Shiseido The Store

TOKYO — Shiseido more than doubled its net income in the fiscal first quarter, the company said Friday.

The large jump was due mainly to strong growth in sales of prestige product lines, which afford higher profit margins than drugstore brands. It was also boosted by the company’s cross-border marketing strategy targeting Chinese consumers and travelers.

For the three months ended March 31, Japan’s largest cosmetics company posted net income of 28.87 billion yen, or $263.4 million, up from 14 billion yen in the same period a year prior.

Operating income for the period grew by 95.3 percent to 47.14 billion yen, compared with 24.13 billion yen in the previous year.

“While marketing investment was increased, strong sales of the highly profitable prestige brands in Japan, China and elsewhere contributed substantially to profit growth,” Shiseido said.

Net sales gained 13.5 percent to 263.76 billion yen, marking the fourth consecutive quarter of double-digit growth for the company.

In terms of geographic regions, the largest sales growth came from travel retail, China, Japan and Asia-Pacific. Travel retail sales grew by 41.9 percent to 21.41 billion yen, and sales in China were up by 28.7 percent to 45.64 billion yen.

“In the China business, the high growth in prestige brands such as Clé de Peau Beauté, Shiseido and Ipsa continued,” Shiseido said. “The cosmetic brand Aupres achieved robust growth, and the Made in Japan appeal…resulted in strong sales for the Anessa and Elixir brands.”

In Japan, which is still Shiseido’s largest market by far, sales grew 17 percent to 118.66 billion yen. In the Asia-Pacific region, excluding China and Japan, sales gained 16.1 percent to total 17.06 billion yen.

“In the Japan business, brands in the mid- to high-price range continued to perform well,” the company said. “These brands benefited from increased investment in marketing mainly for the three skin-related categories of skin care, base makeup and sun care. In particular, ELIXIR wrinkle-reducing cream contributed to growth in new consumers, and those who loved that product then purchased lotions and emulsions, which led to dramatic expansion of sales.”

In the Americas, Shiseido’s sales slipped by 4.8 percent to 28.17 billion yen.

“In the Americas business, prestige brands such as Nars continued to see growth, and Dolce & Gabbana performed strongly. In contrast, sales of BareMinerals, which is undergoing the closing of boutiques with low profitability and other structural reforms, underperformed the previous fiscal year,” the company said. “The termination of the distribution agreement concluded with Burberry last fiscal year and the impact of the sale of RéVive were also among the factors that resulted in a 1.1 percent year-on-year decline in sales on a local currency basis.”

Shiseido left unchanged its guidance for its current fiscal year. For the 12 months ending Dec. 31, it expects net income will more than double last year’s figure, for a total of 54 billion yen.

The company predicts its yearly operating income will gain 11.9 percent to 90 billion yen.

Shiseido is forecasting net sales growth of 2.8 percent on the year, totaling 1.03 trillion yen.

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