ‘made in Japan’ brands, Elixir and Anessa.”

Sales in the Americas gained 8.9 percent to total 64.07 billion yen, bolstered by advanced shipments. BareMinerals, which is restructuring and closing unprofitable stores, underperformed the previous year, but prestige brands such as Shiseido and Nars, as well as the fragrance brand Dolce & Gabbana, continued to grow.

First-half revenue in the company’s home market of Japan inched up 0.5 percent to 231.89 billion yen.

“In the Japan business, we continued to see strong sales growth in the ‘skin trinity category’ in which we have continued to increase marketing investments,” Shiseido’s release said. “We also secured steady inbound demand by strengthening cross-border marketing throughout Asia despite the impact from unfavorable weather from early spring onward in addition to the decline in buyer sales caused by yen appreciation and a new e-commerce law in China.”

The company also revised its guidance for the fiscal year ending Dec. 31, increasing its net profit forecast and lowering its net sales forecast.

Shiseido now expects its full-year net profit to come in at 83 billion yen, up 7.5 billion yen from its previous forecast of 75.5 billion yen. It said that this change is mainly due to an increase in taxes.

The operating profit forecast remained unchanged at 120 billion yen.

The company now expects net sales for the year to total 1.16 trillion yen, a decrease from its previous forecast of 1.17 billion yen. This change is due to a number of factors including the application of new accounting standards among Shiseido’s U.S. subsidiaries and changes in foreign exchange rates.

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