TOKYO — The Shiseido Group has reported its highest-ever net income and sales on a consolidated basis for the fiscal year ended March 31, 2004.
Net income was up 12.4 percent, to $250.4 million (27.54 billion yen) while sales were up 0.5 percent, to $5.68 billion (624.25 billion yen). However, income from operations was down 20.3 percent to $355 million (39 billion yen). Dollar figures were converted from the Japanese yen at current exchange rates.
“Domestic sales slipped 1.1 percent, due to weak personal consumption and the effects of a cool summer, as well as our inability to launch new, high-impact products on the market in the first half,” said a spokesman for the company. “Income from operations fell due to sluggish revenues, increased pension costs and higher expenses associated with our head-office reorganization. Net income climbed, owing to an extraordinary gain due to the return of a substantial portion of the employees’ pension fund, which was approved in the year under review.”
Despite the effects of the war in Iraq and the SARS outbreak, overseas sales grew 5.3 percent in yen terms and 4.9 percent on a local-currency basis to $1.48 billion (162.3 billion yen). Share in overseas sales was 26 percent, compared with the previous year’s 24.8 percent.
Total cosmetics sales, which made up 78.4 percent of entire sales, increased 1.6 percent to $4.45 billion (489.59 billion yen). Toiletries, 10.7 percent, declined 4.1 percent to $603.6 million (66.40 billion yen). Other categories, 10.9 percent, dropped 2.7 percent to $620.6 million (68.26 billion yen).
Domestic sales of cosmetics, at $3.16 billion (347.67 billion yen), edged down 1 percent. During the year, Shiseido concentrated on core product lines while actively promoting consultation-based sales to specialty stores and adopting a stronger approach to structured retailers. In the second half of the year, the group launched new products and undertook additional advertising and promotional activities. However, “this was insufficient to compensate for weak sales in the first half. As a result, full-year sales were slightly down,” said the spokesman.
According to the company, at the prestige end of the market, sales of skin care products — mainly core lines — were solid. In the mid-level, self-selection market, sales of skin care and makeup products turned around in the second half of the year. However, products for men struggled throughout the year, resulting in a weak overall performance.
Overseas cosmetics sales reached $1.29 billion (141.92 billion yen), growing 6.9 percent in local currency terms and 8.5 percent on a yen-denominated basis. The travel-retail business (duty-free shops at airports) of Beauté Prestige International S.A. (BPI) struggled, mainly due to declining traveler numbers. In the second half of the year, however, sales in Asia recovered, especially in China. As a result, the growth rate of overseas sales also increased.
Sales in the Americas were $416.4 million (45.81 billion yen) or 7.3 percent of entire sales, and increased 4.9 percent on a local currency basis. Sales in Europe, $619.1 million (68.10 billion yen) or 10.9 percent of the total, inched up 0.3 percent. And the Asia Oceania Region, $440.8 million (48.49 billion yen) or 7.8 percent of the total, increased 11.2 percent.
For the fiscal year ending March 31, 2005, the group projects a 3.3 percent increase in net sales to $5.86 billion (645 billion yen), 36 percent down in operating income to $227.3 million (25 billion yen) and 56 percent down in net income to $109.1 million (12 billion yen). Overseas sales are expected to increase 7 percent to $1.57 billion (173 billion yen). — Koji Hirano
Del Earnings Plunge 84.3%
NEW YORK — Moving manufacturing facilities from New York to North Carolina turned out to be anything but beneficial for Del Laboratories Inc., as problems getting operations up and running sank earnings for the first quarter.
For the three months ended March 31, the Uniondale, N.Y.-based cosmetics manufacturer said earnings plummeted 84.3 percent to $680,000, or 7 cents a diluted share. Comparatively, the company reported earnings of $4.3 million, or 44 cents a share, in the year-ago period.
Sales declined 11 percent to $83.1 million from $93.4 million.
Shifting manufacturing operations from its Farmingdale, N.Y., location proved problematic. “The unanticipated start-up production issues related to the relocation and consolidation of our principal manufacturing operations to Rocky Point, N.C., had a serious impact on our first-quarter results,” said Dan K. Wassong, chairman, president and chief executive officer, in a statement.
According to data from market research firm ACNielsen, the company’s Sally Hansen brand remained the leader in the mass market nail care category with a 25.6 percent market share.
Wassong said production problems at the new facility were being addressed and that he anticipates realizing benefits from lower costs as a result of the move during the second quarter. — Ross Tucker
Marionnaud’s Profitable Year
PARIS — France’s Marionnaud Parfumeries reported its net profits for the year ended Dec. 31 rose 1.3 percent to $46.2 million at current exchange rates, or 38.7 million euros.
The firm’s consolidated operating profits increased almost 4 percent to $103.2 million, or 86.5 million euros, while its sales registered a 10.7 percent uptick to $1.36 billion, or 1.14 billion euros, year-on-year.
The company highlighted its turnout at home, where Marionnaud’s operating profits increased almost 5 percent to $88 million, or 73.8 million euros. Also in France, the firm claims to be the largest beauty institute, boasting 900 treatment rooms.
During an analyst meeting held Thursday, company president Marcel Frydman reiterated that Marionnaud is not for sale, although there’s nothing stopping a takeover bid from being launched on the publicly quoted firm.
Marionnaud stock closed virtually flat on the Paris Bourse, or down 0.07 percent, at a unit price of $34.28, or 28.73 euros. — Brid Costello
Amore Pacific’s Bigger Factory
PARIS — Korean beauty firm Amore Pacific Corp. unveiled its new manufacturing facility in Chartres, France, last week.
Kyung-Bae Suh, the company’s president and chief executive officer, officially inaugurated the 182,986-square-foot factory, which represents an investment of $19.8 million.
The plant, where Lolita Lempicka and Jean-Charles de Castelbajac fragrances and Lirikos skin care will be manufactured, offers five times the production capacity of Amore Pacific’s previous facility, also in Chartres.
Among attendees at the event were In Soo John, chairman of Pacific Europe; Catherine Dauphin, managing director of Pacific Europe, and Chul-Ki Ju, South Korea’s ambassador to France.
In other Amore Pacific news, Suh received La Medaille d’Argent de la Ville de Paris (The Silver Medal of the City of Paris) here last week. It was presented in recognition of Suh’s decision to choose France, and particularly Paris’ 17th arrondissement, as the headquarters for Pacific’s European operations. Suh’s late father, company founder Sung-Whan Suh, had also received such a medal in the Sixties.
Sephora to Launch New Look
PARIS — Sephora is sprucing up its “white store” in Bercy Village here.
Next month, the perfumery chain, owned by LVMH Moët Hennessy Louis Vuitton, will unveil a new look for the store it opened in December 2000, initially with a skin care focus.
Following renovations, the store will be called Sephora B. Set to open May 18, it will carry makeup, skin care and fragrance and will offer numerous beauty services.